The 1MDB scandal in Malaysia involved billions of dollars in misappropriated funds, leading to criminal charges against high-profile individuals, including the former prime minister, and exposing significant gaps in the country’s ESG regulations.
UK’s Carillion’s non-compliance with ESG standards led to a loss of investor confidence, and reputational damage, and impacted employees, suppliers, and customers with over 3000 job losses and debts of £7 billion.
Boohoo faced significant reputational damage and loss of investor confidence in 2020 after allegations of poor labor practices and environmental standards in its supply chain, resulting in its shares being down by a whopping 68% in 2021.
UAE’s NMC Health scandal resulted in a more than 70% drop in company shares after allegations of fraud and mismanagement.
In a world where transparency and responsibility reign supreme, turning a blind eye to Environmental Social Governance (ESG) compliance policies is a surefire way to sink your business. Not only is it crucial for ethical practices, but it is also becoming a major factor in determining a company’s success.
This is where ISO 37301 comes into play. The new global standard for managing sustainable procurement processes effectively is changing the game for businesses worldwide. By adhering to these guidelines, companies can uphold the highest ESG standards while strengthening their competitive edge in their respective marketplaces. So, what do businesses need to know about ISO 37301 compliance? Read on to find out.
What is ISO 37301?
Compliance can be a headache for many organizations in today’s fast-paced business world. Keeping up with ever-changing laws and regulations can be a daunting task, and the consequences of non-compliance can be severe. That’s why the International Organization for Standardization (ISO) has introduced a new certifiable standard for compliance management systems: ISO 37301.
With ISO 37301, compliance management has never been easier. The standard is designed to help organizations meet their legal and ethical obligations in the areas of Environmental, Social, and Governance (ESG) compliance. It is based on the same principles as ISO 19600 but with the added benefit of being officially certifiable.
ISO 37301 is the product of a global team of experts and professionals, making it a trusted framework for compliance management systems. It provides a risk-based approach to compliance, focusing on assessing risks, screening business partners, and addressing non-conformities. With ISO 37301, organizations can be sure that their compliance management system is up to date and effective.
The standard also has a close relationship with ISO 37001, which focuses on anti-bribery management systems. Implementing ISO 37301 can save organizations time and costs, as it can be integrated with ISO 37001.
In short, ISO 37301 is the perfect tool for organizations looking to simplify their compliance management systems and stay ahead of the game.
The Importance of ESG Compliance in Modern Business Operations
Incorporating ESG compliance into management can make companies more profitable. Customer and supply chain pressures are driving the message of ESG compliance down the supply chain of organizations, requesting a reference to ESG strategies from their suppliers. Smart investors know that ESG performance isn’t just a trend – it’s a key indicator of a company’s ability to thrive in the long term.
However, a strong commitment to ESG compliance can be quickly undone by the perception of bribery and corruption risks. Investors and shareholders want to trust the companies they invest in, but that trust can evaporate if they sense that the organization’s systems aren’t up to the task. That’s why an anti-bribery and anti-corruption program is crucial: it’s the only way to safeguard your ESG compliance and protect your reputation in the eyes of the market.
With Malaysia being downgraded to Tier 3 in the U.S. State Department’s Trafficking in Persons Report, the scrutiny of Malaysian companies’ ESG practices will intensify. Investors will prefer ESG-compliant companies, as the world now gravitates toward sustainable investment more than ever.
ISO Certification can help boost ESG Compliance. An organization’s ESG strategy can be augmented and advanced through ISO Certification and implementing individual or integrated management systems. The following are some of the latest examples and references that demonstrate the importance of ESG compliance and encourage businesses to adopt it:
Growing investor demand: Investors increasingly focus on ESG factors when making investment decisions. In fact, sustainable investments in the US alone grew to $17.1 trillion in 2020, up 42% from 2018. This demonstrates the growing importance of ESG compliance for companies that want to attract investment.
Legal and regulatory requirements: Governments worldwide are introducing regulations and laws that require companies to comply with ESG standards. For example, the European Union’s Sustainable Finance Disclosure Regulation requires companies to disclose how they integrate ESG factors into their investment decisions.
Competitive advantage: Companies that prioritize ESG compliance can gain a competitive advantage by improving their public image and reputation, attracting customers who value sustainability, and reducing the risk of costly legal and regulatory penalties.
Positive impact on the environment and society: ESG compliance can have a positive impact on the environment and society, such as by reducing carbon emissions, promoting fair labor practices, and protecting human rights.
Leading examples: Companies such as Microsoft and Unilever have taken proactive steps to prioritize ESG compliance and have been recognized for their efforts. For example, Microsoft has committed to becoming carbon negative by 2030 and has established an Environmental Sustainability Dashboard to track its progress. Similarly, Unilever has set ambitious targets for reducing its carbon footprint and has implemented various initiatives to promote sustainable agriculture and protect human rights.
By adopting ESG compliance, businesses can meet their legal and ethical obligations and gain a competitive advantage, attract investment, and positively impact the environment and society. It is an essential component of modern business operations that cannot be overlooked.
Influence of ISO 37301 on ESG Compliance
The new certifiable standard for compliance management systems, ISO 37301, has significant implications for ESG compliance. This standard is based on well-established and globally recognized principles of good governance, proportionality, transparency, and sustainability.
The implementation of ISO 37301 can have a significant impact on ESG compliance, as the standard provides guidelines for the integration of compliance into business processes. It helps organizations identify, manage, and mitigate ESG-related risks and ensure that their operations are conducted ethically and sustainably.
Moreover, ISO 37301 offers high flexibility to design, implement and operate an organization-centric, specific compliance program that fulfills the individual corporation’s needs. By adopting ISO 37301, organizations can build trust through a standardized compliance management system that assesses risks regularly, screens business partners based on a risk-based approach, and has a working system to raise concerns.
Benefits of ISO 37301 for ESG Compliance
ISO 37301 is essential for companies looking to improve their ESG compliance. Here are some benefits of implementing ISO 37301 for ESG compliance:
- Better risk management: ISO 37301 helps organizations identify, assess, and manage risks related to ESG factors. By doing so, organizations can ensure that they are conducting their operations sustainably and ethically.
- Improved reputation: Organizations implementing ISO 37301 can improve their reputation by demonstrating to stakeholders that they have a compliance program that meets international standards.
- Enhanced reporting: ISO 37301 requires organizations to document and report on their compliance efforts. By doing so, organizations can provide transparency and accountability to their stakeholders.
- Competitive advantage: ISO 37301 can provide a competitive advantage to organizations, as it can demonstrate to customers and investors that they are committed to ethical and sustainable business practices.
The Consequences of Non-Compliance
The importance of ESG compliance has been highlighted in recent news, with several high-profile cases of non-compliance resulting in significant harm to businesses. For instance, the Volkswagen emissions scandal led to more than $30 billion legal settlement, causing significant damage to the company’s reputation and finances.
Another example is the oil spill by BP in the Gulf of Mexico, which resulted in billions of dollars in fines and compensation claims, as well as severe reputational damage. These cases demonstrate the serious consequences that companies can face when they fail to comply with ESG regulations. It underscores the need for businesses to prioritize ESG compliance and develop robust internal systems to manage ESG risks effectively.
With the increasing importance of ESG compliance, businesses must comply with a plethora of regulations, guidelines, and standards. The lack of resources and expertise makes it challenging for organizations to ensure compliance. Failing to comply with ESG regulations can result in reputational damage, financial penalties, and even legal repercussions. It is crucial for companies to build a strong culture of compliance from the top to manage ESG risks effectively.
How ABAC™ Can Help with ESG Compliance: Expert Solutions for Effective Compliance Management
With the growing emphasis on responsible and sustainable business practices, businesses need to comply with international standards and regulations. ABAC™, powered by CRI™ Group, can help businesses effectively manage ESG compliance risks and foster a culture of business integrity.
ESG Compliance Services Offered by ABAC™
Risk Assessment: We conduct thorough risk assessments to identify and prioritize ESG compliance risks. Our experts assess the business’s operations, supply chain, and stakeholders to identify potential areas of risk.
Policy Development: We help businesses develop ESG policies that align with international standards and regulations. Our experts work closely with businesses to develop policies that reflect their values and goals.
Training: We provide ESG compliance training to employees and stakeholders to ensure everyone in the organization knows the policies and procedures.
Certification: We offer ISO 37301 Compliance Management Systems certification to businesses that meet the standard’s requirements. The certification provides a competitive advantage and demonstrates the business’s commitment to responsible and sustainable business practices.
ABAC™’s Expertise in Compliance and Anti-Bribery and Corruption
ABAC™’s expertise in compliance and anti-bribery and corruption is a valuable asset in ensuring effective ESG compliance management. Our team of experts has extensive experience in developing and implementing compliance programs that meet international standards and regulations.
Compliance with ESG standards is critical for businesses to protect their reputation, manage risks, and demonstrate their commitment to responsible business practices. ISO 37301 Compliance Management Systems and ABAC™ can help businesses confidently navigate the complex landscape of ESG compliance.
ABAC™, powered by CRI Group™, provides expert solutions for effective ESG compliance management. Our services are tailored to meet the specific needs of businesses and help them achieve ESG compliance with confidence. Contact us today to learn more about our ESG compliance solutions and how we can help your business.