Insight: “What Does Compliance Have to Do with Sustainability, Mr. Becht?”

 

Compliance means adhering to laws and regulations, and fulfilling voluntary obligations. Gerd T. Becht, Chief Compliance Officer at Daimler and head of the Legal Department, discusses compliance at the Group.

 

360 DEGREES: Mr. Becht, people often talk about “compliance violations” in connection with corruption, embezzlement, and fraud. What exactly does “compliance” mean?

Gerd T. Becht: The term “compliance” was originally used in connection with obeying a doctor’s orders, in the sense that a patient could only stay healthy or heal quickly by “complying” with a doctor’s instructions. The situation is similar at a company: As a business organization, we can remain successful — and healthy — only if we act in accordance with all relevant laws and regulations, and fulfill our voluntary obligations.

The connection is that our long-term success also depends on our being able to focus on sustainability — in other words by making responsible use of the resources with which we have been entrusted and by fulfilling our economic, environmental, and social responsibilities. Our ability to do this depends, in turn, on how successful we are in keeping to our obligations, whether voluntary or mandated, and in avoiding any and all actions that are illegal or in conflict with our values. The goal of what we call “sustainable compliance” is to ensure that this attitude is internalized by everyone throughout the company.

First of all, it’s clear that each of our more than 270,000 employees is responsible for acting in an appropriate manner, whereby managers additionally need to set an example with regard to integrity. These expectations we have for our staff are regularly formulated and documented. The Group doesn’t just focus on implementation here, however; we also provide extensive support and offer comprehensive services to ensure that no compliance issue is left unaddressed.

What specific support do you provide?

In 2006, we began setting up a central compliance organization that subsequently formulated uniform guidelines and policies which give employees a clear idea of what we expect. Employees will be able to access the complete catalogue in the future in the Daimler House of Policies. We’re also implementing training and communication measures to ensure everyone fully understands and internalizes all these regulations — and acts in accordance with them. Employees who are nevertheless unsure of how to act in a certain situation can consult their supervisor, local compliance officer, or the Compliance Consultation Desk. We’ve also created the Business Practices Office (BPO), which provides information and advice regarding improper behavior. The BPO is available to Daimler employees and external individuals; all inquiries are treated confidentially and those who submit them can remain anonymous if they prefer.

Are you really interested in all types of improper behavior? After all, isn’t compliance focused mainly on the fight against corruption?

As I said, compliance involves adherence to laws and regulations — which is why Daimler’s understanding of compliance and the work of the Corporate Compliance department are by no means limited to corruption issues. The BPO accepts and addresses reports on all types of improper behavior, forwards them to internal investigation units, and ensures that the required measures are carried out. And while it’s true that we initially focused on corruption, we have since expanded our compliance-related activities to include all types of violations.

So what other issues do you address?

We seek to prevent damage to our assets and our image that can result from fraud, breach of trust, and embezzlement, for example, and we also monitor compliance with laws and regulations governing competition, capital markets, environmental protection, occupational safety, and product liability. There’s no set list of issues, however, and there never will be. That’s because legal stipulations vary across cultures and are also subject to change at any given time, so we have to be ready to adjust our internal guidelines accordingly. This means we need to remain vigilant and flexible, adapt to changing conditions, and respond in an appropriate manner to new issues and risks.

How can you ensure that all regulations are adhered to?

Continual monitoring is a good thing, but trust that’s warranted is better — at least that’s the Daimler philosophy. It goes without saying that we have an extensive and systematic monitoring program. Still, even aside from compliance, a company can only operate effectively if an atmosphere of mutual trust exists among management, employees, suppliers, and customers — and anyone else involved in the business. The foundation for this is provided by a corporate culture of responsible and trusting relationships, which is why we insist that our Corporate Values of Integrity, Discipline, Respect, and Passion must be an integral component of everyone’s daily activities. These values constitute, among other things, the basis for active and sustainable compliance.

Daimler has earned very good compliance ratings in the Dow Jones Sustainability Index. In fact it is the automotive industry’s compliance leader. So, are you where you want to be in this regard, or are there still challenges to overcome?

We’ve made a lot of progress toward achieving our goal of sustainable compliance. Nevertheless, we cannot simply rest on our laurels in a world of globalized markets, intense competitive pressure, laws that differ from country to country — and the tremendous uncertainties arising from the financial crisis and economic turbulence on global markets. This is why we are continually working to make our compliance measures even more effective. In short, we will not let up in our mission to achieve sustainable compliance.