Legal compliance for more sustainability in your company
Whether it’s legal requirements, agreements with customers, agreements with industry associations, stipulations with interest groups or voluntary commitments, your company is subject to a multitude of regulations. Legal compliance can quickly become a challenge – after all, you must know, comply with and monitor all obligations. Compliance affects the profitability and sustainability of your business and can lead to severe penalties in the event of a violation. This article explains why legal compliance is one of the most important obligations and how it contributes to sustainability.
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Definition and meaning of legal compliance
Legal compliance means that a company adheres to all legal requirements. This includes national and international laws and operational requirements, norms and standards. This is essential to avoid legal consequences such as fines, penalties and reputational damage.
Differentiation from legal compliance and corporate compliance
Rechtskonformität, auch als Legal Compliance bekannt, meint die Einhaltung von gesetzlichen und regulatorischen Vorgaben. Ein rechtskonformes Verhalten ist unerlässlich, um rechtliche Konsequenzen wie Bußgelder, Strafen und Reputationsschäden zu vermeiden.
Differentiation from legal compliance and corporate compliance
In contrast to legal compliance, corporate compliance goes further. It includes compliance with internal company principles and codes of conduct that go beyond legal obligations. The focus is on maintaining ethical standards such as integrity and honesty within the company.
Importance and objectives of legal compliance
The importance lies in avoiding legal and financial risks. It also promotes responsible and ethical business conduct. The objectives of legal compliance include:
Legal compliance as a business challenge: Which rights must companies comply with?
Compliance with regulations and standards is one of the legal obligations. Companies must comply with regulations and laws that affect almost all aspects of their business activities. Companies are responsible for complying with requirements such as labour law, environmental law, data protection law, product safety law, and anti-corruption laws.
Diversity of compliance requirements
Compliance requirements affect all areas of the company. Companies must identify, implement, monitor and document relevant regulations. This requires a methodical approach and continuous adaptation to new legal obligations.
What penalties can you expect for violations?
Violations of legal rules can lead to fines, license revocation and criminal prosecution. Furthermore, companies risk serious reputational damage, which can affect customer trust and market share in the long term. Civil lawsuits and exclusion from public contracts are other possible financial and operational consequences.
Implementation of a legal compliance system
A structured approach is recommended to meet all legal requirements. The following list shows the most critical steps.
Risk analysis and identification of compliance risks
The first step to implementing an effective system is comprehensively identifying potential risks. Companies must consider all possible legal and regulatory risks – both internal and external – that are related to their business activities.
Establishment of compliance processes and controls
Once the risks have been identified, individually tailored control processes must be developed. The control processes are documented and checked to see whether they meet the applicable legal requirements and standards. Key measures include:
- Creation of a comprehensive overview of all relevant laws and regulations (legal register).
- Development of specific internal guidelines.
- Conducting regular employee training.
Communication and training of employees
A successful compliance program requires effective communication with employees. In addition to training courses, where knowledge is usually imparted digitally or analogue in a frontal classroom setting, interactive workshops can also help. Information campaigns have also proven to be effective. It is essential to adapt the training to the organisation’s individual needs and issues and make it practice-oriented.
Monitoring and continuous improvement of the system
An agile compliance system requires regular revision loops to develop it further. This is the only way it can remain effective in the long term – it grows with the company and its processes. Audits and controls serve precisely this purpose.
Support through compliance management software
Digitalisation offers numerous opportunities to increase efficiency in compliance management. iManSys enables companies to comply with regulations and identify potential risks. The software helps with the implementation and control of new measures. It allows all relevant data to be stored centrally and the status of the developed measure to be checked at any time. Features include automatic updates when legal requirements change, centralised documentation and tracking of compliance activities, and integration with other systems to simplify data management.
Challenges in implementing legal compliance
Achieving consistent compliance with standards requires interlocking measures. Everyone in the company must get on board and ensure these measures take effect.
Integration of compliance into the corporate culture
One of the critical hurdles in implementation is integration into the corporate culture. It is crucial that the entire organisation supports the principles of legal compliance. This begins with the commitment of management, who acts as a role model through their behaviour. The efforts can only be successful if the entire workforce internalises and accepts the relevance of compliance with the rules.
Resource provision and cost management
Integrating a compliance program into a company is a significant effort. It also requires financial and human resources to maintain the program actively. Finally, policies must be developed and continuously updated through regular audits, for example. A well-planned management system is essential to ensure the costs are proportionate to the benefits.
Dealing with compliance violations
Despite all preventive measures, compliance violations can still occur. Dealing with them requires a clear strategy. Companies must set up mechanisms to quickly and efficiently identify violations. They can provide their employees with various reporting channels, such as forums, personal discussions or suggestion boxes in digital or analogue form.
Implementation requires a structured process. Reported violations must be investigated and remedied. Sanctions and corrective measures should be communicated transparently and implemented consistently to maintain the integrity of the compliance process.
Continuous adaptation to new legal requirements
Laws, regulations and operator obligations are changing, and companies must be agile enough to adapt to the changes. Appropriate control processes must precede this to ensure that changes in the law are noticed and taken into account accordingly.
Changed processes and measures must then be communicated to employees. A software solution such as iManSys helps automate and make these processes efficient.
Increasing importance of legal compliance
Companies must ensure compliance with regulations and always consider current laws and developments.
Digitalisation and new compliance challenges
The efforts include data protection, IT security and digital archiving. Dealing with artificial intelligence and big data requires special care to ensure compliance with the General Data Protection Regulation (GDPR) and other relevant regulations. Particularly in light of rapid technological developments, companies must set up structures that consider these circumstances.
Internationalisation and global compliance requirements
With the increasing internationalisation of business activities, companies are faced with meeting national and international compliance requirements. This is particularly complex because different countries have different legal requirements. Companies must develop flexible global compliance strategies to adapt to other countries’ legal requirements. It is important to take local legal changes and cultural differences into account. iManSys is designed to monitor and manage international compliance requirements by centralising and preparing the data for use.
Legal compliance and sustainability
Both aspects are closely linked. Companies with a sustainable business model must align their business activities with the applicable laws. This particularly applies to environmental regulations and social standards. A sustainable company not only meets the legal requirements but often goes beyond them to make a positive contribution to society and the environment. Compliance with standards forms the basis for sustainable action. It is an essential basis on which customers, investors, and other stakeholders can develop trust in a company.
Importance of compliance management software
Compliance requirements are becoming increasingly complex. It is, therefore, advisable to use compliance management software that considers diverse requirements and is always up to date. The software reminds you of upcoming appointments, draws attention to discrepancies, suggests alternatives and supports the design of training courses and information materials. iManSys offers comprehensive support in complying with legal requirements. The software enables the central management of all compliance data, uses automatic updates for legal changes and is suitable for integration into other company systems. By using iManSys, you can make your compliance processes more efficient, manage risks better and ensure compliance with regulations. This contributes to legal security and strengthens business relationships with all parties involved.
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