Words to Work By: Go Beyond: The E&C Pulse

December 16, 2020
Ben DiPietro

Compliance and ESG is not just checking boxes and confirming your organization’s actions are consistent with all regulatory requirements. It’s thinking about what you can do that is good for the environment, good for society, and good for the well-being of people.

“When you comply, comply not [only] with the regulations; go beyond,” Ana Paula Candeloro, compliance director of RB Capital, said during a recent LRN/Refinitiv webinar on the board’s role in compliance and ESG in Latin America.

While it’s ideal to go the self-regulatory route, Karen Poniachik, the director of Columbia Global Centers in Latin America, said that often doesn’t work in many cases in Latin America. But whether it’s voluntary or mandatory, there is no framework that is adopted by a wide number of companies to assess goals and objectives, she said.

“Some companies set environmental goals, some have governance goals and objectives,” said Poniachik. “I don’t see a strong, solid framework of ESG compliance in most companies.”

She pointed to the Vale dam disaster in January 2019 that left 270 people dead as an example of self-regulatory failure. Before it happened, Vale had written a report on ESG compliance, and had organized seminars on the subject.

Yet, when a call came in to the hotline two weeks before the tailing dam collapsed warning about the bad condition of the tailing dams, the company’s CEO ordered  the whistleblower be identified and fired. He could have easily said let’s investigate what is happening with the dams, but he didn’t, said Poniachik.

“Everything worked fine until the governance issues,” she said. “So again, you can say you have great ESG objectives, but what is the framework you are using? How do you audit that you really have a strong ESG framework? Does the E, the S, and the G work in coordination?”

LRN’s Susan Divers said Vale is an example of the dichotomy between what the rules say, or company’s code of conduct says, or what’s in the sustainability disclosures, as in the case of Vale, and what top executives actually do. 

It's a question of how do you measure culture. 

That is done by getting the voice of employees and asking questions about their levels of trust and respect, and asking them in a behavioral way, so the organization can tell if people are being treated with respect and really being encouraged to speak up without retaliation, said Divers. 

“It’s easy to be compliant on a lovely sunny day, but it’s hard when there’s snow and ice out there,” she said. “Focus on culture and measuring, that is really important.”

(This is the last newsletter for 2020. We at LRN wish everyone a healthy, safe, and meaningful holiday season. See you again on Jan. 6.)



The EU is considering legislation to fine tech companies up to 10% of revenue for breaking rules on competition.

VW board member Hiltrud Werner discusses how to lead through a crisis.

The Compliance Lady lists six ways to stop corruption at your company.

The pandemic and the new era of surveillance at work.

Forbes released its list of the 100 Most Powerful Women.

Why do people with dark personalities succeed?

Google's CEO promised to investigate the firing of the company's chief AI ethicist.

The political fight about climate risk in the financial sector. Will 2020 mark the end of greenwashing?

Cleveland's Major League Baseball team will stop using the nickname Indians.

New rules will require companies to identify the true beneficiaries of their operations. How bad is the hack that hit the U.S. government?

The seven principles of ethical leadership.

About the Author

Ben DiPietro

Joined LRN in October 2018 after 30 years as a journalist, including seven years at The Wall Street Journal, including Risk & Compliance Journal and was a creator of the WSJ Crisis of the Week column. In 2015 was named one of the 100 most influential people in business ethics by Ethisphere Institute. Spent 14 years as a reporter in Hawaii, 11 with The Associated Press.

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