In this episode of The Ethics Experts, Nick welcomes Lisa Bond-Holland. Lisa is the Director of Environmental, Social, Governance for South Jersey Industries (SJI), a New Jersey-based energy services holding company. As the Director of ESG, she is responsible for the strategic development, implementation, and communication of the organization’s ESG program.
The Kitchen reviews the Russia and removal from SWIFT – a joint statement of the allies.
‘Compliance is no longer the standard. Companies want to do business with other companies whose values align with theirs.’ This is one of the main talking points in this week’s episode of The ESG Report, where Jagmeet ‘Jag’ Lamba and Daniel Perry join Tom Fox for a conversation about third-party risk management.
The Importance of Third-Party Automation
“Companies are not islands,” says Jag, “they exist mainly with the help of partners.” As the companies grow and expand, the third-party network does too. With the compliance burden, data security/privacy burden, and now, the ESG burden that accompany all of these third parties, it’s impossible to manage without automation.
Reputational Damage
Tom mentions the risk of reputational damage to one’s brand through their third parties. In Jag’s company, Certa, reputation plays a role in all of the contracts they make with their key stakeholders, therefore, any reputational issue is a breach of that contract. He advises holding your third parties to that same standard. It is no longer sufficient to be compliant, as today, employees and other companies want to do business with those whose values align with theirs. “Compliance is no longer the standard,” Jag tells listeners.
The Work of EcoVadis: Improving Sustainability
ESG stands for environmental, social, and governance. The ‘S’ can also stand for sustainability, but, “Sustainability actually covers all of the pillars of ESG,” Daniel claims.
In a company, experts are generally required to aid in making procurement decisions, but they are probably not also experts on sustainability and ESG. His company, EcoVadis, provides a simple scorecard that tells how well, or how poorly a company is doing on key areas of sustainability, such as environment, labor and human rights, ethics, and supply chain. With these scorecards, you can start making broad, tactical decisions. By having one way of understanding the ESG of all suppliers, companies are able to implement necessary changes.
The Partnership between Certa and EcoVadis
Both Daniel and Jag detail their goals for both their clients, as well as the world of ESG, from their respective company perspectives. “The only way to have a strong ESG profile is if you also measure the ESG profile of your third parties,” is a quote from Jag that sums up this partnership quite well.
RESOURCES
Tom Fox’s email
Jagmeet Lamba | LinkedIn | Twitter | Certa
Daniel Perry | LinkedIn | Twitter | EcoVadis
In this episode of the FCPA Compliance Report, I am joined by Mikhail Reider-Gordon, Managing Director at Affiliated Monitors, Inc. We discuss conflicts of interest with some very high-profile examples torn literally from the headlines. Highlights include:
· What exactly is a Conflict of Interest and how does it differ from self-dealing, nepotism?
· Is a COI purely an ethical problem or are there are situations where COIs are illegal?
· COIs in the news of late and in some surprising places?
· Have there been other examples across industries?
· The Courts, the Fed, SCOTUS?
· Do you ever come across COIs in your work?
Resources
Original Posting on podcast on Integrity Through Compliance
Mikhail Reider-Gordon at AMI
In today’s edition of Daily Compliance News:
Yesterday, March 6 was the anniversary of the most historic day of many in the history of the great state of Texas, the date of the fall of the Alamo. While March 2, Texas Independence Day, is when Texas declared its independence from Mexico and April 21, San Jacinto Day, is when Texas won its independence from Mexico, probably both have more long-lasting significance, if it is one word that Texas is known for around the world, it is the Alamo. The Alamo was a crumbling Catholic mission in San Antonio where 189 men, held out for 13 days from the Mexican Army of General Santa Anna, which numbered approximately 5,000. But on this date in 1836, Santa Anna unleashed his forces, which over-ran the mission and killed all the fighting men. Those who did not die in the attack were executed and all the deceased bodies were unceremoniously burned. Proving he was not without chivalry, Santa Anna spared the lives of the Alamo’s women, children and their slaves. But for Texans across the globe, this is our day.
While Thermopylae will always go down as the greatest ‘Last Stand’ battle in history, the Alamo is right up there in contention for Number 2. Like all such battles sometimes the myth becomes the legend and the legend becomes the reality. In Thermopylae, the myth is that 300 Spartans stood against the entire 10,000-man Persian Army. However there was also a force of 700 Thespians (not actors; but citizens from the City-State of Thespi) and a contingent of 400 Thebans fighting alongside the 300 Spartans. Somehow, their sacrifices have been lost to history.
Likewise, the legend that lifts the battle of the Alamo to the land of myth is the line in the sand. The story goes that William Barrett Travis, on March 5, the day before the final attack, when it was clear that no reinforcements would arrive in time and everyone who stayed would perish; called all his men into the plaza of the compound. He then pulled out his saber and drew a line in the ground. He said that they were surrounded and would all likely die if they stayed. Any man who wanted to stay and die for Texas should cross the line and stand with him. Only one man, Moses Rose, declined to cross the line. The immediate survivors of the battle did not relate this story after they were rescued and this line in the sand tale did not appear until the 1880s.
But the thing about ‘last stand’ battles is they generally turn out badly for the losers. Very badly. I thought about this when Chuck Duross, when he was head of the Department of Justice’s (DOJ) Foreign Corrupt Practices Act (FCPA) unit, said at a conference that he viewed anti-corruption compliance practitioners as “The Alamo” in terms of the last line of defense in the context of preventing violations of the FCPA. I gingerly raised my hand and acknowledged his tribute to the great state of Texas but pointed out that all the defenders were slaughtered, so perhaps another analogy was appropriate. Everyone had a good laugh back then at the conference. But in reflecting on the history of my state and what the Alamo means to us all; I have wondered if my initial response too facile?
What happens to a Chief Compliance Officer (CCO) or compliance practitioner when they have to make a stand? Do they make the ultimate corporate sacrifice? Will they receive the equivalent of a corporate execution as the defenders of the Alamo received? This worrisome issue has certainly occurred even if the person ‘resigned to pursue other opportunities.’ Michael Scher has been a leading voice for the protection of compliance officers. In a post entitled Michael Scher Talks to the Feds he said, “a compliance officer (CO) working in Asia asked for recognition and protection: “A CO will not stand up against the huge pressure to maintain compliance standards if he does not get sufficient protection under law. Most COs working in overseas operations of U.S. companies are not U.S. citizens, but they usually are first to find the violations. Since the FCPA deals with foreign corruption, how could the DOJ and SEC not protect these COs?””
The DOJ is now looking at not only the quality of your CCO and compliance function, but how they are perceived, treated and received in the corporate setting. In the 2019 Evaluation of Corporate Compliance Programs and the 2020 Update to the Evaluation of Corporate Compliance Programs, (collectively ‘Evaluation’) the DOJ expanded out its inquiry evaluate the “sufficiency of the personnel and resources within the compliance function, in particular, whether those responsible for compliance have: (1) sufficient seniority within the organization; (2) sufficient resources, namely, staff to effectively undertake the requisite auditing, documentation, and analysis; and (3) sufficient autonomy from management, such as direct access to the board of directors or the board’s audit committee.”
Further there were four specific areas of inquiry and review: (1) Structure; (2) Experience and Qualifications; (3) Funding and Resources; and (4) Autonomy.
In the section entitled “Structure” the Evaluation made the following inquiries:
In the section entitled “Experience and Qualifications” the Evaluation made the following inquiries:
In the area of “Funding and Resources” the Evaluation asked
Finally, in the area of “Autonomy” the Evaluation asked:
These were all deeper and more robust focus on the CCO and compliance team from the DOJ. If your compliance team is run on a shoestring, you will likely be downgraded for your overall commitment to doing business in compliance with the FCPA. The same is true for promotions and other opportunities for advancement within an organization. Not many organizations have such a mature compliance function that a CCO is appointed to another senior level position within an organization.
Upon further reflection I now believe Duross was correct and the Alamo reference was appropriate for compliance officers. It is because sometimes we have to draw a line in the sand to management. And when we do, we have to cross that line to get on the right side of the issue, the consequences be damned. The DOJ has made clear they expect CCOs and compliance professionals to draw that line when they must do so and when they do, companies must heed their warnings.
