ESG and Corporate Compliance — Are You Ready?
Welcome to the CLEAResources Blog! Now that the New Year is in full swing, the usual pace of our days resumes but there is so much for corporate compliance officers to track with emerging trends and a new administration. Like the weather, corporate compliance guidelines, advice, and best practices are always evolving. CLEAResources will be highlighting the good, the bad, and the ugly right here on the CLEAResources Blog.
Today, we focus on ESG – “environmental, social, and governance.” ESG represents a set of corporate values becoming increasingly important to investors and boards because it is important to consumers. ESG is particularly relevant as we enter 2021, making a predictable (if not necessary) surge into corporate compliance and ethics priorities. Why? Because consumers say so.
There is no doubt the concepts behind ESG, like CSR, are already strongly rooted in compliance and ethics, but businesses need guidance on how to align their business goals with ideal ESG practices. Educating the board and executive management on ESG is key, and the Chief Compliance and Ethics Officer should be at the ready to do this. Karen Alonardo, Vice President of ESG Solutions for NAVEX Global, shared that two keys to scalable ESG management will be transparency and relevant data. This data includes information on diversity, inclusion, executive and employee compensation, working conditions, climate risks, among other ESG areas. While we have long maintained that good governance is good business, ESG goes a step further to expressly name environmental and social issues as values companies need to address as “good business.” Warburton Advisors provides further insight in an online article about why compliance professionals should now seriously consider incorporating ESG principles in their assessments and compliance advice for corporations.
While it may seem evident to experienced compliance professionals that ESG should be a key corporate priority, many businesses will not know how to identify and develop the necessary data and artifacts to satisfy investors’ interests and will need a compliance professional to assist. As we settle into a new year still in the face of a global pandemic, the commercial atmosphere feels both daunting and promising. Ethical conduct and ESG values have not historically been deemed necessary for business growth, but after 2020 the playing field has changed. Are you ready?
"A Coming Wave of Investor Interest in ESG Reporting” by Karen Alonardo for “Top 10 Risk and Compliance Trends for 2021" NAVEX Global.
"Why Should Compliance Officers Consider ESG Principles?" https://warburtonadvisers.com/why-should-compliance-officers-consider-esg-principles/.