How governments can stimulate compliance effectiveness
Essay by Michael van Woerden (DeComplianceMonitor), published in TvCo 2022 – 2 (April 2022). Good compliance is good for business. A culture of integrity, embedded in the corporate strategy and supported by a code of conduct as ‘living document’ is crucial to protect trust by customers, governments, and other key stakeholders of the organization. Many companies adapt their strategies to align with the UN Agenda 2030 for sustainable development. However, resulting ethics and compliance commitments will fade if they are not followed by measurable goals and actions. Professor Sandra J. Sucher (Harvard Business School) explains that trust can only endure if it is based on both ‘cognitive trust’ (expertise and reliability) and ‘affective trust’ (motives and actions).3 She calls upon meaningful transparency as a way to hold management accountable for its commitments towards stakeholders of the company. In this essay, it is argued that governments should act as ‘gatekeeper’ for companies that tender for important governmental projects. By separating the wheat from the chaff, damaging compliance shortcomings and the related economic and social costs can be avoided and companies are stimulated to protect integrity and trust as pillars of prosperity. A more active role by the government is important in large projects: it would stimulate and reward self-cleaning initiatives by companies, their suppliers and other business partners. Similarly, enforcement agencies, supervisory authorities, and unilateral organizations such as the World Bank, the European Investment Bank (EIB), and the European Bank for Construction and Development (EBCD) can set the tone as regards compliance by encouraging an integrated approach on environmental, social, and governance (ESG) matters.