By Roy Snell

The Wall Street Journal published an article on 5/4/21 on their Risk and Compliance blog entitled, Compliance Officers Play Growing Role in Corporate Sustainability Efforts. It signals the beginning of a logical approach to the compliance professional’s role in Environmental, Social and Governance (ESG) compliance. The most important “standard” ever created defining the role of a compliance program is Chapter 8 of the US Federal Sentencing Guidelines. The USFSG states that the compliance program should help ensure all laws were complied with… not some laws.   

Take Enron for example, if they had a compliance program, it obviously didn’t cover accounting fraud. The people who created and reviewed the financials were also responsible for ensuring that the financials were compliant with the rule of law. Unlike the compliance department, they were all conflicted to high heaven.  An effective compliance program doesn’t delegate auditing to inside or outside auditors and then not check their work. In the case of Enron their outside audit firm Anderson failed to the degree that their mistakes at Enron led to their demise. Obviously, their internal audit department failed to prevent, find and fix the accounting problems. Compliance can never ever delegate and trust. It must delegate and trust….. but verify. 

This brings us back around to ESG.  I would let any department be involved in the company’s ESG program. but I would verify their work from a compliance and ethics standpoint. The WSJ article went on to say… 

“Companies looking to show investors their commitment to sustainability are relying more on the work of their chief compliance officers.  

The role played by compliance in ensuring that employees act ethically has a natural place in corporate efforts to attract sustainability-minded investors, these companies say.  

Some compliance executives also have been tapped to help manage social or environmental goals that go well beyond their role’s traditional remit, as companies look to put muscle behind the pledges they make on such issues and address legal risks that can be involved.” 

The number of ESG remated laws are staggering and growing every day. Many great people will help their organization improve their ESG program. However, we must use all the tools of a compliance program, audit, investigation, education, anonymous reporting, etc. to help ensure our organization is complying with all environmental, social and governance related laws. 

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