Annual report 2016: Our contribution to the UK economy

Our total impact: £4.55bn

We’ve used our unique Total Impact Measurement & Management (TIMM) framework again this year to monetise our economic, tax, social and environmental impacts. It’s one of the ways we’re providing greater transparency for our stakeholders, and improving the information we use for decision-making.

TIMM is a relatively new framework, and doesn’t yet account for all of our impacts1.

However, it has given us a concept and language that help ensure consideration of the social, environmental, and tax implications alongside the financial business case as we manage our day to day operations. And, it’s helped us to understand the relative importance of different aspects of our business, and where to focus our efforts to decouple business growth from our environmental footprint.

2016 results

We estimate that our net impacts this year total £4.55bn, 32% more than our revenue, and an increase of 8% this year.

We categorise these impacts into ‘direct’, ‘indirect’ and ‘induced’, shown by the shading on each bar.  This year, our indirect and induced impact, together, amplify our direct impact by 67%.

The analysis shows that, once again, our total impact is dominated by our significant positive economic (£2,701m) and tax (£1,760m) impacts, with social impact at £231m.  By comparison, our negative environmental impacts, at -£141m, are relatively small.

You can find a deeper analysis of our TIMM results by indicator, including year-on-year changes, on our Corporate Sustainability website.

1. 2016 results include all direct, indirect and induced impacts for all economic, tax, and environmental indicators. Social impact calculation currently limited (see social impact section). All figures refer to impacts before any estimates of the ‘counter factual’ (i.e. what the impact might have been if PwC didn’t exist).

Our total impact: £4.54bn

Our economic impact: £2,701m

Our total contribution to the UK economy is driven by our economic impact, which increased by 8.5% this year to £2.7bn. 62% of this comes from the jobs we create and 32% from the profits we make.

Over half of this economic impact is from our direct operations. The rest arises from our procurement (indirect impacts), or as spending by our people, or by the employees of our suppliers, in the economy (induced impacts).

The largest share of the increase in economic impact this year relates to our business growth. In particular, direct payroll increased the greatest amount (£93m, 12%), as we continued to employ more people to meet growing market demand for our services.  Significant investments in new technology and software to aid the delivery of our work also drove up direct investments by 13%.

These investments in our people and our business also translated into corresponding increases in indirect and induced impacts as we spent more with suppliers.

You can find a deeper analysis of our TIMM results by indicator, including year-on-year changes, on our Corporate Sustainability website.

Our economic impact: £2,695m

Our tax impact: £1,760m

We also make a positive contribution to the UK economy through the taxes arising from our business. For several years, we’ve reported the aggregated taxes we pay and collect on behalf of government, using our Total Tax Contribution (TTC) approach.

To arrive at our total tax ‘impact’, however, we add two more items: first, the taxes our suppliers pay, relating to the goods and services we purchase from them (indirect taxes); and, second, the taxes that our people and the employees of our suppliers pay through spending their personal income in the general economy (induced taxes).

In 2016, our total tax impacts increased by 6.4% to £1,760m. The increase has largely been driven by the improved financial performance of our business this year, which flows into each of our impact indicators.

£1,124m (64%) of this came from direct taxes on people, as well as production and profit. It increased by 11% this year, largely as a result of employing more people.  

Our direct environmental taxes, however, decreased by 20% as we reduced our energy consumption, and switched to a 100% renewable electricity tariff which is exempt from the government’s CRC Energy Efficiency Scheme.

As with our economic impact, our indirect and induced tax impacts increased as we increased our payroll and spent more with our suppliers than in 2015.

You can find a deeper analysis of our TIMM results by indicator, including year-on-year changes, on our Corporate Sustainability website.

Our tax impact: £1,758m

Our social impact: £231m

As in 2015, we’ve quantified our social impacts. These relate to a contribution to education in the UK via the investment we make in training our people, and the contribution we make to community livelihoods through our support for the social enterprise restaurant, Brigade.

Our main social impact is the incremental Gross Value Added (GVA) generated from people who train with us and then go on to work in other jobs in the economy at large. So far, we’ve measured this impact only for our accountants, with a value of £231m in the UK this year, up 19% on 2015.

We’ve also valued our contribution from the social impacts generated by our social enterprise Brigade, under the Community Livelihoods category.  They totalled £0.5m in 2016.

We currently don’t have the data required to measure other, social impacts reliably, although we continue to advance our methodology for evaluating our community impacts by measuring the outcomes of our programmes and will report on these, in full, next year.

You can find a deeper analysis of our TIMM results by indicator, including year-on-year changes, on our Corporate Sustainability website.

Our social impact: £231m

Our environmental impact: £141m

As a professional services firm, our direct environmental impact is small when compared to many other industries, but we make a concerted effort to minimise it all the same. It’s part of being a responsible business.

Historically most of our focus has been on decoupling the impacts directly associated with our operations from the growth of our business. Our total impact analysis, however, emphasises the scale of our indirect and induced impacts – 19.9% and 80% of the total respectively – and we’re working to positively influence these too.

  • Our total environmental impact of PwC UK remains small (£141m) relative to our economic, tax, and social impacts
  • Most of it is driven by our greenhouse gas and other air emissions (63%), and land use impacts (26%)
  • In 2016, our total environmental impact increased 17%, mainly due to a higher social cost of carbon and increased spending with our suppliers
  • Only 0.1% of our environmental impact is ‘direct’: we’ve reduced it again this year, by 31% as we continue to improve our buildings and moved to a 100% renewable electricity tariff
  • Our indirect and induced impacts increased as we spend more with us suppliers, and paid our people more than in 2015, although less than the increase in supplier spend as our spend has shifted from environmentally intensive sectors such as construction towards more office administration/business services sectors which have a lower environmental impact
  • Indirect impacts are now more than 100 times our direct, reinforcing the importance of our supplier sustainability programme
  • And our induced impacts are over 750 times more than our direct impacts: so we’re working on options to address them

A deeper dive of our TIMM results by indicator can be found on our Corporate Sustainability website

Our environmental impact: £141m

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