EXPERIENCE, the TGS magazine - 2 edition

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EXPERIENCE

is a magazine focused on business trends and business experience stories.

EDITORIAL

DO

Design, layout and direction

Lorena Bernales

Marketing & Communications Manager

lorena.bernales@tgs-sarrio.pe

General Editing

Marcela Vargas

CSR & Marketing Project Manager marcelavargas@tgs-global.com

Collaboration and article writing Partners of the TGS member firms

For further information please write to marketing@tgs-sarrio.pe

TGS Sarrio & Asociados Peru

Follow us on:

www.tgs-global.com

VARGAS CSR & Marketing Project Manager TGS Network

The definition of the expression “sustainable development” was first formalised in the World Commission on Environment and Development’s 1987 Brundtland report which defined it as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs’”

Such a development for a company consists in guaranteeing its activity in the 5, 15 or 30 upcoming years. For the economic growth to be sustainable, there must be equal consideration between the environment, society and economic benefits, thus generating sustained growth and an equitable distribution of income.

A sustainability strategy should not be seen as a short-term opportunity, either to improve the image of the brand or to generate one-off income. When this strategy is conceived in the long term it becomes an essential part of the business model. It is a chance to manage at the same time economic, environmental and social risks, as well as brand image, relationships with customers and stakeholders.

International standards and new regulations are leading companies to integrate sustainable elements into their business model and to closely link it to the financial area of the company. Integrating these new measures should be seen as an opportunity for your business, your employees and your customers.

WE REALLY KNOW WHAT IS BEHIND THE TERM «SUSTAINABLE DEVELOPMENT» AND WHY IT IS AN OPPORTUNITY FOR SMEs?

Marcela

CONTENT

INTERVIEWS

Sustainable development

We interviewed Simone Bonassi, manager of the TGS member firm in Italy, and Gabriela Aguilar, Chair of the Sustainable Development Committee of the Peruvian-British Chamber of Commerce, about the opportunities that an ESG strategy offers.

PARTNER EXPERIENCE

Corporate finance will be replaced by sustainable finance

This article does not attempt to justify or vindicate any global strategies and definitions that focus on SDG objectives (United Nations, 2015) or periodic reviews conducted in Forums such as COPs and others; it instead seeks to explain how they are applied within organizations that quickly adapt to the growing need to contribute to a more sustainable world in increasingly global markets demanding products and services with their unique “sustainability” branding.

PARTNER EXPERIENCE

Business ethics could save us from heavier regulation?

“There’s nothing neither good nor bad but thinking makes it so.” (W Shakespeare, Hamlet, c1600). Although the context of this quote was in an effort by Prince Hamlet to address how to deal with the murder of his father, it speaks to the broadest of debates in business, and the oldest of questions: what is good and what is bad?

According to Shakespeare, it is all a matter of context and perspective.

PARTNER EXPERIENCE

Taxation of crypto assets in Argentina and the South American Region

This article will discuss the situation of investors on digital currencies as miners consider the crypto generation of assets as a service that should be subject to regular taxpayer laws.

Most nations concur that crypto assets should be subject to income tax. Brazil, Colombia, Peru, Chile, and Argentina are Latin American examples of this novel taxation policy.

PARTNER EXPERIENCE

We Spaniards enjoy saying, “Spain is different.”

We do not say it with the same sense of national pride Americans display or with the satisfaction of a dominant industrialized economy such as the German, nor with the deep respect for tradition the Japanese cherish.

With amused resignation, we say it without arrogance, mindful of our illustrious past and immense creative potential, which is only surpassed by our limitless capacity for self-sabotage.

PARTNER EXPERIENCE

ESG incentives in Canada

Canadians are becoming increasingly invested in the sustainability and ethical impact of business operations; and corporate stakeholders are looking for more transparency on how companies manage and integrate ESG risks and opportunities into their business strategy.

Consequently, incorporating sustainable business practices that account for ESG factors has become a key focus for many Canadian organizations.

PARTNER EXPERIENCE

Customer-focused digital transformation: a growth engine for businesses

In the current digital era, businesses must adapt to a constantly changing business environment. In this new era of business, digital transformation is necessary for survival and growth. However, more is needed to implement cutting-edge technologies to achieve significant business growth.

NETWORK EXPERIENCE

Scaling sustainable profitability for professional service firms

Non-financial reporting requirements are becoming more demanding. In Madrid, TGS launched a betaversion of the TGS Lab Process, a diagnostic and advisory toolkit to upskill members to become the trusted ESG advisors for their clients.

The toolkit allows firms to collect data beyond the traditional audit remit, asking about people, profit, planet and leadership activities.

About TGS

TGS is a dynamic global business network of independent firms providing audit, tax, corporate legal services, advisory and outsourcing. With more than 4,200 professionals in more than 55 countries, the multidisciplinary TGS member firms support clients by designing global, sustainable solutions and providing a one-stop-shop for business advisory. We support the 10 principles of the Global Compact on Human Rights, Labour, Environment and Anti-Corruption. Our culture, strategies and operations are aligned with universal principles of sustainable development.

About Experience

Experience is a business magazine that gathers insights, trends and experience stories from TGS member firms that inform and inspire business leaders and future entrepreneurs. Its development seeks to share valuable information for entrepreneurs, under the analysis of our partners and guest executives. This TGS magazine is available free of charge at issuu.com/tgs-sarrio/experiencemagazine

Disclaimer

The firms of TGS are independent members of TGS. As a separate and independent legal entity of TGS, member firms are solely responsible for the work it carries out and the services it provides to its clients. Member firms are not responsible for the acts or omissions of other member firms.

©2023 TGS. All rights reserved

SUSTAINABLE DEVELOPMENT

Interview with:

Simone BONASSI Audit Manager www.lanceaudit.com

What can you tell us about yourself, about your firm and about your team?

I am Simone, I collaborate with Lance Audit, an audit firm, and a member of TGS, based in Milano and Bergamo, Italy.

After my master’s degree in international business, entrepreneurship, and finance at the University of Bergamo, I started to focus my professional growth on the audit and financial consultancy of Italian and international enterprises with experiences in Milano and Shanghai.

Since 2020, I have been working with Lance Audit, a firm where integrity, transparency and ongoing education are the core values of the personnel involved in the company.

The staff is well differentiated for age, culture, and experience since the goal of the board is to create a dynamic environment that stimulates the day work and the professional growth.

What do you think about developing an ESG strategy for your company? How could such a strategy transform the way of doing business?

In an industry characterized by huge competition, the ability to focus on something that can lead to long-lasting added value is a challenging task.

Focusing on ESG means leading people to a view of “doing good to receive good” that, even in a medium-term horizon, can result in the shaping of a healthy place where people can freely share their opinions and ideas, a more attractive environment for new talents, and a spot predisposed to develop new skills enhancing the professional values and promoting the personal growth.

What actions does your firm currently take to be more sustainable, and what are planning new actions on the future?

The main action undertaken by the company has been the implementation of an internal moral code based on waste reduction, including the removal of plastic and other harmful components, supported by the adoption of innovative IT solutions.

“ ”

(...) we are discussing the integration of ESG factors into the client selection process with the ambitious goal of building a portfolio of clients in which everyone is really concerned about ESG and sustainability issues.

Photo by Lance Audit

Moreover, despite the growth in terms of numbers and connections, the company’s thought has always been to establish sites in modern and comfortable spots with spaces relatively contained to safeguard energy consumption and offer the personnel the possibility to work remotely.

If economically speaking, the goal is to limit the costs, the vision is to improve the flexibility and responsibility of our staff in order to lead to a stronger corporate loyalty that can, in our view, have a remarkable effect on the credibility toward our clients.

About our new actions in the near future, we are modeling some incentives to give to our personnel for the use of public means or other sustainable means of transport (i.e., bike, scooter, carpooling or car sharing) to reach the workplaces. In a broader vision, instead, we are discussing the integration of ESG factors into the client selection process with the ambitious goal of building a portfolio of clients in which everyone is really concerned about ESG and sustainability issues.

In what way does TGS Network membership help you undertake new actions in this matter?

In a company such as ours, where non-audit assignments are mainly focused on projects based on renewable energies, being internationally recognized represents a key point of our vision.

Being a member of TGS, a network where sustainability stands as the core value of all the business, significantly increases our credibility in developing services towards these topics and makes us more appealing in the proposals to new potential investors.

Moreover, the development of webinars and conferences worldwide, in addition to the annual quality control, lets us be updated on the subject but, above all, allows us to develop quality services in full respect and updating of non-economic and financial issues

Photo by Lance Audit

SUSTAINABLE DEVELOPMENT

Interview with:

Gabriela AGUILAR Chair of the Sustainable Development Committee

www.bpcc.org.pe

What can you tell us about yourself, about the Chamber and about your team?

I am the Social Responsibility Manager for the British Peruvian Cultural Association and have the fortune to lead the Sustainable Development Committee of the British Peruvian Chamber of Commerce.

It is a committee formed by companies members of the Chamber from different sectors that have in common an interest in making their companies more sustainable and create shared value.

Through different activities the committee seeks to educate and exhibit Sustainable Development’s issues, practices and benefits in Peru and the UK.

These activities are developed jointly with the Chamber team lead by Nancy Velarde, General Manager.

What do you think about developing an ESG strategy for the Chamber? How could such a strategy transform the way of doing business?

Developing an ESG strategy has become vital for organisations.

Currently is not enough to measure companies performance only with economic indicators, looking into social and environmental performance is also important and beneficial for companies.

And that is what we want to promote among Chamber members.

Companies with an ESG strategy show a better control over risk management and better links as the strategy is based on stakeholders needs and expectations.

What actions does the Chamber currently take to be more sustainable, and what are planning new actions on the future?

The committee focuses on two main subjects: Huma Rights and emissions reduction. Around these two issues we develop different activities to raise awareness.

But apart from giving information and promoting good practices, we strongly encourage Chamber members to take action.

In this concern we have partnered with the British Embassy, the Ministry of Environment, Confiep and other organisations to bring spaces where the members can take action and the result was the 50% of members measuring their carbon footprint as a first step to reduce emissions and more than 200 staff from Chamber members trained on the National Action Plan on Business and Human Rights.

This year we will continue developing both issues and will increase our indicators to reach 100% of members measuring their carbon footprint and more staff trained on Human Rights.

Photo by Peruvian-British Chamber of Commerce

In what way does the British Peruvian Chamber of Commerce membership help you undertake new actions in this matter?

The British Chamber is a space to connect, on my opinion that is the most important benefit of the Chamber membership.

Through the committee I have had the opportunity to meet different organisations from the public and private sector that have supported me to develop sustainalibity initiatives in my company.

It is also a good environment to exchange with British delegates, businesses and the British culture in general.

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Currently is not enough to measure companies performance only with economic indicators, looking into social and environmental performance is also important and beneficial for companies.

Photo by Peruvian-British Chamber of Commerce

PARTNER EXPERIENCE

CORPORATE FINANCE WILL BE REPLACED BY SUSTAINABLE FINANCE

Rodrigo QUEZADA Advisory Director www.tgs-canessa.cl

Sustainability is a compelling subject! A few years ago, this issue was merely a challenge; today, it is a priority for international organizations, governments, and businesses.

This article does not attempt to justify or vindicate any global strategies and definitions that focus on SDG objectives (United Nations, 2015) or periodic reviews conducted in Forums such as COPs and others; it instead seeks to explain how they are applied within organizations that quickly adapt to the growing need to contribute to a more sustainable world in increasingly global markets demanding products and services with their unique “sustainability” branding.

The structuring and financing of projects is a part of corporate finance, and in doing so, we are passionate about sharing our clients’ challenges to make their businesses and projects more robust and efficient. In recent years, after applying the traditional concepts and methodologies of Value Management Office (VMO), we have come to understand it is also essential to incorporate ESG (Environmental, Social, and Governance) criteria in the pursuit of excellence, sense of urgency, and transcendence of value for our clients.

This approach represents a pragmatically advanced and creative strategy for managing Stakeholder assets, first internally, in the structuring stage of the projects, then

externally, in the search for financing to execute the tasks. In our current professional practice, to access external funding, specifically from Stock Markets, the structuring of the projects must follow the models of “business sustainability” with already incorporated ESG criteria into the strategy, observing “Guidelines for the issuance of green bonds, social and sustainable” indications that many local Stock Exchanges have published complying with international financial or sustainability organizations guidelines.

We hypothesize that a new “business strategy” must integrate ESG criteria into its primary components: Corporate Strategy, Business Model, Strategic Plan, System of Indicators and Reporting, and Verification and Validation of Requirements.

The parallel and obligatory application of the mentioned elements leads us to think that corporate finance will soon be known as “Sustainable Finance.” From this point forward, the search for financing previously available for standard projects will be restricted to those with the new sustainability outlook.

What should be done? We hypothesize that a new “business strategy” must integrate ESG criteria into its primary components: Corporate Strategy, Business Model, Strategic Plan (Transformation/Transition), System of Indicators and Reporting, and Verification and Validation of Requirements.

This new approach calls for the participation of Senior Management and Experts who, utilizing concepts and methodologies such as Transformational Consulting (TRS: Transformation & Restructuring Services), will reenergize the business cycles of companies, ultimately initiating the transition towards Sustainable Finance.

The time has come for global networks supporting enterprises to promote multidisciplinary workspaces, known as Interest Groups or Think Tanks, to develop guidelines with elements that foster reviews and audits. International and local regulations already stipulate incorporating and including policies in Financial Reports.

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PARTNER EXPERIENCE

BUSINESS ETHICS COULD SAVE US FROM HEAVIER REGULATION?

Jonathan FRANKS Principal & Head of Professional Ethics www. hillierhopkins.co.uk

“There’s nothing neither good nor bad but thinking makes it so.” (W Shakespeare, Hamlet, c1600). Although the context of this quote was in an effort by Prince Hamlet to address how to deal with the murder of his father, it speaks to the broadest of debates in business, and the oldest of questions: what is good and what is bad? According to Shakespeare, it is all a matter of context and perspective.

Businesses around the globe deal with this question daily. At the time of writing, a battle is brewing between regulators and global giants such as Meta (Facebook), which suffered a $1bn fine for breach of data regulations. The question of the flow of data looms large, as data has become the new real estate. To make economic sense data needs to flow to people prepared to pay for it, yet personal privacy conflicts with this need. This is not the first regulatory battle, and environmental, social and governance (ESG) will be the next, but in it we see how business interest can conflict with consumer interests.

Regulatory despair

As I talk to many businesses around the world, they share an element of despair at the number of rules by which they must abide. Procurement departments require suppliers to provide a short book explaining how they satisfy financial, IT security and ESG requirements. Health and safety, engineering, building and professional regulations stifle

imagination and creativity. James Watt could never have invented the steam engine under current regulations. GDPR rules have been implemented with such fervour as to make it impossible to talk to your own bank. Each new rule or regulation places a cost on business and slows down their ability to move to commercial success, as ultimately, it is the consumer who must pay for all these protections. This can price many products out of reach. Too much regulation, and business will grind to a halt. It isn’t hard to imagine that, in a world of too much regulation, we might have to prepare a risk-assessment before we get out of bed. Most of us would roll over and stay asleep.

Foto by Unsplash

If our clients focus on their environmental, social and governance targets before they become law, and engage with regulators positively, they might avert unnecessary future over-regulation.

Go to the other extreme, and we create what economists tell us is a ‘perfect market’, where everyone knowns everything about everything and everyone all the time. This too can never be a reality, and thank-goodness for that! No business would ever be done, because everyone would know what everything is worth to the buyer and the seller, and all forms of bargaining would cease. In theory, that would be a good thing, but every business owner knows that risk gives rise to reward (hopefully), and without risk, capitalist markets inevitably must fail. Where is the place for risk and arbitrage when there is perfect knowledge?

So, if excessive regulation would grind business to a halt, and excessive free market knowledge would do the same, in a world where data is the commodity most coveted, should we assume that there is a central point, a ‘sweet spot’ which leads to the optimal environment? If this is the case, how do businesses find this sweet spot?

Positive collaboration

One of our core values at Hillier Hopkins, there is a role for business-owners to play here, for many reasons. Before I can address this, however, we need to consider how regulations come about, and why so many of them are impractical and ill-conceived. In general, regulations come about because governments perceive a problem. The problem may be to do with the independence of auditors, the construction of buildings, environmental issues, social impacts, governance, or a myriad of other problems. A regulation is often developed by intelligent, well-meaning people who have limited real-world experience in the area where the regulation is applied – government officials, usually advised by lawyers.

But usually, regulators consult with the industry they will affect, and the responses to consultation are usually given by the largest firms and trade associations who have their own self-interest to protect, and so their answers to consultations are commonly in the form “yes, and…”; they want to be seen to positive about new rules.

If, however, smaller businesses respond directly to consultations, their voices will be heard, and they may be able to influence what government imposes upon their industry. Silence is taken as agreement. So the first thing businesses can do is to engage with regulators or government and take the time to be heard, to help form any new rules.

The role of business ethics

Yet there is another, more positive action which businesses can undertake. If, as I suggest above, regulations arise because of a problem which needs to be solved, businesses can act to prevent the problem arising in the first place. If we go back to Meta’s enormous GDPR fine, the regulations which they seem to have breached only arose because of behaviours which were historically thoughtless (at best) or (at worst) exploitative. If internal governance had considered if these behaviours were ethically appropriate, perhaps the need to regulate could have been avoided.

And it is this that brings me to a simple conclusion: business ethics – simply knowing right from wrong - can act to protect businesses from the worst excesses of government interference. Shakespeare’s words might be re-organised to say it is thinking that allows us to distinguish good from bad. By considering the impact of our business’s actions on the wider society, including the environment, we might avoid unnecessary regulation.

And if you’ve ever wondered why the TGS network is so committed to reaching ESG goals and is developing the tools to help our clients reach these goals, it is to help them before the heavy hand of government forces them to do so in a disruptive manner. If our clients focus on their environmental, social and governance targets before they become law, and engage with regulators positively, they might avert unnecessary future over-regulation.

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PARTNER EXPERIENCE

TAXATION OF CRYPTO ASSETS IN ARGENTINA AND THE SOUTH AMERICAN REGION

Javier Ignacio FUENTES Tax Manager www. pgyk.com.ar

Almost a decade has passed since financial operations on cryptocurrency were started. At the same time, its definition, legislation, and tax treatment have only recently been incorporated into different nations’ economic and tax laws.

The complexity of the diverse operations made it difficult to tax such a wide range of activities, particularly those derived from blockchain technology. Nevertheless, cryptocurrency tax study has persisted despite the reasons mentioned above.

This article will discuss the situation of investors on digital currencies as miners consider the crypto generation of assets as a service that should be subject to regular taxpayer laws.

Most nations concur that crypto assets should be subject to income tax. Brazil, Colombia, Peru, Chile, and Argentina are Latin American examples of this novel taxation policy. There is also a consensus that this form of asset should not be subject to consumption taxation (the value-added tax approach).

However, each country has a distinct conceptualization of digital currency. Crypto assets are called virtual assets in Chile and Mexico, intangible assets in Colombia, and movable assets in Peru.

Since 2018, digital investments have been subject to taxation in Argentina, albeit not very precisely due to a lack of accurate definitions. The terminology inaccuracy has resulted in affidavits omitting operations and ownership. The results of operations on crypto assets (including digital currencies) are subject to taxation, with particular consideration when they turn into losses (profits generated by other activities cannot offset them). The standard tax rate is 15%.

We consequently observe that the basis for taxing crypto-asset transactions as income tax is being established; the policy puts them in the same category as any other financial transaction comparable to securities.

Individuals’ holdings of assets (including crypto-assets) as of December 31st each year are subject to taxation under an Argentine law that fails to define crypto-assets more extensively. It was not until early 2022 that the revenue authority determined the status of these assets:

“Cryptocurrencies can be regarded as a new class of non-traditional financial assets based on blockchain technology; they consist of an electronic annotation offering the right to a particular amount of money. They can be classified as securities because they share the common traits securities have. Both are thus considered securities incorporated into a registry of account entries (the blockchain in the case of cryptocurrency). Both assets are also homogeneous and expendable goods in the market.”

This new type of asset is nothing more than another investment and security for the Argentine tax authority.

Cryptocurrencies are a subspecies of crypto assets in the eyes of the tax authority, which submits these operations to the same tax treatment applied to securities.

Recently, a bill for the EXTERIORIZATION OF ARGENTINE SAVINGS has been submitted to the Congress of Argentina; the text includes an obligation to regulate national and international financial assets. This regulation incorporates crypto assets, cryptocurrencies, digital currencies, and any equivalent instruments of economic value, as well as all types of rights in the country and abroad.

In the case of Brazil, the exponential development of these operations pushed the country’s tax authority to impose fiscal regulation on digital operations, imposing a tax on cryptocurrency transactions exceeding USD 6,000.

We consequently observe that the basis for taxing crypto-asset transactions as income tax is being established; the policy puts them in the same category as any other financial transaction comparable to securities. Argentina’s tax authority has consequently set cryptocurrency taxation under the personal property tax figure.

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WE SPANIARDS ENJOY SAYING, “SPAIN IS DIFFERENT.”

Enrique ZUGASTI Head of Tax www. tgs-edisa.com

We do not say it with the same sense of national pride Americans display or with the satisfaction of a dominant industrialized economy such as the German, nor with the deep respect for tradition the Japanese cherish. With amused resignation, we say it without arrogance, mindful of our illustrious past and immense creative potential, which is only surpassed by our limitless capacity for selfsabotage. Spain is akin to a great artist in the twilight of his career: full of lights and shadows in constant contradiction, it continues to advance due to strokes of genius and an earnest desire to live.

Otto von Bismarck once remarked, “Spain is the strongest country in the world; the Spaniards have attempted to destroy it for centuries and have failed.” This ongoing inner conflict has existed since the advent of history. Since the 10th century B.C., Greeks, Phoenicians, and Celts had been at war (among themselves and with each other), passing through the Punic wars (between Carthage and Rome) between the 3rd and 2nd centuries B.C. (during which Iberian nations fought on both sides). The fall of the Roman Empire and the arrival of the Muslims in the 8th century A.D., followed by the Christian reconquest and the establishment of the unified crown of Castile and Aragon in the 15th century A.D. (the prototype of modern Spain), comprise a period of more than two millennia of internal conflict in Spain.

The union between the crowns would have provided a short period of peace to a region that finally attained integration. However, we decided to export our war fervor to half the world. We created an empire that stretched from the current Philippines through North Africa, much of Europe, and much of the Americas; we managed to remain faithful to our Spanish style, fighting outside our borders and among us without a century’s rest until the twenty-first century.

With amused resignation, we say it without arrogance, mindful of our illustrious past and immense creative potential, which is only surpassed by our limitless capacity for selfsabotage.

“ ”

In pursuit of an unrivaled diplomatic base, Spain could have retained the pioneering commercial spirit of the Phoenicians, the social organization of the Roman Empire, the leading science of the Muslim empire (leaders in mathematics, medicine, and astronomy), the most extensive maritime network in history, the industrial revolution that was taking place in the Spanish territories in northern Europe, and the connections with the Church of Rome and half the world. Time after time, we continually discarded almost everything, only to reinvent ourselves later.

And herein lies the great value of our people: regardless of how often we shoot ourselves in the foot, we are always capable of presenting the best version of ourselves without losing our optimism. After losing the war in Cuba to the U.S. Navy, the Spanish coined the idiom “way more was lost in Cuba, and we returned whistling,” which precisely encapsulates this dichotomy. This tenacity and unique entrepreneurial spirit have produced three Roman emperors (Trajan, Hadrian, and Theodosius), philosophers (Seneca or Averroes), exceptional writers (Cervantes, Lope de Vega, Lorca, and Delibes), two Nobel prizes in medicine (Ramon y Cajal and Severo Ochoa), the invention of the submarine, and the gyroplane (the forerunner of the modern helicopter), world-class painters such as Picasso, Velazquez, Golla, and Dali) as well as reference architects (Gaudi or Calatraba) and historically remembered athletes.

This Spanish DNA makes us the first country in the world for organ donations, the country with the highest life expectancy, the second country in terms of the number of tourists per year, one of the five countries in the world with the best high-speed railway network, and one of the five countries with the highest generation of renewable energy; in short, a country that will never stop creating opportunities despite itself.

Current Spain is a reflection of its past, both positive and antagonistic. A nation that prefers facing the future to remembering the past. Yet it looks forward with enthusiasm and inventiveness. Spain will always forge opportunities and welcome visitors and residents with open arms. It is a country to be familiar with, a place to reside and invest, and a nation that never falls but will always rise—a nation for everyone.

We Spaniards are fond of saying, “Spain is different”.

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PARTNER EXPERIENCE

ESG INCENTIVES IN CANADA

Kalin McDONALD Managing Partner www.scpllp.com

Canadians are becoming increasingly invested in the sustainability and ethical impact of business operations; and corporate stakeholders are looking for more transparency on how companies manage and integrate ESG risks and opportunities into their business strategy.

Consequently, incorporating sustainable business practices that account for ESG factors has become a key focus for many Canadian organizations.

The Canadian Net-Zero Emissions Accountability Act— which became law on June 29, 2022—legislates the commitment to achieving these goals.

The Canadian Government has also recognized the need to do more to help Canadian businesses accelerate decarbonization, and have announced numerous tax incentives over the past few years that are aimed at achieving this. In fact, there are almost 150 green incentives and programs available in Canada.

Many of these initiatives and programs target specific sectors, including:

■ Manufacturing

Canadian manufacturers benefit from a number of programs aimed at adopting clean technologies, automating, and increasing energy efficiency.

■ Mining

Canadian mining companies are offered significant incentives to reduce emissions. The recent Federal Budget also included a 30% tax credit to support the exploration of specific minerals used to produce parts for zero-emission vehicles, clean technology, and semiconductors.

■ Transportation and logistics

Luckily for Canadian businesses, there are a growing number of tax and incentive programs that support the creation of sustainable and ethical business practices.

The Government of Canada has been clear in its intention to transition to a greener economy, and has set an GHG emissions reduction target of 40% below 2005 levels by 2030, and net-zero by 2050.

A number of incentive programs have been announced to help vehicle fleet owners and the transportation industry transition to electric alternatives—including a new purchase incentive program for medium- and heavy-duty zero-emission vehicles for businesses.

Budget 2023: Clean Energy Incentives

The 2023 Federal Budget announced on March 28, 2023 provided details on some new and previously proposed clean energy tax credits, such as:

Environmental, social and corporate governance factors play an important role in a company’s ability to create value.

The Clean Hydrogen Investment Tax Credit

The Clean Hydrogen Investment Tax Credit (CH Credit) is a refundable tax credit intended to help offset the cost of purchasing and installing “eligible equipment” for qualifying projects that produce hydrogen through electrolysis or natural gas.

The Clean Technology Investment Tax Credit

First announced in 2022, the Clean Technology Investment Tax Credit (CT Credit) is a refundable tax credit equal to 30% of the cost of eligible electricity generation systems, stationary electricity storage systems, low-carbon heat equipment, and industrial zero-emission vehicles and related charging or refueling equipment.

The Clean Electricity Investment Tax Credit

The Clean Electricity Investment Tax Credit (CE Credit) is a refundable 15% tax credit for eligible investments in nonemitting electricity generation systems, abating natural gas-fired electricity generation, stationary electricity storage systems that do not use fossil fuels in operation, and equipment for the transmission of electricity between provinces and territories.

The Investment Tax Credit for Clean Technology Manufacturing

The Investment Tax Credit for Clean Technology Manufacturing (CTM&P Credit) is a 30% refundable investment tax credit aimed at equipment used for the manufacturing and processing of clean technology (such as solar, wind, water, geothermal and nuclear) including the manufacturing of zero-emission vehicles and batteries, fuel cells, recharging systems, and hydrogen refuelling stations for zero-emission vehicles. The credit also applies to the extraction and certain processing activities related to lithium, cobalt, nickel, graphite, copper, and rare earth elements.

The Investment Tax Credit for Carbon Capture, Utilization, and Storage

The Investment Tax Credit for Carbon Capture, Utilization, and Storage (CCUS Credit) was first introduced in the 2022 Federal Budget and proposes a 60% tax credit for investment in equipment to capture CO2 in direct

air capture projects, a 50% tax credit for investment in equipment to capture CO2 in all other CCUS projects, and a 37.5% tax credit for investment in equipment for transportation, storage, and use.

Zero-Emission Vehicle Incentives

The Government of Canada offers point-of-sale incentives for individual Canadians to buy or lease a zero-emission vehicle (ZEV). Battery-electric, hydrogen fuel cell, and longer-range plug-in hybrid vehicles are eligible for up to a $5,000 rebate, and shorter-range plug-in hybrid electric vehicles are eligible for up to $2,500.

Sole proprietors and incorporated business owners can also claim enhanced Capital Cost Allowance (CCA) limits up to $55,000 for ZEVs used for business:

■ 100% after March 18, 2019 and before 2024,

■ 75% after 2023 and before 2026, and

■ 55% after 2025 and before 2028.

The Role of the CPA

Even with the numerous tax incentives and programs provided and proposed by the Canadian government, realizing ESG and climate change goals is still a major undertaking for Canadian businesses.

CPAs are well positioned to play an important role in helping organizations address many of the related risks, challenges, and opportunities.

In addition to ensuring that all reporting is accurate, transparent, and fully accounts for ESG factors; CPAs can also apply their business acumen, and skills in data analysis and risk assessment, to design internal systems and controls that better integrate ESG issues into a company’s financial and strategic decision-making processes.

Climate change is one of the most pressing issues facing the world today, and Canada is committed to supporting ESG issues that enable the transition to a greener and more sustainable economy.

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PARTNER EXPERIENCE

CUSTOMER-FOCUSED DIGITAL TRANSFORMATION: A GROWTH ENGINE FOR BUSINESSES

In the current digital era, businesses must adapt to a constantly changing business environment. In this new era of business, digital transformation is necessary for survival and growth. However, more is needed to implement cutting-edge technologies to achieve significant business growth. It is essential to adopt a customer-centric digital transformation strategy whose primary objective is to undestand and meet the requirements and expectations of customers as well as to improve their interactions with our organizations vastly. In this article, we will discuss the significance of this approach for businesses and how it can aid in their development. We will also provide examples of common errors companies make when implementing a customer-centric digital transformation strategy.

Implementing a customer-centric digital transformation strategy requires a deep knowledge of the customer requirements, desires, and behaviors. According to Davis (2022), understanding the customer is the first stage of a successful transformation. Companies must use advanced data and analytics to obtain insights to personalize and enhance the customer experience. Profound client understanding also requires abandoning traditional marketing practices in favor of digital marketing, which entails segmenting clients and creating innovative, straightforward, and practical proposals that can be customized to suit the preferences of each segment. Digital marketing allows you to communicate directly with consumers based on their preferences.

Customer-focused digital transformation is also about delivering an exceptional experience at every customer touchpoint; it requires companies to make substantial efforts to chart a new path toward an omnichannel strategy, providing the new type of experience customers are currently expecting. Smith (2021) states that “personalization and anticipation of consumer needs are necessary to create memorable experiences. In every interaction with a consumer, businesses must use technology to provide efficient, individualized service.”

Also, agility and adaptability are essential for growth in a business environment that is highly competitive and constantly changing. Johnson (2020) notes that “customerfocused digital transformation enables businesses to adapt to market demands rapidly.” Technology offers versatile tools and procedures that enable businesses to respond rapidly to changes and maintain their relevance in a business environment that is constantly evolving.

Companies can foster growth and remain competitive in a digital business world through a thorough understanding of their customers while delivering exceptional, quickly-adapting experiences.

Luis Andrés VARGAS Business Strategy & Digital Transrormation COSTA RICA

Despite the significance of having a customer-focused digital transformation strategy, many businesses have attempted digital implementation and failed. To avoid the same mistakes, it becomes crucial to learn why those companies failed. Here we list some of the most critical failures; in a subsequent article we will elaborate on those mistakes.

Some of the primary reasons businesses fail when implementing customer-focused digital transformation strategies are:

1. Organizations prioritize technology over people exposing an ineffective change management.

2. The strategy for digital transformation requires focus and definition.

3. Underestimating the need to invest in the skills and training of their current human resources and neglecting the need to attract human talent capable of operating in the new digital environment.

4. The perception that digital transformation is an undertaking rather than a strategy.

In summary, implementing a customer-centered digital transformation is essential for business growth. Companies can foster growth and remain competitive in a digital business world through a thorough understanding of their customers while delivering exceptional, quickly-adapting experiences. Johnson (2023) states that “implementing a customer-centric digital transformation strategy is not only a competitive advantage, but a necessity for every business seeking to be successful in the current business environment.”

References

Davis, J. (1922). Understanding the customer is the key to digital transformation success. 15(2) Journal of Digital Business, 45-62.

J. Smith (2021). Enhancing the Customer Experience through Personalization and Anticipation in the Age of Digital Transformation. 8(3), 112130, International Journal of Customer Experience.

M. Johnson (2020). Digital transformation that is customer-centric requires agility and adaptability. Strategic Management Journal, 42(4), pages 678 to 695.Johnson, S. (2023). The Duty

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NETWORK EXPERIENCE

SCALING SUSTAINABLE PROFITABILITY FOR PROFESSIONAL SERVICE FIRMS

Andrew MENZIES Vice-President International Development www.tgs-global.com

Takeaways from the TGS Madrid Conference 2023

IAB ‘rising star 2014’ network, TGS, celebrates its 10th anniversary. We’ve been lying awake at night strategizing about how to help our members become the professional service firms of the future.

70 participants from 27 countries met for the TGS conference with the aim of becoming a more profitable, attractive and socially responsible firm.

At last! We’ve moved from a compliance to an advisory mindset

Non-financial reporting requirements are becoming more demanding. In Madrid, TGS launched a beta-version of the TGS Lab Process, a diagnostic and advisory toolkit to upskill members to become the trusted ESG advisors for their clients.

The toolkit allows firms to collect data beyond the traditional audit remit, asking about people, profit, planet and leadership activities.

The diagnostic absorbs the stress clients experience as they prepare for ESG compliance requirements. It is also a base for two of the most value-adding conversations professional service firms can have with their clients:

1. Why should we continue to work with you?

2. Could the TGS network be helping you with services beyond our current remit?

During the TGS Lab Process workshop, Niels Van Raak, Partner of TGS member firm Vermetten Accountants and Adviseurs said, “The ability to deliver ESG advisory services is not futuristic, it is a licence to operate. It’s currently our biggest value-driver”.

Effective leadership is an olympic discipline

Employees with high levels of technical expertise are often promoted to leadership roles. However, few of them are trained to excel in leadership positions and even fewer work regularly on their leadership capabilities.

Reading about how to run a 4-minute mile will not get you closer to joining your olympic team. It’s the same with leadership. TGS Madrid 23 was a gym for developing competition-level leadership capability.

Following inspirational conference workshops with regular, short online training sessions makes sure conference takeaways become quantifiable performance improvement. TGS managers and leaders stay in medalwinning form.

“Training with like-minded firms from around the world gives us access to a wealth of knowledge, expertise, and innovative ideas. This has given us the confidence and ability to lead more complex projects and offer a broader range of services to our clients.”, Anamaria Diaconescu, Manager in TGS Romania.

Entrepreneurial network members need ownership and freedom to succeed

In Madrid, Fabrizio Aldrighetti, Managing Director of TGS South Africa, gave a thrilling presentation of his

development plans as a newly elected TGS Board member, Strategic Council member and Regional Leader Africa.

TGS members have the unique opportunity to become shareholders of the network. More than half the TGS members are currently shareholders and are involved directly in the governance and strategy of the network.

Members of a traditional network can feel like frustrated passengers, following rules and constraints. That’s not a good fit for entrepreneurs like Fabrizio and the 44 other TGS network member shareholders.

TGS is run by and for its entrepreneurial members who like to own, lead and have agency in the projects they are involved in.

One-to-one is good, one-to-many is exponential

The final workshop of Madrid 23 brought the conference topics together to use the power of an international brand to gain institutional recognition. One-to-one networking at a conference is good but one-to-many networking through presentations to super-referrers is exponentially better.

In Miami, we will be showing how we took the TGS Lab Process diagnostic and advisory toolkit, created clientfriendly content around it, presented this to super-referrers such as the European Commission, commercial banks and professional bodies who in turn presented the service to

Photo by TGS “TGS MembersMadrid 2023”

Foto by Adobe Stock

many, many potential clients.

TGS is the professional service network, owned by its members, that helps firms grow profitably and sustainably.

The TGS mission was aspirational when it was created 10 years ago. Now we do what we say.

It’s time to look (again) to the future for a mission statement that will guide us along the next ten years.

We’re not sure what our new mission statement will be yet but it is clear what will be shaping its creation.

1. TGS member/owner firms will create the new mission statement

2. TGS is committed to helping achieve the UNCG SDGs by 2030 so the mission will focus on equality, diversity and sustainability

3. The mission will be continually reviewed and modified by TGS members stretching their advisory muscles in light of the data collected.

TGS members will meet again in regular online sessions and then again physically in Miami this November to decide how to set and manage development goals.

What will your firm look like in 2033 and how are you setting and managing your goals?

You are welcome to join us in our Miami conference or during one of our leadership webinars through TGS U https://tgs-global.com/tgs-u/, our online learning platform.

TGS members have the unique opportunity to become shareholders of the network. More than half the TGS members are currently shareholders and are involved directly in the governance and strategy of the network.

THINK GLOBAL SUSTAINABILITY

TGS is a premier network focused on entrepreneurial companies for long-term relationships. Participant of the UN Global Compact.

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