In this five-part podcast series, sponsored by Assent Compliance, I have explored supply chain data management. I have visited with several members of the Assent Compliance team to introduce the topic, consider the synergies between several different types of compliance disciplines, the impact on organizations of compliance failures in this area and what are some of the drivers for continued legislation and regulation in this area. In this fifth and final episode, I have back Travis Miller, General Counsel at Assent Compliance Inc. and Director of Assent Compliance USA Ltd. We consider the market drivers for continued legislation.
Perhaps one of the largest challenges in the businesses world today is the impact of external stakeholders on business behavior. There has been a magnification through social media. This has led to a recognition that there are numerous external stakeholders that a company, if not has to answer to directly, must at least pay attention to in today’s connected world.
Miller believes that in many ways “it gets back to the corporation or a business purpose.” When corporations and businesses were first initially formed, it was supposed to be a social good. Yet thought time, that ethos changed into more of a “continuous existence of the corporation, not simply to achieve a corporate good.” He feels that what is happening is a reaction to that, even “a very visceral reaction. In many ways that people are saying that corporations are not upholding their end of the bargain. Simply put they are not doing what they were originally intended to do and now people are expecting more of them.”
He believes that there is a large movement to go back to some of those requirements and original purposes corporations were created for. This has become the driver behind a lot of new initiatives. It has led to items that were once voluntary are now becoming mandatory through the implementation of a lot of rules, regulations, laws, market access requirements. All of this is particularly true in the supply chain and the Corporate Social Responsibility (CSR) space.
Yet the other interesting factor that in many ways this social drive is not simply through regulatory enforcement, like fines and penalties for paying bribes for violations of the Foreign Corrupt Practices Act (FCPA), but rather in much more social areas as a byproduct of our social media culture generally referred to as “name and shame”. Miller related that even for corporations “so much of what we decided to do as people is really dictated by those around us and their perception. When the perception is that you are doing something negative as a brand or as a company, this can oftentimes be more catastrophic, at least as catastrophic as a very significant financial penalty.”
Miller believes that much like FCPA enforcement, which was quite light for 25 years, “you are probably seeing a very similar trend right now with labor practice violations.” He believes that it is “only a matter of time before either the law is changed to allow for financial penalties or that some clever policy or some clever enforcement authority finds a way to hold companies accountable for not doing anticipated they should be doing. As laws become more mature, I think you are probably going to see a lot of that coming about in the next several years.”
We concluded by considering whether there would be a move towards more of a public-private partnership in the overall fight against supply chain abuse and exploitation in all its forms. Miller believes regulators and policy folks are willing to say that business should be done ethically. The problem now is there is no single benchmark to hold companies against or even up to. Miller feels that it is up to business to take this step and initiative the conversation. It is not simply the regulators who are going to come up with ways to set expectations. Yet this can be done in a public-private partnership between business and government. Miller believes this is what formulates a better way that all businesses can operate. Such a collaboration allows a wide variety of companies to demonstrate, explain and share how they themselves are successful in the supply chain risk management arena. Miller concluded that it is “almost a race to the top scenario that gets created when policymakers and regulators collaborate” because they can demonstrate why the actions they are taking are so valuable.
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