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Sustainability Is A Political Decision And Not A Technical Jigsaw

Sustainability Is A Political Decision And Not A Technical Jigsaw

Sustainability is a societal goal with three dimensions (also called pillars): the environmental, the economic and the social dimension. These principles are also informally called 'planet, profit and people'; three principles that today govern the strategy of each industry and business, and that is where we begin to encounter the critical challenge for compliance.  This challenge becomes even more critical if we consider that the concept of Sustainability can also guide national and international policy decisions.

It seems like every other day over the last few years we hear someone talk about sustainability and ESG, but very few can really comprehend what are the real attributes that these three dimensions aim at.  In simple words, adherence to those three principles aims in meeting the needs of the present generation without limiting the ability of future generations to meet their own needs.

The interconnection of these three principles or spheres, if I can better refer to them, is a related set of concepts that, when taken together, can form a solid ground from which major decisions and actions can be made. Examples of such decisions could include land-use planning, surface water management, building design and construction, and even law-making.

When the concepts, contained in the three spheres of sustainability, are applied to real-world situations, then everybody wins!

Natural resources are preserved, the environment is protected, the economy isn't harmed, and most importantly, the quality of life for our people is improved and maintained at a good level.

The attributes to be derived via the interconnection of the Environmental, Economic and Social spheres, like Business Ethics, Energy Efficiency, Environmental Law, Fair & Transparent Taxation, etc. are key components to the viability of any organization and literally the sustainability of the human race!

And it all comes down to one key question my dear friends and colleagues:

Is it the job of the compliance function to ensure effective monitoring for embedding these three dimensions and spheres of sustainability?

And the answer is a clear YES! 

Given the critical importance of the attributes emanating from the interconnectivity of these three spheres, the compliance function becomes even more important and its main focus shifts to setting up the necessary policies, processes, systems and controls to ensure conformity and full adherence with the social, environmental and governance frameworks.

This shifting of focus and context in the functioning of Compliance is the cornerstone of the cultural reformation of an organization which will eventually lead to getting the sense of feeling RESPONSIBLE rather than feeling OBLIGED to comply with a set of rules and procedures!

Regulatory bodies and standard setters have also demonstrated the necessity of the Compliance function to monitor and safeguard the mechanics of sustainability and started requiring companies to disclose non-financial indicators, as well as KPIs, and be more transparent about their business operations and supply chains.

In summary: the evolving regulatory landscape and increasingly complex jigsaw of standards and guidelines, is putting real pressure on companies to rethink their compliance through the sustainability spectrum of initiatives and performance indicators.

The debate about whether companies have moral responsibilities as corporations, or whether this is only something individuals can exercise, continues to shift. Nowadays many believe that the so-called “responsibility deficit” means that a company’s obligations must go beyond its fiduciary duty to shareholders, and extend to a wider group of stakeholders.

More broadly, sustainability has become a conventional governance topic. It is shorthand for a wide range of risks, standards, and interests with a scope that covers the economy and society in a broader way. Companies failing to meet these standards have been at the centre of public scandals, with legal liability for individuals and companies.  In other words, they eventually did not manage to comply with the relevant regulation or typical governance frameworks!

My dear colleagues and friends, for many people, the main concern in their lives is their overall well-being and quality of life. Think about how this relates to the economy and the environment. In a poor economy, people experience a poor quality of life. The same also holds true for a poor environment. In a poor environment, the impacts on quality of life are not always easily observable. However, it doesn't take a trained individual to see how things such as polluted storm water runoff, over-development of floodplains, and the poor management of our scarce resources can have an effect on our everyday quality of life. The three spheres of sustainability and their interconnectivity encompass many concepts, which explain how decisions and actions can have an impact on the overall sustainability of our world. 

Let us always remember that sustainability is a political choice, and not a technical jigsaw. It’s not a question of whether we can be sustainable, but rather whether we choose to be!

 

*This speech was given at the 8th International Compliance Forum

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