In this episode of The Ethics Experts, Nick welcomes Katharine Manning. Katharine Manning is the author of The Empathetic Workplace: Five Steps to a Compassionate, Calm, and Confident Response to Trauma on the Job (HarperCollins Leadership 2021) and the President of Blackbird DC. She has worked on issues of trauma and victimization for more than 25 years.
White House fact sheet on March 8 Executive Order banning Russian energy imports; OFAC sanctions Duma members; CBP issued implementing guidance on Russian imports.
Operating in a tax-efficient manner is a wise business move for a multitude of reasons. It’s time to start the conversation about the benefits of a relationship between tax and ESG, especially in multinational organizations. That’s what Tom Fox and Tracy Howell are discussing in this episode of The ESG Report.
How Tax and ESG Intersect
Tracy tells Tom, “There are external forces pulling tax into the ‘S’ and ‘G’ of ESG.” In the social sector, different jurisdictions have different tax rates and laws, and as companies begin to operate in a tax-efficient manner, their activities will gravitate towards lower tax regimes. Tracy adds, “You’ve got forces trying to push the concept of ‘fair share’ rather than compliance with tax laws of different jurisdictions.” Governance-wise, it’s becoming more common for companies to be required to talk about their compliance tax audits.
The Role of Tax in a Company
With the growing pressures on ESG transparency, there’s a push to standardize reporting and scorecarding of companies based on their tax transparency. This would include things like the reporting of an organization’s effective tax rate.
Tax and ESG in Multinational Organizations
Institutional investors play a major role in impacting the activities of a multinational company. When making investment decisions, these entities heavily incorporate ESG scorecards with tax transparency, further emphasizing the need for a relationship between the two sectors.
RESOURCES
Tom Fox’s email
Tracy Howell | Email | LinkedIn
In this episode of the FCPA Compliance Report, I am joined by Exiger Board Chair Michael Beber. He returns to the podcast to talk about the current state of Special Purpose Acquisition Corporations (SPACs).Highlights in include:
· SPACs in 2021 by the numbers.
· Uses and misuses of SPACs.
· Money being invested in SPACs.
· Why SPACs can still be such a powerful tool.
· What will be the SPAC market like going forward?
Resources
In today’s edition of Daily Compliance News:
Driving innovation in your compliance program is still seen as one of the most difficult challenges for every Chief Compliance Officer (CCO) or compliance professional. I was therefore intrigued by a recent article in the Harvard Business Review (HBR), entitled Purposeful Business the Agile Way by Darrell Rigby, Sarah Elk and Steve Berez, which discussed how business leaders can “transform a profit-maximizing system into a purpose-driven one without jeopardizing the future of their businesses and their own careers.”
Interestingly, the authors came to their approach due to the post pandemic great resignation, which they posit business leaders have no clue as to why there is such employee action and equally importantly how to adapt to it, stating, “For decades managers trusted influential economists who promised that if businesses maximized profits, an invisible hand would generate greater benefits for all society. That isn’t happening the way they said it would.” Yet business executives went overboard on creating value for shareholders as their only focus. The authors believe that such a myopic approach robs other “stakeholders of value.” That has certainly been the case for businesses treatment of employees. The authors conclude, “One recent manifestation: Record numbers of people are quitting their jobs, and others are hitting picket lines to demonstrate a growing conviction that life is too short to waste on demoralizing work. Concern about social inequities and environmental damage is escalating. The system is out of balance, and the situation is getting worse.”
Business executives stand at the turning point. They can continue down a destructive path or adapt. However, the problem is that most business leaders are afraid to change, afraid to create multiple stakeholders, as opposed to focusing solely on shareholders and do not want to listen to their employees. The authors believe, “agile ways of working can help, turning squishy debates about corporate purpose into real actions and results.” It provided to me numerous tangible ideas about how to drive innovation in the compliance arena. I have adapted the authors ideas for a corporate compliance program. The authors posit several concrete steps you can take, which every CCO and compliance professional should consider for their compliance regime.
Create a Microcosm
The authors suggest an approach not unlike Design Thinking. Here are some of their suggestions.
Every CCO should be comfortable with these suggestions and steps.
Continuous Monitoring Leading to Continuous Improvement
Compliance, like business purpose, should not be viewed as a mechanical watch. In 2008, I heard then Deputy Attorney General (DAG) Lanny Breuer say that a best practices compliance program needed to be nimble and agile. Obviously, continuous monitoring and continuous improvement are mandated parts of a best practices compliance program in 2022. Where the authors expand on this basic component for any compliance program is around five questions you should ask about your compliance innovation.
These include: Does your compliance initiative support your strategic objectives and create important benefits for the stakeholders who have the most impact on the success of your business? Will multiple stakeholders actively support your compliance initiative? Will your investment in this compliance initiative create greater value for a wide variety of stakeholders, more “than would simply writing a check to a more economical innovator?” Finally, your compliance initiative should “test specific hypotheses and mitigate adverse side effects before scaling up the project.”
Do the Right Thing
Setting financial targets is one way of goal setting. However, as the authors note, “Agile helps flip that approach, focusing first on creating value for stakeholders and then on earning adequate profits in the process. Instead of asking, How can we improve profitability without damaging customer and employee satisfaction? they ask, How can we enrich the lives” of various stakeholder’s and employees?
In the 2020 Update to the Evaluation of Corporate Compliance Programs, the Department of Justice (DOJ) made clear that CCOs and the corporate compliance functions were the holders of institutional justice and institutional fairness in a company. In other words, you already have the obligation. Therefore, doing the right thing for both employees and other stakeholders is not something new for compliance professionals.
Prioritize Collaboration
If there is one thing compliance must do it is collaborate. Compliance generally does not have a hammer it can bring down but must lead through influence and working with others. Moreover, engagement with a wide variety of stakeholders in your company is a much better way to get something down as those stakeholders involved will be invested in the outcome if the are involved in its creation.
In the world of agile, the authors report, “A central reason for the success of agile ways of working is that they prioritize teamwork over individual performance. Research by the Standish Group, which has studied the success of IT projects since 1994, shows that agile teams improve software innovation by more than 60%, on average, and by 100% when the innovation is large and complex. Two-thirds of agile teams across a wide range of business functions report better cross-functional alignment, and 60% register higher team morale, according to the State of Agile Report by Digital.ai, a company focused on digital transformations.”
The bottom line is that by embracing these agile concepts, a CCO has a much better chance of implementing innovative change in their compliance program.
