Tom Fox continues to explain why he believes Compliance is best to lead the ESG effort going forward. In this final part of his solo series, he focuses on response and enhancement.
ESG Reporting
Response and enhancement is familiar to compliance professionals as continuous monitoring leads to continuous improvement. Given the dynamic nature of ESG, companies will need to continuously improve their performance in these areas. ESG must look to more fundamental drivers to achieve real results and be rewarded for them, and the key to this is moving these initiatives forward through ESG program responses and enhancements. Corporate leaders need to step away from the mindset of only tackling compliance and ESG out of a need to protect their firms’ reputations, and replace that mindset with an ambitious ESG strategy if they want to see real financial dividends.
ESG in Business
Developing realistic benchmarks and strategies within organizations can rally the workforce, and prevent what Tom calls ‘agenda tinkering’ at the top. “Organizations that take consistent steps over time to reach specific sustainability goals often experience long-term operational savings,” he says. When everyone is aware of common goals it helps to achieve a deeper understanding of how the supply chain contributes to overall environmental sustainability performance. Growing a business sustainably doesn’t mean you see a finish line with every achievement. Even if business leaders see compliance as purely reactive, every compliance professional understands that the only way to maintain an effective compliance program is through continuous improvement. Companies should avoid a static approach that is merely focused on doing the bare minimum of regulatory requirements. You should strive to align your company’s financial and ESG performance because it gives investors a more complete evaluation of your company’s prospects.
Compliance Must Lead
Response and enhancements of an ESG program are directly tied to compliance requirements of continuous improvement. One sign of an effective compliance program is the capacity to improve and evolve. Tom lists four steps to do with the information generated by their ESG program, including:
- Having a strategic plan ready to implement your findings of continuous improvement;
- Putting accountabilities in place for your plans of execution.
Overall, the process for designing, creating and running an ESG program are fundamentally similar to a compliance program and so are the goals. There is no conflict of interest in compliance leading the effort of corporate ESG as there are multiple levels of verification and monitoring.
Resources
Tom Fox email
FCPA Compliance and Ethics blog
