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As we step into 2024, Ethics & Compliance professionals find themselves at the forefront of a myriad of challenges and trends that demand their attention and strategic planning, to in turn enable their organizations to do the right thing, in an ever evolving and highly uncertain and crisis prone environment.
From the sustainability wave to the impact of geopolitical uncertainties, coupled with the steady rise of conscious consumerism, Ethics & Compliance teams will be challenged to keep the course steady and remain proactive.
In today’s blogspot, we will explore the few key trends and challenges that, in my opinion, may impact our world of Ethics & Compliance in 2024. This is in no way exhaustive of course!
Generally, the number and complexity of regulations keeps on rising steadily. I’ll pass you the conversations on how to rethink how we could create better, smarter and more effective regulations, but if you’re interested in learning more you can have a read at this very interesting 2022 OECD Paper titled The world has changed and so must rule making.
In any event, as global businesses as well as E&C professionals, we face an ever increasing amount of regulations, and the challenge of ensuring we keep abreast. And let’s face it, when we’re so very busy, it’s pretty tough to stay on top of everything that’s coming.
We will want to make sure we stay up to date in 2024. More generally, working to establish robust ethics & compliance programs that are grounded in ethics and thus adaptable to diverse regulatory frameworks is a plus. Of course it does not mean we’ll never have to adapt this policy to the local law, but being encompassing enough to be generally ensuring proper business conduct is, I believe, a way to stay pretty relevant in light of adapting regulations.
One area where we see this surge first hand is sustainability. Corporate sustainability considerations keep on moving to the forefront of corporate priorities, challenging E&C professionals to integrate sustainability into their frameworks.
Several directives and regulations are out or in the pipe in Europe. The most notable items are:
A comprehensive sustainability strategy, coupled with transparent reporting, will be absolutely crucial for maintaining ethical standards and meeting the expectations of customers and stakeholders. These coming regulations may also require revisiting supply chains and our dependencies in some products or jurisdictions. If you’d like to read more about this, what is coming, and how to prepare, check out one of my latest blog articles Raising the bar on corporate sustainability.
Geopolitical uncertainties continue to cast a shadow over businesses and also impact supply chains while creating new challenges for E&C professionals. Trade tensions, political instability, and unexpected events such as wars and geographical escalations will continue to disrupt supply chains, requiring a nimble response from businesses, supported by their E&C teams.
Crafting contingency plans, fostering transparency, and building resilient supply chains are essential to navigate the unpredictable geopolitical landscape and react fast and appropriately when and where needed.
In an environment characterized by uncertainty, E&C professionals may find themselves in constant crisis mode. The ability to identify, assess, and mitigate risks promptly has become a cornerstone of the role. A proactive, risk based approach is imperative to get out of the firefighter stage.
That’s where our risk assessment comes into play in a very pragmatic way: this is the real opportunity to identify our key risks, prioritize them, and work on plans to mitigate them well ahead and have contingencies ready should these risks ever materialize.
The rise of conscious consumerism, particularly driven by the socially aware Gen Z, will continue in my view to alter the dynamics at play.
Generation Z encompasses 32% of the world's population and is the largest generation ever. Born between 1996 and 2010, Gen Z is 13 to 27 years old. Investing in ethics, sustainability and generally good business conduct matches the expectations of these new consumers. 73% of them report that the climate crisis is terrifying them, actually impacting their mental state.
These consumers are also the ones who absolutely will not buy from companies who do not care: according to a First Insight report, The State of Consumer Spending, 62% of Gen Z prefers to buy from sustainable brands, and this number is very likely to grow.
A McKinsey study showed that 70% of Gen Z respondents “try to purchase from companies they consider ethical”, and they do remember scandals or controversies involving a company. In fact, 80% of them refuse to buy goods from companies involved in scandals.
These new consumers are more and more wielding their purchasing power to influence corporate behavior, all of this supercharged by viral social media. They vote with their wallets, may engage in boycotts and will heavily scrutinize businesses for greenwashing.
According to this previously mentioned McKinsey study,:
“in a transparent world, younger consumers don’t distinguish between the ethics of a brand, the company that owns it, and its network of partners and suppliers. A company’s actions must match its ideals, and those ideals must permeate the entire stakeholder system.”
And in my opinion, companies need to get better and bridge the gap between statements and reality, if they want to survive in the world where Gen Z will be the decision makers. As just one example, we can see so many companies being extremely vocal on social media for diversity month and how greatly diverse they are, while it takes 2 minutes to take a look at their executive teams or boards and be drowned in a uniform sea of (old) white cisgender males all coming from the same universities. I know it does not happen in a snap, but 2024 is the year to walk the talk and work on our core principles and authenticity as a business. And no surprise, diverse organisations are also more innovative (to read more on this, check out this article I wrote on The Power of Diversity: Building and Sustaining Diverse Teams to Nurture a Strong Ethical Culture).
The key here is consistency between statements and reality.
Building trust through transparent communication and genuine commitment to our principles is becoming more and more paramount in this era of empowered consumers.
Needless to say that integration of artificial intelligence (AI) into business processes presents both opportunities and challenges. Some companies are already embracing it while taking proactive steps by drafting codes of ethics that govern the use of AI (see for example Roche AI Ethics Principles published late December).
E&C professionals have the opportunity to position themselves at the forefront of this technological wave, understanding the ethical implications of AI and incorporating guidelines into their programs, in order to better protect the business.
And how about also thinking how to better leverage new technologies for our E&C Team?
Let’s not be the last ones to enable ourselves with technology. 2024 is the year where many E&C Teams will want to push and invest in digitizing to create efficiencies. It’s not a surprise, knowing that E&C Teams are likely to have to deal with the same budget constraints as in the prior years. Thus, making more with less, working on creating efficiency from our precious limited resources will enable us to deliver more value to the business and our stakeholders.
Leveraging technology, automation, and data analytics can enable E&C professionals to streamline their processes, identify potential risks, and allocate resources efficiently.
How about ensuring highly qualified team members don’t spend too much time on reporting and admin for a start? There IS a better way than 1000 Excel spreadsheets and technology can definitely help!
When I was in charge of Group Ethics & Compliance myself, we spent +50% of our time on admin and reporting: coordinating to-dos around the world, sending emails, several reminders, chasing other team members for reporting, following up and then compiling all answers received via email in way too many tracking Excel spreadsheets to try to have a good view of where we actually stood with respect to our Anti-Corruption program. Add to that all our other programs (Human Rights, Antitrust, ESG, Data Protection etc.) in a group with several dozens of Business Units around the world, and it came close to a nightmare.
I kept thinking that there must be a better way. This is why we created Ethical by Upright: an E&C Governance, Risk & Reporting software to not only fix this pain, but enable E&C Teams to know where they stand in real time with all of their initiatives and report in a snap. Check-out what we do if this pain is familiar!
As Ethics & Compliance professionals embark on the journey into 2024, they face a multifaceted landscape where regulatory intricacies, technological advancements, and societal expectations converge. Navigating this intricate web requires adaptability, innovation, and a keen understanding of the global business environment, while creativity to make the most out of limited budget and resources.
By being prepared, having a risk based approach to proactively address challenges, E&C professionals will continue to play a pivotal role in protecting their businesses and delivering strategic value to their companies and stakeholders. We wish you all your dreamed successes for the New Year!
Follow Upright Solutions on LinkedIn for more inspiration to lead your E&C Team and initiatives.
Love from Copenhagen 💜
