Abstract

This study examines the relationship between sustainability management and corporate tax aggressiveness, proxied by discretionary book-tax differences (DD_BTD), among 56 Nigerian energy-intensive firms between 2018 and 2024. Using 392 firm-year observations and panel regression analysis, the research investigates how resource productivity index (RPI), deferred environmental liabilities (DEL), human capital investment intensity (HCI) and social investment ratio (SIR) influence tax planning. Descriptive statistics reveal mild average tax aggressiveness (mean DD_BTD = 4.37%) alongside substantial heterogeneity in sustainability investments. Regression results show that environmental proxies (RPI and DEL), grounded in the natural resource-based view, are not significantly associated with tax aggressiveness, suggesting limited disciplinary effects of eco-efficiency and liability recognition. In contrast, both HCI and SIR exhibit strong, statistically significant positive relationships with DD_BTD. Drawing on legitimacy theory, this finding suggests that firms employ social and internal investments as ‘moral capital’ to shield aggressive tax practices from scrutiny. Stakeholder theory further explains that such spending aligns with stakeholder expectations, even while masking opportunistic fiscal behaviour. The political cost hypothesis reinforces this by showing how legitimacy-building investments reduce political costs, thereby enabling tax aggressiveness. The study concludes that, in Nigeria, social sustainability maturity paradoxically facilitates rather than constrains aggressive tax planning.