The Society of Corporate Compliance & Ethics recently wrapped up its 22nd annual Compliance & Ethics Institute in Chicago, bringing in more than 1,000 attendees and featuring an intriguing slate of discussions from industry leaders about real‑world compliance issues, emerging trends, and practical applications. Several members of LRN’s Advisory Services team attended SCCE CEI—two of whom presented their own panels!—and they shared interesting thoughts and reactions to the topics explored at this year’s conference. (You can hear more at LRN's upcoming SCCE CEI recap webinar.) Here are five key takeaways from our ethics and compliance advisors.
The DOJ is focusing on corporate crime related to national security
“Lisa Monaco, the Deputy Attorney General with the US Department of Justice, was a keynote speaker at SCCE CEI this year. Monaco mentioned that the DOJ’s first and most important area of focus was ‘the biggest shift in corporate criminal enforcement that I’ve seen during my time in government: the rapid expansion of national security-related corporate crime.’ She cited terrorist financing, sanctions evasion, and the circumvention of export controls as the main areas of focus for prosecutors.
The three enforcement examples she gave all involved non-US companies: LaFarge Cement (France) for terrorist financing, British American Tobacco for sanctions violations and Suez Rajan for transporting Iranian oil. This reinforces our focus on a global standard for compliance programs. This shift is especially important for US companies in the defense and government contracting area, as any violations harming US national security could have catastrophic consequences on their business and reputation.” —Susan Divers, Director of Thought Leadership and Best Practices
AI is a new risk topic for E&C, but IP rights are carving out regulation paths
“Organizations are still grappling with what AI means for their operations and how they are going to educate and set expectations for their employees. While a lot of what this will mean is still up in the air, one area where there has been definitive movement is on organizations attempting to protect their intellectual property from AI models. We see that in discussions within organizations and with some of the early lawsuits against AI companies.” —Eric Morehead, Director of Advisory Services
Security and crisis management are “must-haves” in ethics and compliance programs
“A timely and important session for me was Disasters and You: The Role of the Compliance Team in Disaster Preparedness, Response, and Recovery presented by Jill Cusack from American Fidelity, Laura Clark Fey from Fey, LLC, and Tom Leatherbee from Hagerty Consulting. They spoke about how the regulatory landscape has changed in that a plan for disaster recovery is no longer a ‘nice to have’ but a ‘need to have.’ More importantly, the risk of polycrisis is growing, defined by the World Economic Forum as present and future risks interacting ‘to form a cluster of related global risks with compounding effects, such that the overall impact exceeds the sum of each part.’
The term 'polycrisis' is used throughout WEF’s 2023 Global Risks Report and brings to mind a whole host of privacy and data concerns, specifically when you see cybercrime coinciding with things like natural disasters. To bring it home, LRN code of conduct assessments include the topic of security/crisis management for this very reason—it’s something that should be thoughtfully considered in a code revision, in particular if it hasn’t been included in the code in the past.” —Meredith Hunt, Ethics & Compliance Specialist
ESG wasn’t as popular a SCCE CEI topic this year—likely for operational and political reasons
“There are several quite noticeable reasons why environmental, social, and governance topics weren’t as prominent on the agenda this year. Off the bat, AI has stolen some of the headlines from ESG and dominated a lot of the conversations especially at board level—not to mention conversations around sanctions, data breaches, and mental health at work. However, a confluence of controversies, criticisms, and perhaps a misalignment with current economic and political contexts seems to have taken some of the wind out of the ESG sail.
This isn’t speculation either. There’s been a substantial decline in the utilization of ESG criteria among investors. A recent study from Morgan Stanley indicates a considerable drop in the deployment of ESG considerations among very high net worth families when shaping their investment strategies. This shift may be attributed to various factors, including the increasing scrutiny and skepticism surrounding the tangible impact and efficacy of ESG investments.
The metamorphosis of ESG from a universally embraced concept into a politically charged term has been notably highlighted by Larry Fink, BlackRock’s CEO as he openly expressed his disdain for how ESG has been ‘weaponized’ by disparate political factions, tarnishing its original ethos of fostering responsible investment and corporate behavior. According to a recent article in Time magazine, he said he is ‘ashamed’ to have been drawn into the political debate over the term. Despite distancing himself from the ESG label, Fink maintains a firm commitment to ‘conscientious capitalism.’
Over in Europe, ESG’s structural and regulatory framework has come under the microscope, exemplified by actions within the European Parliament. In July 2023, despite the initial adoption of the European Sustainability Reporting Standards (ESRS), a group of over 40 lawmakers has called for its rejection, suggesting replacing the standards with simpler, less burdensome, and less expansive sustainability disclosure rules for companies.” —Ty Francis, Chief Advisory Officer
Board relationships matter, and policy simplification needs better application
“The importance of a real relationship between the board and the operational personnel in compliance is still not really the norm with many organizations. I found the discussion in Emily Miner's presentation about involving operational personnel at the board level was helpful. I was also interested to see that the topic of policy simplification came up in a couple of different sessions, but didn't hear many ideas on how to facilitate it. Finally, I heard a helpful piece of data from the Harvard Business Review: the average worker spends 28% of their workday answering emails.” —Eric Morehead, Director of Advisory Services
The key takeaway
The 22nd annual Compliance & Ethics Institute from SCCE explored a wide range of pressing issues, from AI and ESG to DOJ expectations and board engagement. To hear more about what stood out to ethics and compliance leaders this year—and what do they anticipate next—be sure to register for LRN’s upcoming webinar After SCCE CEI 2023: What we learned, and what’s next.
