Why compliance is smart business

6 April 2017

Operating responsibly brings a competitive edge in several ways. Personnel, business partners and investors all benefit mutually when companies follow regulations and apply responsible practices.

Markus Skrabb
Markus Skrabb

“Compliance is a cornerstone of our business operations because it affects our reputation, risk management and business results. Taking responsibility issues seriously protects and improves our profitability in the long term,” explains Markus Skrabb, UPM’s Chief Compliance Officer.

The Limited Liability Companies Act states that the purpose of a company is to generate profit for its owners. “Investors constantly evaluate the gains and risks of their investments. Risks are greater in companies that fail to integrate compliance in all of their actions,” Skrabb adds.

Skrabb believes that the corporate environment has become more aggressive, which is increasing the importance of compliance. Tougher regulations, sanctions and stakeholder expectations are forcing companies to be careful in responsibility issues.

“Authorities have noticed that revenue-based sanctions are an efficient way to enforce legislation. These sanctions and other direct and indirect consequences have become a real business risk for companies, so they have to be extremely careful with these issues,” he emphasizes.

Companies also face tougher demands and expectations about transparency from stakeholders and consumers. Meanwhile, technological progress and today’s digital communications culture are changing the way people communicate, which is more difficult to influence and control.

“Reputation risks associated with the disclosure of misconduct are growing in today’s transparent world, where news of alleged violations spreads quickly through social and traditional media. Now, even minor issues stir up a big noise. This is another fact of life we have to accept.”

Tool for engaging employees

All told, however, responsibility is an excellent tool for engaging employees. Employees who work for companies that manage their risks properly are more secure.

When the employees’ values are in line with the company values, it decreases the responsibility-related risks and the employee turnover rate. “In big companies, a risk can trace back to the conduct of an individual employee. There is less misconduct in companies where employees and subcontractors are aware of responsibility principles and follow these rules in their work.”

According to Skrabb, the picture is growing more complex with increasing numbers of external suppliers and partners working for businesses. Companies that otherwise operate responsibly can be saddled with the blame for the misconduct of external personnel and suppliers.

Risk management is part of compliance practises

Skrabb affirms that responsibility is an integral part of UPM’s Biofore strategy and the leading principle in its business operations. UPM is strongly committed to continuously improving its economic, social and environmental performance, legal compliance setting the minimum level.

“We have six business areas operating in different markets across the world. Our risks are also diverse because legislation in the energy market is different from that governing the pulp and paper markets, for example.”

UPM aims to control risks through education, issuing guidelines and communicating clearly with employees and external partners. Risk identification and management are an integral part of UPM’s global compliance practices.

“With the help of monitoring and audits, we can determine how aware our employees are of responsibility risks and how well risk management has been implemented. We can also use external auditors to examine the situation and find suitable measures to correct any shortfalls.”

Revised code of conduct

In the spring of 2016, UPM revised its Code of Conduct. All relevant issues are now explicitly defined in the Code of Conduct, which communicates UPM’s policy both internally and to external partners.

UPM’s compliance with laws and regulations – in particular, competition and anti-corruption laws – forms a solid foundation for its reputation as a trustworthy business partner. UPM’s leading principle is that it does not compromise its standards of integrity under any circumstances.

“We are committed to continuously improving our operations and practices. Our responsible and ethical practices create long-term value for both UPM and its stakeholders,” concludes Skrabb.

Read more:

UPM supplier and third party code – foundation for conducting business responsibly

Why investing in responsible business is a win-win strategy

Ambitious responsibility goals lead UPM into the year 2030

Supplier audit process creates mutual benefits

Vesa Puoskari

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