[author: Charlotte Emerson]
On June 9, 2022, NAVEX hosted the European Virtual Risk and Compliance Conference 2022, where industry leaders and experts came together to discuss all the latest news, trends, updates and challenges regarding corporate compliance, whistleblowing and ESG.
Environmental, Social and Governance (ESG) affects every part of an organization and has become the latest areas of the legal framework that businesses, society and investors use to measure an organization’s success in non-financial ways. . Often, investors and customers will now seek to understand how a company and its supply chain operate legally, ethically and socially before deciding whether to invest in or purchase its services and products.
Below is a summary of some of the main points that were discussed throughout the two ESG and compliance discussion tracks of the virtual conference.
Speakers: Roisin Rivers, Corporate Marketing Manager at NAVEX and Tabish Wani, COO, Castolin Eutectic
About Castolin Eutectic:
Castolin Eutectic is a global leader in maintenance and repair applications, established in 1906. The organization works across more than 50 industries to bring innovative products and sustainable solutions in maintenance, surface protection and special assembly for reduce maintenance costs and increase industrial productivity through welding, brazing and coating technologies.
How have Castolin Eutectic’s recent compliance efforts improved the organization and built business confidence?
Compliance is important, both from a market and customer perspective, but even more so internally. As an organization, Castolin Eutectic is proud of its employees, believing that people are the value of a company and transform organizations.
It is important for a company to introduce compliance standards to unlock its potential, to make a company a better place to work and for people to have the right to express their opinions and share their experiences. This translates into a better business, for both employees and customers.
Castolin Eutectic has internal governance systems and standard operating procedures locally and globally, with the NAVEX One platform as a tool to ensure everyone in the business has the level of information and access correct. Having a single platform makes it easier to manage and maintain compliance – with NAVEX One, information is continuous and the business can work collectively as one.
What does Castolin Eutectic do around ESG?
Castolin Eutectic ensures that customer processes are more sustainable and profitable. However, this is not only for customers, but also internally. The company is continuously working with the operations team to achieve more sustainable product transportation, verify the sustainability of supply network design, and redesign supply chains to align with ESG objectives.
The company is also working to consolidate its manufacturing footprints, global sourcing impact, energy consumption and corporate environmental impact. On the product side, the company is evaluating and replacing plastic packaging with more sustainable materials.
A global organization must understand the collective impact of all its employees around the world around ESG. The NAVEX One platform helps Castolin Eutectic understand their impact, collectively measure it and communicate information to employees, customers and stakeholders. When an organization’s collective information is brought together on one platform, it helps people realize, especially with large corporations, that there is an opportunity to have a huge environmental impact.
How do current corporate compliance and ESG initiatives affect growth and potential employees?
ESG is a subject of which society, in particular the younger generations, is becoming more and more aware. Castolin Eutectic’s purpose and actions demonstrate this awareness time and time again, with customers and stakeholders giving positive feedback on the sustainability work undertaken. Castolin Eutectic has taken many measures to ensure that employees work in a cleaner and more sustainable environment and lifestyle, for example by providing professional bicycles and electric cars.
From a footprint perspective, Castolin Eutectic manufactures in many countries; at each location, they ensure that the company’s ecosystem and its suppliers continue to be as sustainable as possible. As a result, this is well reflected in society, the company will expand its ESG operations and hire new employees.
Will companies that don’t take ESG seriously suffer?
ESG creates business value – people want to work for organizations they feel good about. Especially now, companies that don’t put a proportionate focus on sustainability and a commitment to customers and employees, will suffer in the long run.
This is especially true in Europe where the workforce is very competitive. ESG and sustainability are topics that allow one organization to stand out more than another, giving it a competitive advantage in recruiting and attracting new talent.
Speakers: Robert Smith, Director, Business Compliance and Ethics. Serco Group PLC. and Giles Newman, Managing Director, International at NAVEX.
ESG is here to stay
ESG continues to grow in importance with investors and entities, with currently 81% of employees, according to the NAVEX 2021 The Definitive Risk and Compliance Benchmark Report (US, UK, France and Germany), with a formal ESG compliance program in place at their company.
In addition, the volume of ESG laws, regimes and regulatory requirements has grown and expanded significantly in recent years. At the end of 2022, the first standards should be presented by the ISSB and the CRSO standards of the European Commission should be presented by EFRAG. Looking to 2023, TCFD-aligned disclosures will now be required across most of the UK and German supply chain law will apply.
ESG as value creation
Implementing an ESG program can be a great business driver and should not simply be viewed as a framework that entities must follow to stay compliant with the law. More and more people are becoming more aware of social, ethical and environmental issues and want the companies they work with to act accordingly and create a positive impact. Therefore, successful ESG programs generate positive values for companies, investors and society in several ways other than simply for regulatory compliance:
- Companies perform better overall if they have a strong ESG program
- An entity that complies with ESG regulations demonstrates commitment and care, which leads to better employee retention and customer loyalty.
- ESG programs earn stakeholder trust as companies are committed to doing the right thing
- Positive ESG measurement ratings lead to higher asset valuations
- ESG risk assessments can be used as tools to mitigate climate and biodiversity risks
- Bloomberg estimates global ESG assets could be $53 trillion by 2025
- ESG policies help people understand and improve the impact of companies on society
- Contribute to the UN SDGs
- Provides capital allocation to address social and environmental challenges
How do ESG, ethics and compliance come together?
ESG and E&C are complementary, but depending on the company, different topics take on importance. However, there is a natural fit between the three areas, as the skills developed in an ethics and compliance program dovetail nicely with the skills needed to carry out an ESG program. Ethics and compliance teams have complex issues to manage, ranging from whistleblowing to creating policies and rolling out new projects across an organization. They must therefore be very well connected within their company. A range of issues, the deployment of large projects and good relationships are also necessary to manage ESG programs effectively.
Moreover, ESG isn’t just about data and reporting – it’s about the end result and what investors are looking for. It is also about how conclusions and data are provided. Ethics relates to the business values, behavior and decisions made by the company. If the integrity and honesty surrounding how ethics, compliance and ESG decisions are thought through and made fails, then the whole program fails. Many data points and actions needed within ESG stem from ethics and compliance and cement the integrity of an organization.
What’s next for ESG?
ESG is not going away. Governance regulations are historically consistent and public and media attention continues to increase on environmental issues and climate change awareness. Diversity, equity and inclusion (DEI) are also major topics for businesses and investors that need to be measured alongside the need for key demonstrations of social value, community impact and investment. community.
Some countries seek to standardize ESG requirements and reporting framework. In Europe, the EU Corporate Sustainability Reporting Directive has been introduced, setting new standards for how European companies should report on ESG elements. In the UK, the ISSB brings together its first standards around general sustainability and information disclosure requirements, which take a completely different approach to materiality.
To learn more about how NAVEX can help your business stay ESG compliant, discover the NAVEX One platform here.