AHC Group Newsletter Archive
Issue: January 2006
Answering Public Expectations Since 1981
Beyond the Rules:
The Cost of Compliance vs. the Value of Leadership
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Governance, and corporate responsibility more broadly, can be viewed positively — as a source of competitive advantage and enterprise risk management.
— George Dallas
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Whatever one's political stance on the evils (or desirability) of government regulation of business, there is at least one point most company owners and officers can agree on: if you think "following the rules" is expensive, try running a business without a common set of protocols governing good corporate behavior and best practices. When those rules are both explicit and widely accepted, then you know that the playing field is level, at least where your competitors are concerned.
One important fact to emerge from the recent U.N. Conference in Montreal is that when it comes to climate change and other social and environmental issues, there is not always any such level playing field. While much of the rest of the world has signed on to the Kyoto accord, for example, the United States has not. Is this a case of an administration stubbornly digging in its heels, or are they simply taking a prudent "hands-off" stance toward industry?
Aside from politics, the answer to that question doesn't really matter. What does matter is that this political divide has practical implications for companies, especially multinationals, that aspire to operate on an equal footing with other corporate good citizens around the world. Without the guidance that legislation provides, how can a company make rational business decisions affecting their compliance with laws that may or may not be passed in the future, and thus their long-term planning for internal governance and risk management policies respecting such laws?
In the legal vacuum which thus prevails, fortunately, the potential for financial anarchy and costly missteps is considerably smaller than one would suppose — thanks to the efforts not of government, but of the private sector. Into this breach have stepped large reinsurers, rating organizations such as DNV and Standard & Poor's, and high-profile corporations like BP, Hewlett Packard, Suncor Energy, and others. Rather than wait to be told what to do by government, it is they who are in effect writing the rules, leading rather than meandering, and legislating not by fiat but by calm, rational analysis and, frequently, just by good example.
More often than not, these de facto rules of governance affecting environmental and corporate social responsibility policies are in many respects more stringent than anything that government might have come up with. In other words, the CSR protocols that even now continue to evolve are becoming already a kind of gold standard; and minimum compliance with these protocols not only defines the playing field worldwide — in the 21st century, it IS the playing field.
In an article from our most recent issue of Corporate Strategy Today (#11), contributor George Dallas of Standard & Poor's argues that corporate governance should not be looked at as an external discipline that imposes costs, but rather as an internal discipline that adds value to an enterprise. It is about creating a corporate culture that embodies and implements core values and principles intended to enhance the quality and sustainability of a firm's future performance, and ultimately its bottom line. You can read an excerpt from his article, "Better Governance: To Avoid Risks or to Create Value?," at our Web site.
January Promotion
Risk, Value & Trends Report
Insights on Trends in Capital Markets and the Investment Community
In today's volatile risk climate there has been a rapid evolution in investment, regulatory, and stakeholder expectations. Understanding and managing these expectations are key to the long-term fiduciary health of an organization.
Over the past few years, the AHC Group has facilitated a number of private workshops on behalf of its Corporate Affiliate members — from HP, Merck, and ConocoPhillips to over a dozen of the leading utilities in the world — on the topic of "Trends, Values, and Risk."
Our common theme throughout these workshops has been to update member companies on developments in capital markets and the investment community regarding how best to capture the value of your firm's energy, environmental, and corporate social responsibility (CSR) programs and efforts.
An Invaluable Resource
Based on the facts that have emerged from these workshops, as well as ongoing research in the field, three of the AHC Group's principal consultants (founder and CEO Bruce Piasecki, along with Senior Associates Dennis Minano and Alan Banks) have compiled a 65-page executive summary entitled Risk, Value & Trends to spotlight their findings.
What is truly unique about this report is that it bridges the usual gap between your financial and investment people and those running your energy, environmental, and corporate responsibility functions.
This document will help your company understand the criteria and concerns of the more than 80 key groups shaping how your firm is perceived by capital markets and the investment community.
SPECIAL OFFER
This item is currently on sale for $795 (a cost savings of over $700). All customers are eligible for this discount.