Top 5 compliance trends and challenges for 2022
Companies face new compliance challenges every year as the compliance landscape changes more frequently than ever. By addressing these challenges, dedicated teams and individuals can help companies continue operations without interruption, save a fortune by avoiding fines, and maintain a presence in the marketplace.
The way we deal with compliance has also evolved. To comply with regulations and not waste too much time or money doing so, companies are constantly exploring new methods of compliance - these methods eventually become trends when they prove useful.
In this article, we provide an overview of the latest developments in compliance, the challenges they pose to companies, and the trends they follow.
Environmental, social and governance compliance
Environmental, social and governance (ESG) compliance is becoming more stringent every year - especially the environmental aspect, as companies need to pay more attention to their impact on the environment.
Many new commitments were discussed at the recent United Nations Climate Change Conference, and regulators have been quick to adopt them as new guidelines for companies. We expect that in 2022, companies will pay even more attention to environmental due diligence, which will become a priority for stakeholders and regulators alike.
In the EU, the Environmental Due Diligence Directive pushes for several compliance measures, including:
- Measuring waste generation
- Use of sustainable natural resources
- Assessment of environmental pollution
- Assessment of greenhouse gas emissions
- Assessment of deforestation
- Of course, we've only listed a few measures, but the list also includes biodiversity assessment, ecosystem assessment, and more
The guidelines issued by the GDPR require companies to be proactive, not just reactive. Instead of just focusing on reducing pollution, waste and other negative impacts on the environment, companies need to explore new methods to make them more sustainable, raise awareness of environmental impacts, look for alternative production methods and more.
Data protection and data security
As the world moves further and further towards complete digitalization, it is only natural that more data is collected, processed and used in some way. We live in a world where almost all our household devices can connect to the Internet and send/receive data. So, it's only natural that regulators are pushing for even stricter privacy regulations.
Regardless of the industry you're in, it's likely that some part of your business already deals with data, and this trend will only increase through 2022. Developing a comprehensive data privacy program, therefore, will help you stay ahead of the challenge.
But how can you put such a plan in place? A company could hire a data protection expert to assist it with any data protection issues and help it stay compliant while keeping in constant contact with a data protection authority.
Here is a list of tasks for which an external data protection officer is responsible:
- Regular training of your employees on the topic of data protection
- Conducting frequent data protection audits
- Creating all required documents
- Liaising with the data protection authority
- Providing useful advice to management and other professionals
Alternatively, a company can train an employee in data protection by giving them the necessary knowledge and assigning them the role of internal data protection officer.
The main advantage of such an approach is that this person already knows how your company works. In addition, he or she knows your company's employees well and can communicate with them more easily. Unfortunately, there are also some disadvantages, as the company must invest enough time and money in training the selected person, who will have to focus on his new role and give up his previous tasks.
Market surveillance focuses on investigating and preventing illegal, manipulative or abusive practices in the market. It also conducts a check on goods entering a particular market. Within the EU, market surveillance works closely with other initiatives such as ESG compliance, human rights compliance, supply chain due diligence and more.
As more companies choose to do business online, we can see the rise of the e-commerce market, which has been the main focus of market regulators lately. It is a complex area, and regulators are doing their best to ensure that all practices of e-commerce market participants comply with various market and cybersecurity regulations.
Failure to comply with market surveillance directives issued by European regulators could mean the end of your goods distribution in the EU, as it is a significant market. As a result, companies in the EU (but also in other parts of the world) are facing an increasing challenge to comply with market requirements and regulations.
Due diligence with regards to human rights
Ensuring compliance with human rights is a longstanding responsibility that companies must prioritize. As with environmental concerns, taking a proactive stance on human rights is essential, going beyond mere reaction to reported violations.
It entails identifying, preventing, mitigating, and taking responsibility for the harm caused by human rights violations. Conducting thorough due diligence is now fundamental in establishing robust systems and processes that address human rights and their impact on business operations.
The use of technology in compliance
As companies around the world transition to digital ways of working, the use of technology is inevitable. This is especially true for compliance, as compliance requires more effort than it used to - there are more things to keep track of, and new policies are often issued.
Using the right software to stay on top of your compliance issues will become even more important in 2022, especially when it comes to data privacy compliance. It's a good idea to implement unified software to keep all your data protection documents in one place, train your employees on the subject, and even audit customers.
The heyData platform provides a great way to secure data protection documents and train employees to ensure compliance if your company is within the GDPR's sphere of influence.
Staying one step ahead to stay competitive.
In today’s landscape, policies and regulations are becoming increasingly complex, and staying on top of them is now more important than ever. With increasing requirements around data privacy and security, ESG, market surveillance and more, companies need to find an appropriate way to stay compliant and thrive in the market.
Failure to do so can result in a range of penalties, including:
- Heavy fines
- An import ban may be imposed if human rights have been seriously violated.
- A bad public image in the media due to unethical practices
- Exclusion from public sector support programs, government subsidies or government procurements
- Exclusion from the EU market (or any other market with standards your company does not meet)
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