The era of the neutral corporation may have just come to an end. For a long time now businesses have often likened themselves to Switzerland, doing their best to stay out of social, political and geopolitical conflicts. The belief was often expressed that such issues were best left unaddressed, and the only concern of business was the interest of its shareholders.
Over the last few years that has changed dramatically. The Black Lives Matter movement saw many organizations taking a very public stand. The ESG movement has expanded greatly how businesses are measured, including on social factors, by both the public and the investment community.
Over the last week, the Russian invasion of Ukraine has upended things even more. Many organizations have made the choice not to do business in or with Russia. In addition, ever stiffening sanctions are making things more difficult, forcing a reckoning.
For compliance and ethics teams, there are immediate, practical considerations as a result of the sanctions. It’s time to start working with the business unit to see what agreements are in place, what were being developed and how to stay on the right side of the line. It’s also time to examine the assumptions about doing business in Russia, and, quite likely, make some major adjustments.
Compliance and ethics leaders, whether their organizations do business in Russia or not, also need to assess what the potential end of business neutrality means for their programs. Is the compliance program structured to thrive in an era when organizations are either being pulled into social, political and geopolitical issues or proactively choosing to address them? Specifically, it’s time to:
- Reassess the risk assessment. The risk profile has changed all over the world, and it is likely to continue to evolve as global events unfold and new issue areas arise domestically.
- Examine the organizational values in a new light. Do they provide guidance for responding to events outside of the company or only to those inside it? How can they guide what the organizational response can be? And is corporate communications emphasizing the tie between the organization’s actions and its values?
- Revisit training. Any stance the company takes needs to be communicated internally in a meaningful way, and in recognition of the fact that some employees may have very different beliefs. Training should address that in the new era organizations will be scrutinized like never before, and how decisions need to be considered thoroughly and made in concert with the organizational values.
- Set a protocol for a different type of helpline call. If they haven’t already, helplines may start getting calls about issues in the outside world. Some will likely be about sanctions breaches. But others will likely be about wrongs the employee sees in the world and the organization’s lack of a stance. Have a protocol in place to ensure that such calls can responded to appropriately.
- Be prepared for new kinds of cheating. Wherever there are goals or limits set, there is always a temptation to cheat. Somewhere a salesperson may be considering a “clever” way to void sanctions restrictions. A manager may be looking how to fudge the numbers for CO2 emissions to achieve a corporate carbon goal. Compliance needs to be alert to these new challenges.
These are but a few of the changes compliance teams to make, and, if recent times have taught us anything, they are likely just the start of many more to come in a post-neutral business world.