The compliance landscape has undergone a significant metamorphosis in recent years, triggering increasingly complex challenges for company directors, especially those at the C-Level.

Business leaders face new challenges in ensuring compliance with laws, ethical codes, and best practices in their organizations, as well as in preventing and managing the legal, reputational, and operational risks that may arise.

For context, the renewable energy industry has seen explosive growth globally in recent years. In the specific case of Chile, from having a negligible level in 2015, it is estimated that it currently occupies one of the top positions in this sector globally.

Looking back five or six years ago, all the attention was focused on the business, with the focus on the operational area. Today’s reality, driven by global changes and the growing attention to aspects concerning environmental protection, has expanded to other areas of concern that make corporate development more complex.

In the new compliance scenario, challenges go hand in hand with opportunities to demonstrate the company’s commitment to ethics and responsibility.

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New Realities, Renewed Actions

The implementation of comprehensive strategies that address legal complexity, promote organizational ethics, and effectively manage crises will allow companies not only to comply with regulations but also to build and maintain a solid reputation in an increasingly demanding business environment.

For companies and their executives, it’s no longer just about responding to the regulations and demands set by various laws. Nowadays, it’s also required to attend to the regulations specific to each industry sector in which they operate.

For example, in matters related to renewable energies, compliance is geared towards addressing a series of regulations focused on energy transmission conditions, or, in the case of salmon farms, these must respond to special regulations when working with living organisms and their derivatives. Even if we think about companies linked to the financial area, they must also comply with exclusive regulations specific to their sector.

Therefore, each company must face its particular issues, and this involves some difficulties in having to comply and demonstrate compliance, because, until very recently, it was enough with a statement that addressed the review of some background and legal obligations.

In the new scenario, this is much more complex and specific. The publication of compliance statements must be supported by sustainability reports, which allow establishing the evidence. These statements must express whether both regulations and norms are being met; otherwise, the reports must state which actions are in process to achieve full compliance with the requirements. These reports, of course, must be made public.

The importance of this compliance statement, supported by the publication of sustainability reports, acquires even greater resonance in companies that have payment commitments from loans granted by financial entities.

Today, the entity can demand the acceleration of a loan repayment from those companies that do not demonstrate compliance with their regulatory commitments, and it is not about the company’s ability to generate the resources that allow it to pay. These entities could demand early repayment of a loan upon noticing that the company is not meeting the sustainability commitments and regulations that apply to it.

This demand for early repayment poses a significant risk for companies that have shown non-compliance; these demands can amount to three million dollars a year, a substantial sum that must be included in the company’s cash flow; therefore, this financial risk becomes more than relevant to the point of dramatically affecting the results.

Keys to Facing Compliance Challenges in the New Scenario

• Define a compliance strategy aligned with the vision and objectives of the company. The rapid evolution of sustainability in recent years has led companies to improvise without clear policies, defined strategies, and without the resources or tools to achieve their goals.

Moreover, compliance should not be seen as a burden or an imposition, but as an opportunity and a competitive advantage. Therefore, it is important that business leaders dedicate their attention to determining a compliance strategy that is aligned with the vision and objectives of the company, that responds to the needs and expectations of its stakeholder groups, and that adapts to the context and changes that occur.

• Have a professional and multidisciplinary compliance team. Compliance is a cross-functional role that requires a team of qualified and specialized professionals. Company directors must have a compliance team that has the training, experience, autonomy, and appropriate resources to develop their work with efficiency and quality.
• Implement a compliance management system based on international standards. A compliance management system is the set of elements that allow planning, implementing, checking, and improving regulatory compliance and business ethics in an organization.

Company directors can rely on international standards to establish a compliance management system that is coherent, systematic, integrated, and continuous.

• Evaluate and monitor compliance and performance. Evaluation and monitoring are essential activities for the control and improvement of compliance. Company directors must establish indicators and measurement and monitoring mechanisms that allow them to know the level of compliance and the performance of compliance in the organization, as well as to identify the strengths, weaknesses, opportunities, and threats that arise.

In this regard, companies have seen the need to strengthen their operational teams and to define policies and strategies that incorporate tools to facilitate and optimize compliance management. Within this framework, companies have digital solutions that allow them to address these complexities.

We must understand that the use of traditional tools is no longer sufficient to achieve favorable results. In this challenging environment, we cannot rely on simple spreadsheets to manage compliance actions. 

• Involve and commit the entire organization. Compliance is a shared responsibility that involves and commits the entire organization, from top management to the newest employee. Company directors must encourage the involvement and commitment of all levels and areas of the organization in compliance, through awareness, motivation, participation, collaboration, and feedback.

Reflecting on the demands of the new realities we have previously mentioned, the ability to adapt to changing regulations has become a critical competency for business leaders. Additionally, the absence of suitable technological tools can complicate compliance management.

The adoption of digital solutions is essential to effectively address these complexities. Investing in compliance management platforms that enable the traceability of information, the standardization of processes, and the creation of sustainability reports with always up-to-date data not only ensures compliance with regulations but also provides companies with a competitive advantage by anticipating regulatory changes.

Taking the lead in implementing an effective compliance program not only protects the organization from legal and reputational risks but also creates opportunities to strengthen the ethical culture, enhance competitiveness, and build trusting relationships with various stakeholders.

Until recently, inaction might have been possible, but today, neglecting compliance challenges is not an option.

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