ComplianceKeys#29. Compliance and Sustainability
In recent years, the concept of Sustainability has evolved and become integrated into different areas of our society. Among these is the business world, where it has increasingly become a priority concern and a fundamental pillar in the development of today’s businesses.
The consolidation of the concept of sustainability in the business world responds to an increasingly demanding global consciousness that calls for the adoption of responsible and transparent management models. This paradigm shift is driving organisations to integrate environmental, social and good governance criteria into their decision-making processes, ensuring not only the creation of long-term value, but also the mitigation of risks associated with corporate impact on their environment.
In this context, Compliance takes on a strategic role, providing the necessary mechanisms to ensure compliance with the applicable regulatory framework and promoting the effective incorporation of sustainability principles into organisational culture and corporate planning.
Sustainability as a strategic pillar
Corporate sustainability encompasses three key dimensions: environmental, social and governance (hereinafter ESG). These dimensions have become essential criteria for business development and assessing the impact of companies on society and the environment. Integrating sustainability into businesses has been shown to generate direct benefits, such as improved corporate reputation, access to new markets and operational efficiency.
The adoption of regulations such as Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 as regards corporate sustainability reporting (hereinafter referred to as the Corporate Sustainability Reporting Directive or CSRD) or Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (hereinafter referred to as the Corporate Sustainability Due Diligence Directive or CSDD), reinforce the need for companies to comply with their Sustainability obligations and, at the same time, anticipate emerging regulations in this area by integrating aspects of prevention and sustainability ex ante.
Compliance and Sustainability
As such, Compliance is not just a set of regulatory measures, but also a strategic approach that promotes ethics, transparency and commitment to compliance within companies. The integration of ESG criteria into Compliance systems is essential to ensure that companies not only mitigate the risks associated with their activities in relation to the regulations that apply to them but also generate a positive impact on their environment.
One of the challenges facing companies is integrating sustainability principles into their Compliance strategy and business activities, which involves managing environmental, social and governance risks such as climate change, labour exploitation and transparency in business management. To this end, Compliance models must evolve, incorporating sustainability across all organisational processes and aligning business objectives with sustainability goals.
Challenges and Opportunities in Compliance and Sustainability
The main difficulty and challenge in this area lies in the regulatory complexity and costs associated with implementing sustainable practices. Companies must keep up with a constantly changing regulatory environment, both nationally and internationally, and this can create both operational and financial impediments.
In Spain, SMEs are particularly affected. Due to their resources and structure, they face greater barriers and difficulties in adapting to these new standards and requirements, both in terms of Compliance and sustainability.
Furthermore, measuring the impact of sustainability practices and accountability remain complicated tasks, making it difficult to report on and implement these measures.
Thus, companies that adopt sustainable practices have the opportunity to improve their reputation, access broader markets and attract sustainable investments. The integration of ESG criteria into corporate reporting, as required by the CSRD and the CSDDD, can facilitate transparency and improve relationships with investors, customers and other stakeholders. In this context, large companies, which are directly subject to these regulations, tend to extend their sustainability requirements throughout their value chain, passing on requirements to suppliers and third-party collaborators. This has a direct impact on SMEs which, despite not being legally obliged to comply, are forced to adapt in order to maintain key business relationships. Thus, considering sustainability as a key component of their strategy not only improves operational efficiency and the ability to adapt to new regulations, but also becomes a critical factor in continuity and competitiveness for companies, especially for SMEs in an increasingly demanding market.
European Regulations and their impact on Compliance and Sustainability
At the European level, the adoption of regulations such as the CSRD and the CSDDD are clear examples of how regulations are driving companies to incorporate sustainability into their business models. For example, the CSRD requires companies to report on their social and environmental impact, reinforcing the need to integrate ESG criteria into their Compliance practices.
These regulations seek not only to ensure transparency, but also a greener and more inclusive economy, aligned with the UN’s Sustainable Development Goals (SDGs). Companies that align themselves with these initiatives not only comply with legal requirements, but also contribute to sustainable development at a global level.
Conclusion
Compliance and sustainability must be understood as inseparable components of a comprehensive corporate strategy that pursues not only economic success, but also a commitment to regulatory Compliance, social welfare and environmental preservation. As regulatory and stakeholder expectations (such as customers or investors) increase, companies must take a proactive and transparent approach to integrating sustainability principles into all their operations.
In the future, the most effective Compliance systems will need to be able to adapt to these new challenges and opportunities. Companies that manage to balance their economic objectives with a firm commitment to sustainability and Compliance will be better positioned to thrive in a global environment that is increasingly aware of the importance of social and environmental responsibility. To this end, Compliance plays a key role and is a strategic tool for achieving these goals.
Compliance Department of Molins Defensa Penal.