Every organization is governed by ESG laws and regulations.  These include workplace health and safety; restrictions on products and services; how waste is managed; and fair working conditions.  Increasingly, these regulations extend beyond the legal boundary of the organization, into the supply chain, product use and product reuse or disposal.

The notion of “compliance” has evolved, as well.  As regulations became more burdensome (and costly, in the event of a compliance failure), parties included environmental/ ESG provisions in legally-enforceable agreements:  acquisition and divestiture contracts; product and service specifications; insurance policies; landlord/ tenant agreements; etc.

Global treaties and agreements, and industry standards have created new obligations – also “compliance.”

Organizations now make voluntary commitments for environmental/ ESG performance.  With ESG performance and profile now a compelling differentiator to investors, customers and other stakeholders, these “voluntary” commitments are not entirely altruistic.  Stakeholders expect performance, reporting, and transparency.  This is another aspect of “compliance.”

DHC helps clients design, implement, review, and improve environmental compliance programs.  Compliance drivers include all those noted below.

• Laws, regulations
• Plans and programs pursuant to laws and regulations
• Contracts
• Customer specifications
• International treaties
• Industry standards
• Topical standards
• Company commitments

Companies are often unaware of the full extent of their environmental compliance requirements.  And they are dynamic.

DHC provides value by helping Clients understand the breadth of environmental compliance/ ESG compliance requirements.  They extend far beyond those included in the Code of Federal Regulations and state regulations (in the U.S.).

DHC has experience in designing, implementing and auditing policies, procedures, and internal controls.  This range of experience adds value, regardless of whether our Client’s needs are in one area, or for the full life cycle of compliance management.

DHC’s experience at a Big 4 firm included supporting over 20 financial audits as an environmental specialist.  This experience with the complexity and expectations of accounting rules has provided a useful “toolkit” to help Clients improve their environmental compliance/ ESG compliance management programs.

While ESG roles and responsibilities are often widely distributed, this should not be the only source of ESG expertise.  ESG compliance and ESG risk touch many parts of the organization – Operations, Facilities, Investor Relations, Quality, and Marketing, to name a few.  It is common for ESG to consist of a small portion of their duties in these departments.  They are expected to achieve and maintain compliance with little formal training or oversight by ESG specialists.  There should be appropriate, consistent touch points between those with ESG roles and responsibilities and specialists in the ESG issues that affect them.

“The best-laid plans of mice and men … “ Even compliance programs for longstanding environmental regulations have compliance requirements “hiding in plain sight.”   With apologies to John Steinbeck, the best-laid plans of organizations often go awry.  Although many environmental / ESG regulations are prescriptive, many require companies to develop and implement their own plans.  Written plans include commitments – to training, inspecting facilities, maintain spare parts for critical equipment, etc.  Organizations write their own compliance requirements.  In the event of an incident, these plans are the first place regulatory authorities – and plaintiff attorneys – will look.

Other plans involving ESG may get even less attention, but they are no less impactful.  Business Continuity Plans did not consider effects of a pandemic.  Organizations may have plans for Management of Change, but do not recognize what constitutes a “change” or its impact.  Changes in raw materials or restrictions on product content (both ESG-relevant) can have a wide ripple effect across a facility or organization.  ESG specialists who are plugged into the range of activities across an organization are extremely helpful in helping to maintain smoother, consistent operations and enabling organizations to meet their objectives.  This becomes obvious when things go wrong (COVID-19 example again).  ESG specialists are doing their best job when nothing bad happens, and nobody notices.