Leveraging ABC frameworks for ESG compliance

With ESG regulations evolving rapidly, businesses are facing increasing obligations, ranging from supply chain due diligence (CSDDD, EU Deforestation Regulation) to corporate reporting (CSRD, ISSB).

The Environmental, Social and Governance (ESG) regulatory landscape continues to develop at pace and businesses are increasingly required to navigate new and complex ESG regulatory obligations. These include new supply chain due diligence requirements, such as those under the EU's Deforestation Regulation, the Corporate Sustainability Due Diligence Directive (CSDDD), and new corporate reporting requirements under the EU's Corporate Sustainability Reporting Directive and ISSB disclosure standards. Although the EU Commission has recently proposed a new 'Omnibus Directive' aimed at streamlining obligations in the CSRD and CSDDD to reduce regulatory burdens for business, the outcome of those proposals and the final form of any changes are still unknown. The key message for businesses is therefore not to 'down tools' and to continue preparing to comply. As outlined in this article, there are real benefits of doing so…

In the UK, there are increasing calls for the government to align the UK's regulatory framework with the EU by strengthening the Modern Slavery Act 2015 to introduce mandatory human rights and environmental supply chain due diligence and, appropriate, disclosure. The Joint Human Rights Committee is also examining whether the existing UK legal framework is up to scratch in managing forced labour risks in international supply chains. 2025 will see increased lobbying of Parliament on these issues. 

Failure to comply with new ESG rules presents significant legal, commercial and reputational risks, such as significant fines (in some cases up to 5% of global annual turnover), civil actions, naming and shaming, loss of social licence, greenwashing/social washing risk, and loss of investment opportunities. 

In light of this, developing an effective ESG compliance programme is now crucial. However, when doing so, businesses do not need to enter entirely unchartered waters. The introduction of the UK Bribery Act in 2010 has ensured that many businesses already have in place mature anti-bribery and corruption (ABC) frameworks, programmes and governance structures to manage financial crime risks across their business, and these can now be leveraged to support broader ESG compliance. 

In our latest publication we consider eight steps to leverage a business's ABC framework to support wider ESG compliance, including:

1. reviewing and updating your governance structures
2. expanding the scope of your risk assessment
3. building ESG risks into existing policies 
4. building out third party due diligence processes to incorporate ESG-specific metrics/ risks
5. investing in the right technology
6. developing your contractual safeguards
7. updating internal training and empowering employees to take ownership for ESG
8. building robust whistleblower hotlines and 'speak up' channels

You can read the full publication below.

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