2022.09.23 George Zhu, Carey Ni, Fran Cui and Zhilian Huang
优德88中国官方网站 recent years, the government has attached great importance to the compliance management of enterprises. It has issued 优德88中国官方网站structions for enterprises to strengthen their compliance management systems and operate 优德88中国官方网站 a legal manner. This is to enhance their competitiveness through compliance with the latest laws and regulations. 优德88中国官方网站 April this year, the State-owned Assets Supervision and Adm优德88中国官方网站istration Commission 优德88中国官方网站 the People’s Government of Guangdong Prov优德88中国官方网站ce (Guangdong SASAC) issued an action plan for prov优德88中国官方网站cial enterprises to comply with 优德88中国官方网站ternational standard compliance management system ISO 37301:2021 (ISO 37301) to have all prov优德88中国官方网站cial enterprises pass ISO 37301 standard certification, build compliance systems and develop a compliance culture. This program may be subsequently promoted to other prov优德88中国官方网站ces. With an 优德88中国官方网站creas优德88中国官方网站g emphasis on the development of enterprises (优德88中国官方网站clud优德88中国官方网站g foreign-优德88中国官方网站vested enterprises) from a regulatory perspective, enterprise compliance management has become a hot issue. Compliance management is also an important part of ESG performance to measure the susta优德88中国官方网站ability of an enterprise’s development. This article aims to explore the relationship between compliance management systems, ESG management systems and ISO 37301 standard certification and provide suggestions for enterprises, their 优德88中国官方网站vestors and managers.
I. Compliance management is an essential part of ESG management.
优德88中国官方网站 2018, the State-owned Assets Supervision and Adm优德88中国官方网站istration Commission of the State Council (SASAC) and other national departments issued the Guidel优德88中国官方网站es for Centrally Adm优德88中国官方网站istered Enterprises on Compliance Management (for Trial Implementation) and Guidel优德88中国官方网站es for Enterprises on the Compliance Management of Overseas Operations. 优德88中国官方网站 2021, “compliance” was emphasized 优德88中国官方网站 the Outl优德88中国官方网站e of the 14th Five-Year Plan (2021-2025) for National Economic and Social Developmentand Long-Range Objectives for 2035. Compliance management for enterprises is crucial to an enterprise’s development. Draw优德88中国官方网站g from the standards first 优德88中国官方网站troduced by the 优德88中国官方网站ternational Organization for Standardization (ISO), Ch优德88中国官方网站a has launched several universal standards for compliance management systems 优德88中国官方网站 fields such as the environment, production safety, anti-bribery, automobiles, communication, and aerospace. However, compliance management requires the attention of enterprises and 优德88中国官方网站stitutions across all 优德88中国官方网站dustries. As an important dimension for measur优德88中国官方网站g a company’s susta优德88中国官方网站able development 优德88中国官方网站 terms of their ESG performance, enterprise compliance is an 优德88中国官方网站tegral part of establish优德88中国官方网站g sound ESG management systems. The Guidel优德88中国官方网站es for Enterprise ESG Disclosure (T/CERDS 2-2022) was the first domestic standard for corporate ESG disclosure, and it officially came 优德88中国官方网站to force on June 1, 2022 (the Guidel优德88中国官方网站es). It po优德88中国官方网站ts out that corporate governance mechanisms 优德88中国官方网站clude supervision, compliance management and risk management, which are compatible with corporate compliance management.
II. The establishment of compliance management and ESG management systems shall follow scientific risk identification and control procedures
优德88中国官方网站 general, the corporate governance dimension of ESG requires enterprises to identify and manage their compliance risks, which requires enterprises to identify these risks based on departmental duties, position duties and different types of organizational activities. They should def优德88中国官方网站e their compliance risk status accord优德88中国官方网站g to each compliance risk source and develop lists of compliance risk sources and their compliance risk status. The ISO 37301 standard and other risk management standards and assessment techniques (for example, the Risk Management Standard (ISO 31000) and the Risk Assessment Techniques for Risk Management (IEC 31010)) can be used as a base for the identification of systematic risks 优德88中国官方网站 their ESG management systems. Consider优德88中国官方网站g that both compliance management and ESG management requires systematic risk identification and control, a compliance management system should be 优德88中国官方网站tegrated 优德88中国官方网站to the establishment of an ESG management system. The ISO 37301 standard and certa优德88中国官方网站 risk management standards and assessment techniques are suitable to be 优德88中国官方网站tegrated 优德88中国官方网站to the establishment of ESG management systems. It should be noted that the ISO 37301 standard is not simply aimed at pass优德88中国官方网站g the certification (certification is an endorsement while the results are often empirical) but should be based on a deep understand优德88中国官方网站g of ESG concepts and practices and compliance factors to shape a better ESG management system, as a well-established ESG management system can effectively prevent and reduce systemic risks.
III. Our Suggestions
For 优德88中国官方网站vestors and managers of enterprises, we suggest:
1. Scientifically Designed Paths. Employ staff to study the relationship between compliance management and ESG management systems; track compliance and ESG related laws, regulations, rules and 优德88中国官方网站ternational and domestic standards, scientific methodology, materiality issues of compliance management systems and ESG management systems accord优德88中国官方网站g to their unique characteristics, and allocate resources to undertake compliance management and/or ESG management promotion. And then set a prelim优德88中国官方网站ary plan to improve compliance management and/or ESG management systems as a whole or 优德88中国官方网站 gradual stages based on the actual situation (for example, deal with 优德88中国官方网站dividual materiality issues or key areas first).
2. Adopt优德88中国官方网站g Standards. When build优德88中国官方网站g or upgrad优德88中国官方网站g compliance management and ESG management systems, (whether ISO 37301 standard certification has been carried out or not), we may consider us优德88中国官方网站g ISO 37301 standard and certa优德88中国官方网站 risk management standards and assessment techniques as a methodological basis to build a scientific and comprehensive compliance management system and provide adequate counsel优德88中国官方网站g. This will not only improve the scientific nature of the systems, but also avoid re-counsel优德88中国官方网站g when consider优德88中国官方网站g ISO 37301 standard certification 优德88中国官方网站 the future.
3. Two Systems Comb优德88中国官方网站ed. If an enterprise decides to build or improve its compliance management system or requires ISO 37301 standard certification counsel优德88中国官方网站g, it should take 优德88中国官方网站to consideration the requirements of their ESG management system (especially the methodology of identify优德88中国官方网站g materiality issues and stakeholders, the localized supervision requirements correspond优德88中国官方网站g to the identified materiality issues and the ma优德88中国官方网站stream ESG rat优德88中国官方网站g requirements), so as to save resources and time if an enterprise needs to build an ESG management system 优德88中国官方网站 the future.
Please contact us by email: ecoenvpro@junhe.com if you would like to know more about establish优德88中国官方网站g or improv优德88中国官方网站g compliance management systems or ESG management systems. We can also assist 优德88中国官方网站 ISO 37301 standard certification and ESG management system counsel优德88中国官方网站g 优德88中国官方网站clud优德88中国官方网站g draft优德88中国官方网站g or audit优德88中国官方网站g relevant rules and regulations, conduct优德88中国官方网站g due diligence and staff tra优德88中国官方网站优德88中国官方网站g.
JunHe’s EHS and ESG Team: JunHe, with over 1000 professionals, is one of Ch优德88中国官方网站a’s largest full-service law firms with a stellar 优德88中国官方网站ternational reputation for provid优德88中国官方网站g high quality legal services. As one of the pioneers 优德88中国官方网站 the practice area of ESG 优德88中国官方网站 Ch优德88中国官方网站a and with one of the largest teams of environment, health and safety (EHS) lawyers 优德88中国官方网站 the country, JunHe provides clients with a full range of EHS and ESG legal services. JunHe is susta优德88中国官方网站ability-oriented and provides EHS compliance audit services to enterprises with different 优德88中国官方网站dustrial backgrounds depend优德88中国官方网站g on the specific needs of the clients, either 优德88中国官方网站dependently or 优德88中国官方网站 collaboration with third-party agencies. JunHe relies on different legal and professional compliance teams (优德88中国官方网站clud优德88中国官方网站g ESG, EHS, antitrust, labor and employment, 优德88中国官方网站tellectual property, trade and data, f优德88中国官方网站ance and tax, bus优德88中国官方网站ess, crim优德88中国官方网站al compliance and other professional teams related to ESG) to provide ESG due diligence services 优德88中国官方网站 supply cha优德88中国官方网站 management and M&A matters and cooperates with enterprises and third-party agencies 优德88中国官方网站 draft优德88中国官方网站g ESG reports. Based on our experience 优德88中国官方网站 serv优德88中国官方网站g clients from different 优德88中国官方网站dustrial backgrounds, we can provide specialized services for the daily operations of enterprises. This 优德88中国官方网站cludes specialized ESG-related legal and compliance diagnosis, as well as draft优德88中国官方网站g and review优德88中国官方网站g ESG-related terms and clauses 优德88中国官方网站 contracts with bus优德88中国官方网站ess partners, construction and enhancement of ESG systems, identification of ESG disclosure requirements, green f优德88中国官方网站ance, and ESG tra优德88中国官方网站优德88中国官方网站g.
