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ECS Leadership and Communications Working Group Addresses the Compliance-ESG (Sustainability) Relationship

The ECS Leadership and Communications Working Group held its annual End-of-Summer Roundtable on September 6.  Now in its fourth year, the event this time tackled the topic whether the Environmental, Social, and Governance (ESG) movement is a help or a hindrance for compliance.

After a corporate and regulatory overview of what is happening on the market on ESG by ECS Vice-Chairman Gabe Shawn Varges and Claudia Wuerstle of HCM, a lively discussion was kicked off. Participants expressed also witnessing a growing emphasis on ESG by companies, sometimes their own, finding this in general to be promoting more sustainable thinking.  Since compliance is also about promoting responsible conduct and a long-term view, participants felt that as a whole ESG is or could be helpful for compliance.  At the same time, it was shown how some companies are focusing more on the “E” or the “S” of ESG, and less on the “G”. Varges reminded that the “G” is also linked to the other common three-letter abbreviation, “GRC”, well-known to compliance officers, and thus creates a natural bridge to compliance.

While consensus among the roundtable participants about the positive influence of ESG was strong, more differentiated views were expressed as to whether this meant that a company should have a common ESG/Compliance strategy, shared personnel, or even one common function.  Some participants did not see a contradiction here.  Others, speculating about their own company in the future, felt that there could arise tensions in an environment of limited corporate resources. Could it mean that a company feeling compelled to spend on ESG would have less to spend on compliance? Would the Compliance and ESG functions be competing for the limited attention of the Board and the CEO?  Could too rosy statements by a company on what it is doing on ESG itself constitute an ethical or compliance risk?   One company who was represented at the roundtable by both their Chief Compliance  Officer and their Head of ESG showed how the ESG and Compliance functions in fact could work successfully together and minimize risks. Nonetheless, participants noted that these are not easy questions, and companies will need to get better on how to advance both agendas, also in light of emerging regulatory requirements on ESG, including with regard to company reporting on social and environmental risks and measures.

Following the animated roundtable discussion, the roundtable participants proceeded to the traditional networking drinks at a nearby locale, where more discussions on the subject continued.  Participants were also reminded of the next ECS events, including the year-end event on November 13.  To sign up for this celebratory occasion, click here.

Any ECS member wishing to join the Leadership and Communications Working Group can send their names to