ESG considerations are increasingly becoming an integral part of corporate strategies. However, the implementation of ESG initiatives can incur significant costs, necessitating appropriate allocation within a multinational corporation. Allocating the costs of ESG measures, including CO2 certificate trading, requires transfer pricing approaches that both support the company's strategic objectives and comply with tax regulations.

It has been argued for many years that sustainability is the new profitability. Companies must balance the returns and profits generated with the resource use, methods, and behaviours employed to achieve them.

The main issue of ESG in connection with transfer pricing is the question of who takes on which functions, bears which risks and uses which tangible or intangible assets. This provides the basis for appropriate pricing of cross-border, inter-company transactions. In the context of sustainability and ESG, the question arises whether these are entirely new functions that companies must establish for the first time.

Topics such as EHS (Environment, Health, Safety) have been around in manufacturing companies for many years. What is new is that, in addition to the control-relevant variables of sales, profit and earnings contributions, non-financial aspects such as environmental costs or CO2 prices are increasingly playing a role in corporate management and must be included in the individual profit and loss statements.

It is therefore essential to regularly review which additional ESG topics are being incorporated into corporate management. In addition to economic and sales-based metrics, companies are increasingly required to not only fulfil their function, but also to make their contribution to society measurable.