In this episode of The Ethics Experts, Nick welcomes Willian Andrade. Willian Lo is a Compliance Coordinator in Sodexo On-site Services Brazil, with over 9 years of relevant experience. He holds CCEP-I certification by the SCCE (Society of Corporate Compliance and Ethics, Juris Doctor by Catholic University in São Paulo (Brazil) and he is currently concluding a Specialization in Criminal Law.
OFAC issues Ethiopia Sanctions Regulations in relation to the human rights crisis in the country.
Tom Fox welcomes Joshua Nunziato on this episode of the ESG Report. Joshua is an author, and an Instructor in the Social Responsibility and Sustainability division of the Leeds School of Business. He joins Tom to talk about corporate leaders conducting ethical leadership, its role in ESG, and why ethical leadership is a must in the future business world.
Creating Ethical Leadership
Joshua created his Ethical Leadership course for corporate leaders to equip them with the tools and insight they need to understand the changes happening around them. “We really want to help leaders who participate in our program to understand that acceleration is really the new constant,” he tells Tom. Corporate leaders need to be able to respond proactively to changes and crises. The range of stakeholders has expanded, so the traditional approach to corporate director education is no longer going to work. Directors and corporate leaders need forward-looking tools to navigate their current environment.
The Relevance of Ethical Leadership in 2022
Tom asks Joshua to explain why a course on ethical leadership is needed in 2022. Joshua responds that emerging from the crisis mode of the pandemic comes with a range of challenges that board members have to face, including increasing interest rates, high inflation and uncertainty. Board members need to be able to situate their companies against these challenges and risks, ask the right questions and provide leadership that will drive their organizations forward.
The Role of Corporate Leaders in ESG
Sustainable leadership in ESG means that the needs and wants of the broad ecosystem of company stakeholders are being met with what Joshua calls, ‘compassionate pragmatism’. “Corporate leaders are able to weigh up and evaluate the comprehensive impact that their decisions are having on the environment on local communities, on their employees, on their suppliers, on their customers, and yes on their investors,” Joshua further explains. Compassionate pragmatism is also about taking in the impact, whether positive or negative, that corporate decisions may have, as well as managing what leaders can measure, and what they cannot. Leaders have to figure out what they value, and also what values they can gather as a business community that will drive them towards enduring prosperity.
America in Ethical Leadership
Joshua doesn’t see America taking the lead on ESG, or other sustainability issues; however he does see America leading relative to other economies that are trying to get their citizens into the global middle class. Innovation on various compliance and ethical issues is happening around the US, and this is because individuals are recognizing the need to respond. The impact of corporate decisions over the decades is being felt across the political spectrum. Scandals and breaches of ethics also have serious ramifications and consequences for businesses, and so it makes sense for leaders to step and lead with ethical conviction. Joshua’s role as a philosopher is to expand the moral imagination of the leaders he works with, so they can ask the right questions and consider sustainable leadership possibilities they otherwise may not have thought of.
Resources
Joshua Nunziato | LinkedIn | Twitter
In this episode of the FCPA Compliance Report, I am joined by fan favorite James Koukios, partner at Morrison and Foerster. In this episode we consider some of the key ABC issues in the always great MoFo Monthly Top 10 International Anti-Corruption Developments for November 2021. Highlights of this podcast include:
Resources
James Koukios on the MoFo website
November International Anti-Corruption Newsletter here
In today’s edition of Daily Compliance News:
I just delivered to LexisNexis the edits for the next edition of The Compliance Handbook, the single definitive one author volume on the design, creation, implementation and enhancement of a best practices compliance program. It will appear later in 2022. One thing that struck me in updating this seminal work is the innovation that has occurred and continues to drive the compliance profession. In addition to the evolution of the Department of Justice (DOJ) in its thinking about what constitutes a best practices compliance, the tools and strategies used by compliance professionals continues to evolve through innovation. I decided it was time to have another Innovation in Compliance Week to look at some of the newest business strategies which can be applied by the compliance profession to corporate compliance programs. My inspiration comes from MIT Sloan Management Review Winter Edition. Today, I want to consider platforms for compliance ecosystems.
In Setting the Rules of the Road, authors Ulrich Pidun, Martin Reeves, and Niklas Knust posited that putting the right rules in place to orchestrate a platform that creates value for all stakeholders is critical to help in an overall approach to manage risk. I have used their article as a starting point to look at the enhancement of compliance ecosystems.
What is a Compliance Ecosystem?
If you have ever sat in the Chief Compliance Officer (CCO) chair you know that your life is constantly juggling multiple balls in the air at once. Perhaps my favorite metaphor is fixing or even swapping out jet engines while flying at 400 MHP at 35,000 ft. Moreover, in the corporate world think about all the other disciplines compliance touches or should touch. For instance, how many touch points are the in the Human Resources (HR) sphere around compliance? I submit there are client touchpoints at each step the HR lifecycle of employment for any person in any organization. The same is true for the entire sales cycle and the procurement cycle. Compliance should work in each of those ecosystems to operationalize compliance more fully by adding value through increased business efficiencies, not bureaucratic burdens.
There is another way that this ecosystem approach can make your compliance program more effective. Think about the third parties your company has on both the sales and supply chain side. If you could work to create a closer ecosystem with those stakeholders from the compliance perspective, it would not only make the business relationship stronger but also make the entire business process more efficient.
Compliance has undergone a paradigm shift as a result of technological and digital innovation. CCOs who cannot interpret the data from their own systems will likely find themselves consigned to the dustbin of corporate luddites. Compliance will be moving into a new era of collaboration and connection to more fully operationalize compliance to make all business stakeholders more efficient and, at the end of the day, more profitable.
The authors found that many ecosystem failures stem from their governance models; that is, “the explicit and/or implicit structures, rules, and practices that frame and direct the behavior and interplay of ecosystem” stakeholders. The authors noted a variety of reasons for these failures including conflicts among ecosystem partners, backlash from internal stakeholders or government regulators are other indicators of governance flaws that can bring down an ecosystem. The key for CCOs in trying to establish compliance ecosystems is to “understand the components of a comprehensive governance model and glean insights from ecosystem successes and failures can make more informed and explicit governance decisions.” As the authors note, in doing so, CCOs can “improve the odds that their” compliance ecosystems will survive and prosper over the long term.
Compliance Ecosystem Framework
Good governance supports a compliance ecosystem’s ability to create value, manage risk, and optimize both efficiency and return among its stakeholders. To lead in support of these ends and capture a competitive advantage, CCOs must systematically think through and actively design what the authors denote as five elements of an ecosystem governance model. I have adapted their framework for a corporate compliance program.
Mission. There must be engagement so there is a strong sense of shared mission to keep compliance ecosystem partners moving forward. CCOs should identify a clear and distinctive compliance purpose early in the ecosystem “development and anchor it in a well-articulated set of values can motivate and align partners, particularly when this involves solving a significant problem or making an important contribution to society.” This can also “encourage desirable behaviors without undue reliance on complex rules and written standards.”
Access. CCOs should begin with stakeholders who agree to certain standards and behaviors regarding the compliance ecosystem. “The rules governing access also can help determine partner commitment by requiring an investment or offering an incentive for joining the ecosystem and/or defining the level of exclusivity that partners must provide to the ecosystem.” This investment can be with people or time but investment + engagement means increased buy in.
Participation. “The degree to which partners are invited to contribute to the formulation of ecosystem governance and strategy over time. It also includes the rules for conflict resolution among ecosystem stakeholders.” Some type of Fair Process Doctrine is critical here as “stakeholders need a clear view into the rules and strategy of a [compliance] ecosystem to actively participate in it and determine their own strategies”. Through stakeholder engagement and participation “governance and strategy can bolster their commitment and willingness to invest resources in an ecosystem.”
Conduct. This component of the framework is more technical as your compliance ecosystem should have a strong tech element. This allows CCOs to “directly influence the behavior of participants in their ecosystem using input control, process control, and output control. Input control, which is often automated using application programming interfaces (APIs) or integrated development environments, specifies the requirements for the partners’ contributions to the ecosystem, including standards and instruments of quality control and the approval of new contributions.”
Sharing. The final building block of ecosystem governance defines the data and property rights of stakeholders. The authors note, “data and property rights regulate ownership and use of the data and intellectual property that are contributed to — or created within — the [compliance] ecosystem.” This can work to allow a wide variety of outcomes across disparate business lines or units, geo-regions or service/product offerings.
Join us tomorrow where I will employ these elements to counsel four foundational recommendations that can guide CCOs in developing and leading a compliance ecosystem.
