@Risk

Many companies aren’t adequately integrating environmental, social and governance (ESG) issues with new SEC requirements, and that’s causing widespread SEC disclosure noncompliance, according to recent research by CSR Insight LLC.

The study, billed as the first independent, comprehensive technical study of how the SEC regime applies to ESG issues found that:

• More than a dozen SEC requirements potentially apply, for 10-K, 10-Q, 8-K, and other corporate SEC filings, including narrative disclosure and financial statement requirements, books and records requirements, and management certification requirements.
• There’s a substantial likelihood of widespread corporate noncompliance with one or more of these SEC requirements.

CSR Insight, which is an independent consultancy specializing in analysis of SEC and global financial regulation, global financial regulatory policy, ESG reporting frameworks, ESG capital market issues, and international corporate governance standards,  concluded that the problem is this: (more…)

In its January 2010 “Citizens United” decision, the Supreme Court lifted all but a handful of restraints on corporate spending on politics.

How have companies responded? Are they spending on politics? And, if they are, how are they navigating disclosure, board oversight and the associated risks?

A new study from the Center for Political Accountability, in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania, gives us some intriguing insights.

I found the results encouraging. The research, which is the first of its kind since Citizens United, revealed that many leading companies are taking steps to increase corporate political transparency and accountability. They are disclosing political spending and working to safeguard shareholders from its potential risk.

In fact, based on seven key indicators, the CPA-Zicklin Index identified the following S&P 100 companies as the top 10 for political transparency and accountability: Colgate-Palmolive Co., Exelon Corp., International Business Machines, Merck & Co. Inc., Johnson & Johnson, Pfizer Inc., United Parcel Service Inc., Dell Inc., Wells Fargo & Co. and EMC Corp.

Here’s a look at a few additional findings: (more…)

New research from PwC reveals some disturbing details which suggest that most companies aren’t necessarily providing investors with a complete view of the strategic opportunities and threats to the business.

Even though there’s considerable uncertainty in global markets these days, PwC’s new study showed that less than half (45 percent) of the 350 largest listed UK companies clearly explain the potential impact of the risks they have identified or how they intend to buffer their effects.

What’s more:

• Only 16 percent of the FTSE 350 clearly based their reporting on their strategy throughout their accounts,
• Just 35 percent clearly align their key performance indicators with strategic priorities and
• Two-thirds are failing to clearly define their business models in their annual reports.

Although these statistics may seem concerning, the study also uncovered a bright side: In many ways, reporting has improved from last year. For instance, back then, a mere 18 percent of the companies studied were clear about the impact of their risks.

In other positive developments: (more…)

The US Department of Justice, the Securities and Exchange Commission and the FBI have joined forces on a rigorous anti-corruption campaign, and they’re cracking down on businesses that aren’t compliant with the Foreign Corrupt Practices Act (FCPA).

Many have already felt the heat. Last year federal agencies initiated a record number of FCPA enforcement actions. Plus, the penalties associated with FCPA violations have become increasingly severe.

Who’s the most at risk?

That’s a tough question to answer, of course, knowing that the US government is targeting not only a company’s employees, but also its agents, contractors, investors and suppliers. In my estimation, supply chain and procurement executives of all multi-national corporations now face distinct risks and business challenges.

If you’re looking for an in-depth analysis of recent trends in anti-corruption enforcement, check out the new report from international law firm Chadbourne & Parke LLP.

The Chadbourne Compliance Quarterly Special Report, authored by partner M. Scott Peeler, reviews the circumstances surrounding 61 individuals who were the subject of government-initiated civil or criminal action alleging FCPA violations over the past six years. Interestingly, the study found that: (more…)

Most people would agree that the first step in solving a problem is admitting that yes, indeed, there is a problem.

So, how are companies going to implement effective risk and compliance management practices if they don’t even realize the impact of risk or compliance failures on their organization?

A new report written by the Economist Intelligence Unit illustrates my concerns.

After a worldwide survey of 385 senior executives from the finance, risk, compliance and legal functions across six industries and the public sector, the data shows that few companies have the ‘big picture’ view needed for effective risk and compliance management. Even though they understand the importance of an integrated approach to these activities, many have short-sighted practices that end up becoming costly and complex burdens. What’s more, these disparate responses often keep the “true” level of risk out of sight of the wider organization.

For example, the study found that: (more…)