Asset Managers Shift Focus to Companies with Small Tax Bills, Seeing Financial Risk

Asset managers are growing increasingly concerned about companies with notably low tax liabilities, viewing them as potential financial risks that cannot be overlooked.

Firms such as Federated Hermes Inc., Robeco Institutional Asset Management, Van Lanschot Kempen NV, and Natixis Investment Managers’ unit Mirova have started to analyze stocks based on their tax histories, with some companies even being excluded from investment portfolios as a result.

This trend reflects a shift in the investment landscape, where tax practices are now being considered significant factors in investment decisions.

Investors are becoming more wary of companies with suspiciously small tax bills, as they perceive them to pose a hidden financial liability that may impact returns.

There is a growing emphasis on transparency and ethical tax practices in the investment community, leading asset managers to scrutinize companies’ tax behaviors more closely.