By Marion KINDERMANS, LES ECHOS
Managers are adapting to an ever-increasing number of standards, and devoting time and money to doing so. It's a virtuous exercise, but one that also has its darker side: window-dressing and circumvention of the rules.
Basel II then Basel III (banks), Solvency II (insurance), CSR, IFRS accounting standards, etc. Companies have to comply with a growing number of standards. "Since the early 2000s, mainly under pressure from the European Commission, the regulatory package has been considerably strengthened".. Matthieu Courtecuisse, co-founder and CEO of the Sia Group, confirms this. To cope, companies are making major investments in terms of time and money. And, in the absence of in-house resources, they often turn to outside consultants for support.
"It's energy wasted that isn't devoted to other aspects of the development strategy".says Matthieu Courtecuisse. BNP Paribas, for example, has had to invest massively. To ensure that its US branch complies with US law in terms of transparency. Because if the company doesn't comply with the rules, the bill can be very high. In the current economic environment, however, compliance is not all bad news. Eric Lasry, Managing Partner and M&A Partner at Baker & McKenzie, "respecting the rules makes companies more competitive".. This enables companies to improve their image, avoid the risk of financial penalties and position themselves better in public procurement markets. They are also better perceived by shareholders and rating agencies, and can recruit more easily.
Five key issues
According to the latest "Internal Audit" survey carried out by the audit and consultancy firm EY on the expectations of companies, compliance remains one of the top five concerns of managers. "Over the last ten years, regulatory risk has been one of the top five issues for senior executives. This is particularly true for the banking sector and highly regulated sectors such as pharmaceuticals. The economic crisis and globalisation have changed their concerns over the last three years. Managers are now more demanding. They ask lThe internal audit function is also responsible for managing business risks. Such as the risks associated with major projects or checking the stress tests of business models. Explains Dominique Pageaud, Business Consulting Advisory partner at EY.
This change in priority is also due to the fact that companies have gradually set up effective compliance teams. "The issue of compliance is as important as ever. Because if they don't comply with the regulations, some companies risk a great deal and can permanently undermine their business model. However, business concerns are significantly intensifying in audit plans".concludes Dominique Pageaud.
At first, the objectives are positive: better ethics, transparency, better governance, international alignment to conquer new markets, etc. But limits eventually arise. But there are limits. Some successive layers of regulation lead to what Matthieu Courtecuisse calls The "regulation spaghetti", with the main consequence being paradoxical injunctions. "In the photovoltaic sector, for example, there are aberrations between the decisions taken by the competition authority and those taken by the regulatory authority".says the consultant.
But there's something even more annoying. "It's the panacea of legal irresponsibility! Once you're compliant, you can think you can do anything you like.exclaims Françis Rousseau, Chairman of Quartier Libre. The founder of Eurogroup Consulting (of which he is now chairman of the supervisory board) does not mince his words: "When conformity becomes a screen or leads to uniformity, it serves no purpose. So is compliance just a shop window? "Twenty or twenty-five years ago, people might have suspected that codes of conduct were little more than window-dressing. This is no longer the case. Today, the competent authorities can impose very severe sanctions in this area".says Eric Lasry.
But Francis Rousseau denounces more perverse effects. "Basel I, then Basel II, then Basel III take years to come out, leaving enough time for financial instruments to be invented to circumvent them".he points out. Without going that far, some companies can make do with a more flexible use of the rules. "In the case of accounting rules, if companies apply the standard intelligently, optimising the financial impact, I don't see anything wrong with that a priori.." Says Charles-Antoine Roger, pensions leader at Mercer France, which has just published an annual study on the social commitments of the CAC 40.
At the end of the day, companies that simply comply with the law without any concern for their employees have no interest in doing so. "For example, there is no rule that obliges them to worry about their employees' pension levels, beyond their legal obligations. Yet this is an asset when it comes to attracting and retaining talent.. It is also a major tool for managing the age pyramid. The companies have understood this".explains Charles-Antoine Roger.
