Emerging Risks: Is Your Code of Conduct Up to Standard?
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The document discusses emerging risks that impact corporate codes of conduct, highlighting trends such as regulatory changes, technology, and social expectations. It emphasizes the importance of continuously updating codes to address issues like third party management, human rights, and sustainability, while also stressing the need for effective training and assessments. The author, Jason Lunday, offers insights from his extensive experience in ethics and compliance consulting.
![Emerging Risks Resources
► News articles on the emerging topic – this helps to identify the
concern and related business practices
► Corporate codes of conduct or policies
► Try a complex Google search like “code of conduct” (or
“policy”) and “[topic]” (e.g., +“Code of conduct”
+sustainability)
► Business or industry association websites (e.g., Int’l. Chamber of
Commerce)
► Cause advocacy groups (that may develop topic-specific codes of
conduct)
© 2016 IntegrityFactor](https://image.slidesharecdn.com/i-sightwebinarmay2016jasonlunday-emergingrisks1-160526145206/85/Emerging-Risks-Is-Your-Code-of-Conduct-Up-to-Standard-23-320.jpg)
Emerging Risks: Is Your Code of Conduct Up to Standard?
- 1. Emerging Risks: Is Your Code of Conduct Up to Standard? Jason Lunday, IntegrityFactor
- 2. Jason Lunday Jason Lunday is a consultant with IntegrityFactor, a professional services company. With more than 25 years of experience in consulting and management, Lunday has worked with companies of many sizes and across numerous industries to implement and enhance overall ethics and compliance programs and their components, including corporate values, codes of conduct and policies, training, communication and risk, culture and program assessments. Much of his work has involved development, revision and review of corporate codes of conduct, as well as in-depth research on corporate code of conduct fundamentals, trends and leading practices. He has authored or co-authored over thirty articles, including for Compliance & Ethics Professional, Corporate Compliance Insights, ethikos: A Journal of Practical Business Ethics, Ivey Business Journal, the Federal Ethics Report and EPAC Magazine. Jason has worked for Goldman, Sachs & Co., Arthur Andersen LLP, the Ethics Resource Center, VeriSign, Inc., and Premier, Inc. Jason holds an MBA, with focus in business ethics and organizational behavior, from the University of Virginia’s Darden Graduate Business School.
- 3. Agenda ► Trends & drivers for emerging risks ► Emerging risks making their way into codes of conduct ► Implications of more standards ► Emerging risks and their impact on the evolving role of a code of conduct ► How to assess which emerging risks may be relevant to your organization and its code © 2016 IntegrityFactor
- 4. Poll Question When was your organization’s code of conduct last updated? A.Within the last year B.Two years ago C.Three years ago D.Four years ago E.Five or more years ago © 2016 IntegrityFactor
- 5. CEB Research © 2016 IntegrityFactorSource: “Getting Code Review Right,” CEB, 2014-2016.
- 6. Trends & Drivers © 2016 IntegrityFactor Legal ►New laws ►More regulatory clarity ►Greater enforcement Technology ►Internet ►Greater amounts of data ►Ease of data transfer Transparency ►Internet ►Many eyes ►Corporate reporting Organizational integrity ►Holistic responsibility ►Recognition of holistic cause-and-effect Power of stakeholders and interested parties Reputation and trust (regulatory sanctions may be the least of concern) Higher order expectations ►Industry ►Professional ►Business entity ►Non-business entity (non- profits, advocacy) Better ways to manage E&C risk Interconnectedness of: ►Entities ►Stakeholders (upstream- to-downstream effects
- 7. Emerging Risks: A Process Model © 2016 IntegrityFactor Laws & regulationsLaws & regulations Self-Regulatory Standards Self-Regulatory Standards Company stakeholder concerns Company stakeholder concerns Advocacy group concerns Advocacy group concerns NewsNews News articles, investigative exposés Agitation for change, protests, boycotts Shareholder proposals, Advocacy orgs, business orgs, quasi-governmental orgs
- 8. Major Emerging Risks ► Third party management ► Human rights ► Sustainability ► Industry specific risks ► Technology-related ► Risk management ► Legal process ► Corporate structure ► Aspirational © 2016 IntegrityFactor
- 9. Topic: Third Party Management © 2016 IntegrityFactor Overview Emerging E&C management issue; partly driven by regulatory guidance Overview Emerging E&C management issue; partly driven by regulatory guidance Resources Anthem, Citigroup, Comcast, CVS, IBM Resources Anthem, Citigroup, Comcast, CVS, IBM Topics ►Employees’ duties in working with third parties (arm’s length, objective procurement, proper procedures, avoidance of COI, nepotism, safety, environmental protection, use of supplier data, G&E and free services ►Controls for working with third parties (contracts, gov’t. acquisition regs, monitoring, ►Supplier diversity, incl. SME ►Separate third party codes of conduct or policies/supplier duties (performance standards, confidentiality, G&E) Topics ►Employees’ duties in working with third parties (arm’s length, objective procurement, proper procedures, avoidance of COI, nepotism, safety, environmental protection, use of supplier data, G&E and free services ►Controls for working with third parties (contracts, gov’t. acquisition regs, monitoring, ►Supplier diversity, incl. SME ►Separate third party codes of conduct or policies/supplier duties (performance standards, confidentiality, G&E) OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 10. Topic: Human Rights © 2016 IntegrityFactor Overview ►Closely linked to supplier/supply chain conduct ►High-level standards, sometimes dispersed among categories; more content in corporate statements or policies Overview ►Closely linked to supplier/supply chain conduct ►High-level standards, sometimes dispersed among categories; more content in corporate statements or policies Resources Chevron, Clorox, Dow, Applied Materials, Citigroup Resources Chevron, Clorox, Dow, Applied Materials, Citigroup Topics ►Environmental protection; improving env. performance in operations ►Reduction of waste, emissions, energy consumption; op. footprint ►Resource conservation/efficient operations; recycling, incl. product development ►Sustainable development/growth ►Community health & safety; ►Supplier diversity; use of local suppliers ►Use of third parties with similar standards ►Public reporting (“triple bottom line”) Topics ►Environmental protection; improving env. performance in operations ►Reduction of waste, emissions, energy consumption; op. footprint ►Resource conservation/efficient operations; recycling, incl. product development ►Sustainable development/growth ►Community health & safety; ►Supplier diversity; use of local suppliers ►Use of third parties with similar standards ►Public reporting (“triple bottom line”) OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 11. Topic: Sustainability © 2016 IntegrityFactor Overview Can be a broad topic, but often focused on environmental protection Overview Can be a broad topic, but often focused on environmental protection Resources Corporate statements on environmental protection and sustainability; Domtar, Dow, Avery Dennison, Celanese, Kellogg Resources Corporate statements on environmental protection and sustainability; Domtar, Dow, Avery Dennison, Celanese, Kellogg Topics ►Environmental protection; improving env. performance in operations ►Reduction of waste, emissions, energy consumption; op. footprint ►Resource conservation/efficient operations; recycling, incl. product development ►Sustainable development/growth ►Community health & safety; ►Supplier diversity; use of local suppliers ►Use of third parties with similar standards ►Public reporting (e.g., “triple bottom line”) Topics ►Environmental protection; improving env. performance in operations ►Reduction of waste, emissions, energy consumption; op. footprint ►Resource conservation/efficient operations; recycling, incl. product development ►Sustainable development/growth ►Community health & safety; ►Supplier diversity; use of local suppliers ►Use of third parties with similar standards ►Public reporting (e.g., “triple bottom line”) OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 12. Topic: Sustainability (II) © 2016 IntegrityFactor
- 13. Topic: Industry-Specific Risks © 2016 IntegrityFactor Overview ►Increased inclusion of standards specific to industry rules and expectations; more industry-specific self-regulation ►Moving from policies into the code; signal of integrated compliance management Overview ►Increased inclusion of standards specific to industry rules and expectations; more industry-specific self-regulation ►Moving from policies into the code; signal of integrated compliance management Resources Quintiles, NiSource, Kindred Healthcare, P&G, Pfizer Resources Quintiles, NiSource, Kindred Healthcare, P&G, Pfizer Topics ►Healthcare: Food/drug laws, Medicare part D participation, licensure and certification ►Pharmaceuticals: science misconduct, clinical research, marketing ►Financial services: professional duties, fiduciary duty ►Energy/Utilities: FERC price reporting ►Government contracting: Cost accounting/reporting, use of third parties Topics ►Healthcare: Food/drug laws, Medicare part D participation, licensure and certification ►Pharmaceuticals: science misconduct, clinical research, marketing ►Financial services: professional duties, fiduciary duty ►Energy/Utilities: FERC price reporting ►Government contracting: Cost accounting/reporting, use of third parties OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 14. Topic: Technology-Related © 2016 IntegrityFactor Overview Quick ramp up on this topic; can expect greater expansion in coming years Overview Quick ramp up on this topic; can expect greater expansion in coming years Resources Cisco, HP, Comcast, IBM Resources Cisco, HP, Comcast, IBM Topics ►Mobile devices: while driving, “Bring Your Own Device” (BYOD) ►Use of social media (for business and personal uses) ►Information security; business continuity ►Information/data privacy; access by third parties ►Open source software Topics ►Mobile devices: while driving, “Bring Your Own Device” (BYOD) ►Use of social media (for business and personal uses) ►Information security; business continuity ►Information/data privacy; access by third parties ►Open source software OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 15. Topic: Risk Management © 2016 IntegrityFactor Overview Greater understanding of the means to reduce risk, not just stop illegal conduct Overview Greater understanding of the means to reduce risk, not just stop illegal conduct Resources Comcast, Charles Schwab, Clorox, NiSource, Chevron Resources Comcast, Charles Schwab, Clorox, NiSource, Chevron Topics ►Internal controls ►Contract review ►Background checks ►Audits ►Business continuity ►Written approvals, exceptions ►Security/crisis management ►Contract compliance ►Working with auditors Topics ►Internal controls ►Contract review ►Background checks ►Audits ►Business continuity ►Written approvals, exceptions ►Security/crisis management ►Contract compliance ►Working with auditors OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 16. Topic: Legal Process © 2016 IntegrityFactor Overview Greater focus on how employees support the legal process; mostly centered around Records Management Overview Greater focus on how employees support the legal process; mostly centered around Records Management Resources Pulte, Harris, Realogy, PetSmart, CF Industries, Verizon Resources Pulte, Harris, Realogy, PetSmart, CF Industries, Verizon Topics ►Regulatory inquiries; government investigations; court orders ►Duties of Corporate Integrity Agreements/Deferred Prosecution Agreements ►Legal holds Topics ►Regulatory inquiries; government investigations; court orders ►Duties of Corporate Integrity Agreements/Deferred Prosecution Agreements ►Legal holds OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 17. Topic: Corporate Structure © 2016 IntegrityFactor Overview As organizations increase in structural complexity and collaborative relationships (e.g., subsidiaries, minority ownership, partnerships, joint ventures), more focus on managing related issues Overview As organizations increase in structural complexity and collaborative relationships (e.g., subsidiaries, minority ownership, partnerships, joint ventures), more focus on managing related issues Resources Verizon, Spectra Energy, NiSource, Leidos, CH2M Hill Resources Verizon, Spectra Energy, NiSource, Leidos, CH2M Hill Topics ►Affiliate rules ►Organizational conflicts of interest Topics ►Affiliate rules ►Organizational conflicts of interest OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 18. Topic: “Aspirational” © 2016 IntegrityFactor Overview ►Some content goes beyond requirements to higher-order conduct to meet greater expectations ►Some of this content is still overarching and not tied to specific conduct/behaviors Overview ►Some content goes beyond requirements to higher-order conduct to meet greater expectations ►Some of this content is still overarching and not tied to specific conduct/behaviors Resources Chevron, Visteon, Interpublic, Danaher, Caterpillar Resources Chevron, Visteon, Interpublic, Danaher, Caterpillar Topics ►Corporate values (more defined, better link to mission and code’s standards) ►Diversity/inclusion; supplier diversity ►Quality ►Innovation ►Sustainability Topics ►Corporate values (more defined, better link to mission and code’s standards) ►Diversity/inclusion; supplier diversity ►Quality ►Innovation ►Sustainability OverviewOverview ResourcesResources Sub-TopicsSub-Topics
- 19. Implications of More Standards ► More for each employee to know and do ► Need for better training plans ► Activity-based training (put education close to when most needed) ► Re-imaging the code and policy continuum ► Also as resource manual ► As decision-making tool ► Since the overwhelming number of standards and policies cannot be memorized – need to function more as a guide © 2016 IntegrityFactor
- 20. Implications for Investigations ► Need for clear standards to address undesirable conduct ► Provide employees with clear guidance, examples, decision tools ► Provide information and expectations on the investigation process so employees know what to expect and what is expected of them ► “Good faith” reporting ► Culpability vs. raising one’s own misconduct ► Duty of confidentiality ► Non-retaliation, esp. for supervisors © 2016 IntegrityFactor
- 21. Assessing Emerging Risks ► What’s the level of conversation regarding the topic? ► General interest ► Agitation ► Business problems ► Is the topic relevant to your industry? Your business? ► News stories of competitors or others in similar circumstances ► What’s your organization’s risk tolerance? ► How important is reputation and trust to your organization’s success? ► What ‘s your organizations Ethics & Compliance Program maturity level? © 2016 IntegrityFactor
- 22. Best Practices in Standards © 2016 IntegrityFactor Topic Definition Example Rationale The standard’s purpose “Our commitment to sustainability demonstrates our responsibility to our communities and improves our business performance.” Overarching standard A crisp statement of expectations “We operate our business in a sustainable manner for our own and future generations’ benefit to foster greater environmental protection, improvement of local economies and a better quality of living for workers.” Definitions Clarification of terms “Sustainability is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Examples The underlying issue and standard in practice • Use of renewable resources to power company facilities as a way to reduce our impact on the environment. • Seeking local suppliers to foster a more vibrant economy in our communities. Subtopics Specific areas for standards to focus on Environmental protection, human rights, vibrant local communities
- 23. Emerging Risks Resources ► News articles on the emerging topic – this helps to identify the concern and related business practices ► Corporate codes of conduct or policies ► Try a complex Google search like “code of conduct” (or “policy”) and “[topic]” (e.g., +“Code of conduct” +sustainability) ► Business or industry association websites (e.g., Int’l. Chamber of Commerce) ► Cause advocacy groups (that may develop topic-specific codes of conduct) © 2016 IntegrityFactor
- 24. Thank-you for participating If you have any questions, please feel free to email them to: Jason L. Lunday, IntegrityFActor jason.lunday@integrity-factor.com Joe Gerard, Vice President Marketing and Sales j.gerard@i-sight.com