People and nature are among the most sensitive areas in a company’s sphere of influence. After all, life and health are at stake here. Violations can have serious consequences. The liability risks arising from occupational health and safety and environmental protection law are correspondingly high. Of course, the basic obligations towards employees or other persons and the environment are known to every entrepreneur and compliance is not a new topic in these areas. Every company will consciously or unconsciously implement compliance measures in this area. However, the topic has become very much the focus of the authorities – and the focus of the public.
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Strategy, liquidity, earnings: a company crisis can have various causes. Well-established crisis compliance shows the right steps to take in the individual situation. The risk of a crisis has increased significantly in recent years and more recently against the backdrop of the pandemic and the Ukraine war – even for seasoned companies. Moreover, in times of numerous high-profile corporate scandals, the liability claims of boards for misconduct have come into focus. Against this background, crisis compliance management is currently experiencing a strong upswing.
Well-managed compliance protects companies from criminal offenses, breaches of rules, unethical behavior and the associated financial losses and reputational damage. But even the most sophisticated compliance organization can only be effective if communication is right. It builds the bridge between the rules and regulations and acceptance within the company with transparent information and an exchange based on trust. Compliance management can only be successful if everyone is informed about the regulations, duties, codes of conduct and responsibilities, can understand all the rules and supports the associated goals.
“Organizations do not commit violations of the law or misconduct. These are committed by people in the organizations.”
Compliance combines goals and functions to comply with laws and rules in the company and to create the framework that misconduct is avoided. In practice, compliance looks different for every company: Of course, every company has to adhere to the legal provisions, thus acts “compliantly” per se. But for a craft business, other laws and internal rules are important than for an IT company or a logistics company. All internal rules that go beyond the law are formed from industry practices, stakeholder expectations and corporate values.
Courageous? Disloyal? Whistleblowers are people who blow the whistle on other people or organizations. For these people, it is usually important that existing regulations and laws are observed and that misconduct to the detriment of organizations and society is stopped. Thus, they open up many opportunities with their tips: If critical information about wrongdoings in the company is not made public, but is received through internal reporting channels, the management level can deal with it proactively.
In this way, financial damage can be averted, grievances can be uncovered at an early stage and company departments can be optimized. A positive reporting culture that signals that critical knowledge is welcome and does not fall on deaf ears increases employee satisfaction and improves the image. In this respect, the whistleblower system, which the EU Whistleblower Directive prescribes for all companies with more than 50 employees, is a good way to make one’s own company more transparent.
The new year marks the beginning of the annual financial reporting season. All companies that prepare financial reports have to deal with the issues surrounding the preparation of their annual financial statements. Even if many of those responsible are not aware of it: accounting compliance forms the foundation here. It ensures that all relevant accounting rules are recognized and applied, and that the company’s assets and liabilities are valued correctly, so that the annual financial report is prepared in accordance with the rules.
The topic of sustainability is gaining strength. The background is the EU Green Deal, with which the European states want to gradually make the EU climate-neutral by 2050. The financial markets have a decisive role to play in the implementation of the climate policy goals, as they promote and anchor the issue of sustainability. “Sustainable finance” is the new buzzword. It means that sustainable aspects of a company regarding the environment, social issues or corporate governance are included in the decisions of financial actors. Sustainable finance is synonymous with supervision and regulation of the financial markets towards more sustainability in companies – and that also in small and medium-sized enterprises. In the future, banks will give more weight to sustainable aspects when granting loans, regardless of the size of the company, and make sure that their loan portfolios are in line with the EU taxonomy, which will come into force in 2022 and place greater emphasis on environmental aspects.
The implementation of the EU Whistleblower Directive is on the agenda of many small and medium-sized companies. Managing directors and compliance officers immediately think of lawyers and software, but it takes a lot more to implement the guideline not only in a legally secure way, but also in a motivating and profitable way.
Our expert Karin Scherer puts it in a nutshell: “Many managing directors would like to receive information from the staff when the company is damaged, whether negligently or intentionally, internally by employees or by external persons. Our experiences range from reaching into the till, theft of goods to sexual harassment at the workplace. All incidents in which those in the know or affected did not know how to act, looked a way as a precaution – and in which the management would have liked to have been informed at an early stage, to protect the employees affected and the company.”
