Environment, Social and Governance (ESG) issues are taking on more and more presence in the corporation's planning and strategy. This presentation discusses emerging trends, potential paths forward and challenges with staying in compliance to the myriad of ESG standards and requirements.

1. Comprehensive
Compliance
How you can achieve

2. About Us
Nimonik offers operational compliance
solutions for organizations around the world.
Founded in 2008, Nimonik services over 450
customers around the world.

3. Nimonik is not
EHS management software
Content provider
Just another audit tool

4. Minimal
Management
Supervisor led
Systems are in place and training is
mandated. Most of the issues are
pushed by supervisors and reports
identify problematic areas. General staff
do not feel a strong responsibility for
compliance.
Integrated
Team based compliance
All members of the organization
believe that compliance to
standards and regulations is
good business. Strong
comprehension by all of policies
and procedures. Easy access to
data and software that
empowers teams.
Reactive
Focus on putting out fires
Organization reacts to
EHS, Quality and
Compliance issues as they
arise. People and teams
respond only when there is
a immediate problem.
Inconsistent
Piecemeal approach
Some process and
systems are in place.
Most facilities or
business units are
independent and do not
share best practices or
systems.
Compliance Maturity
ProActive
Forward Thinking
Meet with stakeholders
and regulators. Conduct
continuous improvement
of compliance program.

5. Most organisations do not
know all of their obligations,
leading to “surprises”...
A typical Facility has 3,000
Compliance Obligations and
200 new ones per year.

6. Modern organisations
operate efficiently and
satisfy their customers
without violations, spills,
product recalls or worker
injuries - is this ESG?

7. Modern organisations eliminate
surprises with Comprehensive
Compliance

8. A Comprehensive Compliance program captures all of
your Obligations across your compliance areas :
social, environmental, governance, safety, hr, ohs, product,...
and Sources
regulatory, standards, contracts, permits, stakeholders, customers,...
and enables timely management of Actions and Audits.

9. Obligations
External obligations from regulations &
standards
Internal obligations from your files, permits
and procedures.
Actions
External actions when regulations &
standards change.
Internal actions issued by your team to
come into compliance.
Audits
Inspect your facilities based on your
Obligations.
Verify for action completion and
effectiveness of those actions.
The Three Pillars of Nimonik’s Comprehensive Compliance
Together, this methodical approach to compliance will help you avoid problems before they occur.

10. Comprehensive
Obligations
Comprehensive
Assurance
Business
Outcomes
01 02 03
• 360° Coverage
• Mandatory and Voluntary
• Obligations Mapping
• Always Audit Ready
• Comprehensive Audit
• Performance Assessments
• Increased Trust
• Reduced Risk
• Less Surprises
Path to Resilience

11. Agenda 2021 State of Compliance
Discussion of ESG Trends
1
2
How does compliance
underpin ESG?
3

12. Agenda 2021 State of Compliance
Discussion of ESG Trends
1
2
How does compliance
underpin ESG?
3

13. Compliance is a moving target. No organization is ever fully compliant with all of its obligations.
“Obligations are any mandatory or voluntary requirement that your company needs to comply
with. You can separate obligations into two broad categories - Internal and External. Internal
obligations come from corporate documents, while external obligations come from
government regulators and industry bodies.”
In addition to changing obligations, organizations are constantly changing due to mergers,
acquisitions and management change. These changes are a constant struggle for any organization.
This survey of over 150 industry professionals paints a portrait of compliance in 2021. We hope you
will find some insights worth sharing with your colleagues.
What is this survey?

14. Executive Summary
Most organizations surveyed feel their compliance burden will increase in
the years to come, but they are relatively well equipped to tackle it.
Chinese companies have more concerns around fines, penalties and
sanctions than North American or European companies.
Most organizations feel they could use more resources to tackle
compliance; this is especially true in China.
All organizations indicated that they lost substantial time and money on
“surprises”. These losses were often in the thousands of hours and
millions of dollars. This is perhaps the single biggest issue organizations
are facing: how to reduce or avoid unwanted events?

16. Perception of compliance burden
Most organizations feel they have over 2,500 obligations with about 4% changing every year.
This lines up with observations at Nimonik. Our data of over 450,000 regulatory documents
shows that about 3.5% or over 15,750 documents are repealed, replaced, introduced or
amended every year.
Internal obligations from contracts, permits, supplier agreements and stakeholder
engagements form at least 30% of obligations. These are generally not being managed
effectively, as demonstrated by our 2020 survey on Internal Obligations.
Organizations have a high level of confidence they are “mostly” in compliance; whether they
have the data to support this is another question entirely.

18. Management systems
Most organizations have some form of a compliance program in place.
Chinese and European companies rely much more on management systems than North
American companies.
Technology for managing compliance is still not widespread in the industry, with nearly 50% of
organizations still reliant on pen, paper, Word and Excel.
North American and European companies are mostly satisfied with their systems, whereas
Chinese companies are less satisfied.
In terms of prioritization, risk ranking is popular across the board, but Chinese companies rely
more heavily on potential fines and on government inspections.
It seems that many organizations are still audit driven - meaning they rely on external and
internal audits to drive their compliance priorities, which is not ideal.

20. Perception of compliance
The survey participants indicated their companies are generally in favor of compliance
programs and view proactive compliance as an investment. It is likely that the sample for this
survey consisted of people and organizations who are further along in their organizational
maturity.
Most participants felt that compliance is part of operational excellence, which is a good sign
that more and more organizations are taking action on compliance programs.
Many organizations feel they still lack resources to tackle compliance; the shortage is
particularly acute amongst Chinese companies.

23. “Surprises”
Nearly all participants indicated they had substantial compliance “Surprises” which indicates
there is still room for improvement.
Some participants indicated they could not quantify the amount of time spent on unplanned
events, but “it was a heck of a lot of time”. Time is money and as such, it is critical that
organizations quantify time spent on unplanned events to help further justify investments in
proactive compliance.
Organizations indicated that they could have avoided a substantial portion of these surprises
with better systems and planning.

25. Emerging Trends
The vast majority of organizations see their regulatory and compliance burden increasing in the
years to come.
Organizations feel they mostly have the tools in place to tackle this increasing work, but that
they will continue to invest in programs, systems and software across their organization.
Environmental, Social and Governance (ESG) are becoming an increasingly important part of
their compliance programs and many organizations plan to further integrate ESG with their
compliance systems.

27. Various comments spoke about the needs to better centralize and organize
compliance data and for management to lead the effort
“A holistic system where you can manage all of your compliance needs would
be beneficial in the industry. We currently need numerous systems to track the
data related to HSE management.”
“Top level management involvement cardinal for any compliance system to
succeed.”
“It requires an enterprise-wide commitment for all levels of the organization.”
General thoughts on compliance?

28. Participants spoke about increasing burden from their customers and investors.
Nearly everyone anticipates greater regulation across the board.
“"Obligations" in the form of customer demand: we expect more sustainability
demands over and above regulatory obligations from customers.”
“ESG will take on a greater and greater role”
“We anticipate a significant increase in both state and federal regulations”
Emerging trends

29. Agenda 2021 State of Compliance
Discussion of ESG Trends
1
2
How does compliance
underpin ESG?
3

30. ESG

31. ESG History
1950-2000
● 1960s Anti-War Protests, May 69 -> Pax World, Business and Society index, Code of conduct against Apartheid in
S.A.
● 1970 Earth Day, Clean Water Act, Clean Air Act,...
● 1980 Comprehensive Anti-Apartheid Act targetting South Africa
● 1989 ExxonValdez spill led to Coalition of Environmentally Responsible Companies
● 1990 Domini 400 Social Index
● 1992 Earth Summit
● 1997 Global Reporting Initiative
● 2000 Global Compact 14,670 companies
● 1990-2020 Various ISO Standards (14001, 450001, 19600, 31000)

32. ESG History
● 2005 paper “Who Cares Wins.”
○ “ESG investing is based on the assumption that ESG factors have financial relevance” Forbes
○ Principles for Responsible Investment (PRI)
○ Sustainable Stock Exchange Initiative (SSEI)
○ Global Reporting Initiative (GRI)
○ International Integrated Reporting Initiative (IIRC)
○ Sustainability Accounting Standard Board (SASB)
○ Task Force on Climate-related Financial Disclosures (TCFD)
“The big challenge for most corporations is to adapt to a new environment that favors smarter, cleaner
and healthier products and services, and to leave behind the dogmas of the industrial era when pollution
was free, labor was just a cost factor and scale and scope was the dominant strategy. For investors, ESG
data is increasingly important to identify those companies that are well positioned for the future and to
avoid those which are likely to underperform or fail.”

33. ESG History
2017
● “In May 2017, 62% of ExxonMobil shareholders went against management’s
recommendations by voting to require the world’s largest oil and gas
company to report on the impacts of climate change to its business (an
increase of 38% over the previous year).” Forbes
2019 - 2020
● 2019 Business Roundtable Report on ESG
● Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution.
● Larry Fink 2021 letter cites a ‘tectonic shift’ for companies

34. ESG is fundamentally about financial
health of an organization. It is not a
moralistic judgement or an
organization.

35. An evolution and consolidation
Source: Betsy Atkins
Mike Wallace, a partner of the
Environmental Resources
Management (ERM) noted that,
“While it may feel confusing and
overwhelming, it is actually a logical
progression of our field’s evolution
and thinking. New issues emerge,
the breadth and depth of our
impacts are better understood, and
we all want to know a little bit
more.”

36. Reporting driven, operational impact
Too much data needs to be
collected and the only way to
manage this is through Business
intelligence tools.
Source: Betsy Atkins

37. Financial Growth

38. ESG Growth vs. non-ESG

39. Financial Growth

40. Conclusion
● ESG SEC Task Force was created in 2021
● SEC will likely publish an ESG framework in 2022,
● Follow the trends and ideally, get ahead of them.
● ESG will only grow and there will likely be some consolidation of standards, reporting
etc. Ensure you have a monitoring process to track relevant changes to your
obligations.
● The core of ESG - Environmental stewardship, Social impact and Governance need to be
taken care of regardless of the “Standards” or “Reporting requirements”
● Put systems in place to help you manage this, but first determine your organization’s
priorities

41. Agenda 2021 State of Compliance
Discussion of ESG Trends
1
2
How does compliance
underpin ESG?
3

42. Rules / Compliance
Rules, regulations, standards are there to force organizations to do what they
would not otherwise do.
We can look at it from:
1. The customer/public perspective
2. The competitor perspective
3. The regulator perspective
Trend is to impose more responsibility on companies, directors and managers.

43. ESG brings together obligations in a
holistic vision that is aligned with the
financial interests of a company and
society.

44. Compliance is the foundation
You can run, but you cannot hide!
“Today, MSCI leverages alternative data sources and AI (artificial intelligence) to
uncover undisclosed data, which informs MSCI ESG Ratings — a key input into the
MSCI ESG Indexes.” MSCI
“We will challenge firms where we see evidence of potential greenwashing, clarify
our expectations, carry out further policy analysis and take further actions as
appropriate” FCA
The transition needs to be from compliance as defense to compliance as offence.

45. Get ahead of the curve
Reporting & transparency requirements will only increase. It is time to implement
comprehensive compliance programs and solutions.
David Curran, Chief Sustainability and ESG Officer at the law firm Paul Weiss told Regulatory Intelligence,
“the natural place for ESG to reside is the compliance department. Compliance has systems-process
software, GRC platforms and the like to deal with such obligations and commitments. The best
place to track, measure, monitor, and report it is compliance, as it’s the only function within
organizations that has enterprise-wide visibility and processes in place,”
Thomson Reuters

46. Data is key
David Curran continued to explain that outside parties will be looking at your work.
He says the questions will resemble, “Do you have a policy or procedure, and can
you track, measure, monitor, and report on progress against that initiative?”
One oil & gas customer survey other companies and found that “no one does
compliance in the same way, but all the leading companies have a system in
place”.
Another 100 year old mining company recently came under pressure from the
board to provide data on their compliance status and they were unable to do so.

47. ESG compliance implementation challenges
Sounds nice, but challenges remain.
● How to actually drill down into the details without overwhelming staff?
● How to balance point solutions vs enterprise wide software?
● Can you play offence with ESG when there are limited resources and
(legitimate) resistance to change?

48. Conclusion
● Setting ESG objectives that take into account the evolving landscape, the
organization and the underlying business should be a priority.
● Compliance to standards, policies, procedures and regulations is at the core
of progress. Organization should start their journey there.
● Too often the journey is started with reporting and audits and this turns into a
whack-a-mole exercise.
● Ensure you have visibility on all of your obligations before taking action.
● ESG is not a replacement for sound business strategy, it must go hand in
hand.

49. Customers

50. Our offices
Our partners
Montréal (HQ) Shanghai
Paris
Nimonik.com - info@nimonik.com - 1-888-608-7511 - +86 021 51720468
Thank you!