Fiscal transparency: Etica Funds sets its sights on Cisco

Fiscal transparency: in June 2022, Etica Funds, Greater Manchester Pension Fund and Missionary Oblates filed a motion with shareholders of Cisco Systems.

The fiscal transparency motion presented to Cisco

The proposal calls for the company to publish a tax transparency report aligned with the GRI Tax Standard, including a tax strategy and a country-by-country breakdown of tax and financial information.

The motion follows what has been seen as a “historic” vote in May 2022 at the shareholders’ meeting of Amazon, in which 21% of independent shareholders voted in favour. A number of Microsoft shareholders also recently filed a similar proposal.

In filing the motion, Etica Funds was supported by Pensions & Investment Research Consultants (PIRC), as part of an initiative in collaboration with the Center for International Corporate Tax Accountability and Research (CICTAR). The initiative aims to develop engagement with companies in technology sectors that have a history of aggressive tax strategies, as well as sectors with significant exposure to government contracts and dependent on tax revenues.

Why Cisco Systems?

Cisco Systems is a multinational company registered in San José, California (USA) which supplies telecommunications and IT networking devices.

trasparenza fiscale

The company has published a report that presents its global tax strategy. However, according to some investors and analysts, the document does not provide sufficient information on governance and risk management. Furthermore, Cisco does not publish its profits or tax payments on a country-by-country basis for its operations on markets outside the US. This makes it difficult for investors to assess the company’s tax risks and it is not clear whether the company adopts fiscal practices that guarantee the creation of long-term value both for the business and for the communities in which it operates.

The precedents

Cisco’s approach to taxation has been repeatedly discussed by tax authorities at a global level. In 2021, TaxWatch stated that Cisco avoided paying £68 million in tax in the United Kingdom in 2019[1].

In 2018, following the entry into force of the Tax Cuts and Jobs Act, Cisco repatriated $67 billion in cash holdings back to the US[2], one of the largest repatriation plans seen from a US company[3]. The amount raised questions about Cisco’s fiscal planning and sustainability strategies, in particular as regards the excessive use of artificial legal structures to reduce tax obligations in the countries in which it operates. Shareholders need greater transparency to assess the risks associated with the company’s approach to taxation and the long-term implications for their investments.

Why is it important to facilitate engagement on fiscal transparency?

Responsible investors like Etica Funds call for fiscal transparency because this leads to greater fiscal justice, increasing the income that governments can invest in welfare (education, healthcare, social support), innovation and environmental protection.

Fiscal transparency promotes growth. Improvements in infrastructure, the rule of law and the provision of basic services are a fundamental element of a functioning economy. The Commission on Growth and Development chaired by the Nobel laureate economist Michael Spence discovered that countries with the best performance in terms of growth are those that invest the highest proportion of their GDP into public services compared to less well performing economies 4. Essentially, this means that stable sources of tax revenue are essential to market growth. For more information on Etica Funds’ commitment see this article.

Tax risk is a major issue at company and systemic level.

And that’s not all, for investors that “tax risk is a major issue at company and systemic level. At company level, with the tightening of regulations and shifting public expectations, tax evasion has led to substantial sanctions and has proven growing reputational, governance and financial risks. At systemic level, taxation – if improperly managed – can threaten market competition, economic growth and sustainable development, and thereby jeopardize total portfolio returns,” explains Aldo Bonati, Stewardship and ESG Networks Manager at Etica Funds. “The pandemic offered investors another opportunity to think about how to reduce the risks deriving from companies’ fiscal practices to a minimum and meet urgent social and environmental needs. Between 2017 and 2019, Etica took part in the PRI collaborative engagement on corporate tax transparency, in which Cisco was Unresponsive. Since then, we have continued to engage with the company on its fiscal practices with little success. We trust that this motion will help us to obtain more complete and relevant tax information from the company. To this end, we invite all long-term investors interested in obtaining more transparent and standardised data to support the motion in the vote.”

Governments, consumers and investors are increasingly demanding greater tax transparency

“More and more companies are committing to greater transparency of fiscal information, and the gap between companies that are leading the way and those that are lagging behind is constantly growing. This corporate commitment reflects the changing expectations of investors and communities on responsible tax practices,” says Katie Hepworth, Tax Lead Manager at PIRC. “In light of the historic reforms to the global tax system that are currently being undertaken to ensure that companies contribute fairly to the tax revenues of the countries in which they operate and generate profit, businesses must at the very minimum provide investors with the tools to assess the risks of their fiscal strategies. This filing recognises that Cisco is way behind the leading companies in not allowing its investors to adequately manage the risks of the company’s fiscal strategy and the governance mechanisms it has adopted to monitor and mitigate those risks.”

Learn more

PIRC is Europe’s largest independent corporate governance and shareholder advisory consultancy with over 25 years of experience in providing proxy research services to institutional investors on governance and other ESG issues. Its client base includes institutional shareholders, faith-based investors, trade unions and other responsible investors.

The GRI Standard are most widely adopted global sustainability reporting standards in the world. 93% of the 250 largest companies in the world publish sustainability data. The GRI standards are used by over 4,000 organisations in more than 90 countries and are often citing in non-financial reporting legislation, such as the EU Directive on Non-financial Reporting. The GRI Tax Standard was developed by a technical committee of experts representing various stakeholders. It was developed in response to investors’ concerns that current tax reporting does not adequately consider the fiscal planning practices of a company or assess the risks associated with those practices. The GRI Tax standard envisages: the public country-by-country disclosure of commercial activities – including the number of employees, remuneration, revenues from related parties and third parties, profit and taxes – and information on fiscal strategy, governance and risk management that meet stakeholders’ reporting expectations.


[1] Eight of world’s richest tech titans ‘avoided £1.5billion UK tax in just one year’

[2] Cisco to Repatriate $67 Billion Under New Tax Law

[3] Trump Tax Still Not Trickling Down To Workers

[1] Commission on Growth and Development, “The Growth Report: Strategies for Sustained Growth and Inclusive Development Report,” The World Bank, 2008 at


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