We invite you to read the column written by our Managing Partner, Rodrigo Albagli, on the ESG challenges in the Economic Crimes Law.
The enactment of the new economic crime law is a significant milestone for the country, as it not only stiffens penalties for those who commit economic crimes, but also imposes new transparency and due diligence standards and obligations on companies, aligning them with international environmental, social and governance (ESG) standards.
The law reinforces the importance of corporate governance. Companies now have greater obligations in line with the implementation of more rigorous internal control mechanisms to prevent and detect illicit activities. Of particular note are the adoption of effective whistleblower channels, ongoing employee training on compliance issues, effective analysis and monitoring of suppliers, and the incorporation of risk committees with independent audits.
“From a social perspective, by requiring greater accountability and transparency, the new regulations have the potential to protect consumers, employees and local communities“.
Among the advantages, organizations can improve their reputation and, with it, increase investor confidence. In a globalized market, where investment funds are increasingly prioritizing ESG criteria, this evolution is necessary to attract capital and maintain competitiveness.
From a social perspective, the new law also has the potential to transform the relationship between companies and their stakeholders. By requiring greater accountability and transparency, consumers, employees and local communities are protected. At the same time, companies that adopt responsible and sustainable business practices not only contribute to social welfare, but can also enjoy greater customer loyalty and attract better working talent.
In environmental terms, the new law encourages companies to move towards more sustainable practices to mitigate risks. For the first time, a catalog of environmental crimes is established, including pollution, illegal water extraction and environmental damage, for which legal entities may be prosecuted, which is relevant in view of the advance of climate change and the sustainability goals for the year 2030.
However, although the new law is an important step forward in terms of ESG, there are also questions. Effective implementation will require authorities and agencies that have the capabilities, resources and tools to oversee the new offenses, something we do not have today. The new regulation considerably increases the number of crimes for which companies and individuals can be sanctioned, but the budget to effectively manage this new reality is not increased.
The new law is also an important challenge in the preparation of prosecutors and judges, so that they can better face new crimes, which require a higher level of technical specialization, which is currently lacking.
Considering all these challenges and obligations, it is now time to prepare ourselves to comply with this new regulation and standards, and to have an exemption of liability with the implementation of an effective crime prevention model.
Column written by:
Rodrigo Albagli | Socio y Managing Partner
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