
The evolving due diligence regime – looking to the horizon
Evolving due diligence laws demand transparency and results, impacting global value chains and corporate compliance strategies.
Rapid evolution in the sustainability regulatory landscape impacts companies and their suppliers across all sectors, at a global level. In this dynamic environment, where compliance and reporting challenges converge with broader strategic imperatives, General Counsel (GC), Chief Legal Officers, Company Secretaries and their teams have a pivotal role to play.
As well as being responsible for steering their Boards through complex, often interconnected sustainability regulations, they have an opportunity to leverage this focus on compliance to unlock broader business value.
To explore the spectrum of challenges and opportunities that ESG compliance raises for legal and company secretarial teams, PwC Legal Business Solutions (LBS) has collaborated with clients to host a series of international roundtable events throughout 2024 – in Hong Kong, Madrid, New York, London and Amsterdam.
Our aim throughout has been to create a unique forum where legal and company secretarial teams can share their experiences, identify pain points, gain insights, and discuss potential solutions.
These events coincided with the publication of a series of articles by the PwC’s LBS team focused on opportunities to create business value – covering key global regulatory developments including: the Corporate Sustainability Reporting Directive (CSRD); the Corporate Sustainability Due Diligence Directive (CSDDD) and the impacts on shareholder and director liability from initiatives such as the EU Green Deal. The series also explored key developments in sustainability regulation and the impact on environmental performance across the value chain and the role of legal function in ensuring workforce policies and rights.
This is a summary of some of the key themes that have emerged and the actions that we believe legal and company secretarial teams should be taking to manage sustainability risk and become catalysts for innovation, change and value creation.
As legal and company secretarial teams drive to enable ongoing sustainability compliance for their organisations, priorities include establishing integrated governance frameworks, with clearly defined roles and responsibilities and seamless communication enabled between the Board and their Legal, Company Secretarial and Finance / Corporate Reporting teams.
With the regulatory and reporting frameworks continuing to develop at pace, it will become even more essential for teams to monitor all applicable regulations, track compliance timelines and, where possible, leverage synergies. Technology tools and advisors will provide vital support, including implementing pragmatic approaches to balance and prioritise compliance with voluntary and mandated disclosures.
Crucially, as they look to the future, General Counsels, Chief Legal Officers and Company Secretaries should be alert to every opportunity to leverage sustainability compliance for competitive advantage and value creation. Pragmatic compliance, for example, should help to improve relationships with customers and suppliers, as well as providing a platform for modernising and streamlining the contracting process.
The emerging panoply of sustainability regulation is a powerful articulation of the way society expects companies to operate. From a legal perspective, it is imperative for companies to obtain an overview of their legal risks and opportunities, as well as how they distribute responsibility across their governance structures. Seamless collaboration with wider business functions such as employment, procurement, human rights and risk management will be mission critical.
While compliance with these existing and new regulations is increasingly a multidisciplinary exercise, legal and company secretarial functions should ensure they can support leadership teams in core areas such as assessing which companies are in scope (across the value chain), reviewing contracts, updating jurisdiction clauses, embedding sustainable ways of working into the core of the company via board knowledge and upskilling, updating policies and procedures, and ensuring effective monitoring.
PwC’s Legal Business Solutions global sustainability teams combine a breadth of legal and commercial capabilities and expertise to help businesses effectively understand their regulatory requirements and develop strategies for compliance that deliver business value. Working with organisations worldwide, we help support approaches to managing compliance across the spectrum of environmental, social and governance regulations and standards. Together with our strategic technology alliance partners, our human-led, technology powered approach enables us to evaluate regulatory risk and compliance, and helps legal and governance teams to develop an ecosystem that integrates legal requirements with leading industry practices.
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