This is a summary of the lecture by Duncan M. Park, Head of IP at TOMRA about IP risks as part of corporate compliance from the joint CEIPI European Patent👉 A legal right granting exclusive control over an invention for a limited time. Office Diplom Universitaire IP Business Administration
The evolving global emphasis on sustainability has brought Intellectual Property👉 Creations of the mind protected by legal rights. (IP) to the forefront of corporate compliance and governance. IP is no longer just a legal safeguard for innovation👉 Practical application of new ideas to create value.; it has become a strategic tool for driving sustainable development, aligning with Environmental, Social, and Governance (ESG) principles, and fostering long-term business value. This article synthesizes insights from recent discussions and studies on the intersection of IP, corporate governance, and sustainability to explore how companies can navigate this complex landscape.
This lecture is part of the certificate course IP in corporate sustainability
https://ipbusinessacademy.org/certified-university-course-ip-in-corporate-sustainability
and part of the university diploma (distance learning) IP Business Administration
https://ipbusinessacademy.org/ceipi-epo-university-diploma-in-ip-business-administration-du-ipba
In an era defined by increasing environmental awareness and stringent regulatory oversight, corporations are under immense pressure to integrate sustainability into their core business practices. Duncan Park, Head of Intellectual Property at TOMRA Systems in Norway, delivers a compelling lecture on the crucial role of intellectual property (IP) risk management👉 Process of identifying, assessing, and controlling threats to assets and objectives. within corporate compliance and governance structures. Drawing upon his extensive 30 years of experience in the IP profession, with a focus on sustainability, circular economy, and ESG (Environmental, Social, and Governance) issues, Park elucidates the intrinsic link between IP, corporate responsibility, and long-term business resilience.
Corporate Compliance and Governance: A Foundation for Sustainability
Park begins by defining corporate compliance and governance as the framework through which a company is managed and regulated. It encompasses the responsibilities, accountability, and decision-making processes that guide an organization’s operations. The lecture underscores that the increased focus on corporate compliance stems from past industry failings, such as the Enron scandal and the 2008 financial crisis, which highlighted the necessity for robust governance structures, transparency, and stringent checks and balances.
A company’s compliance program should comprise a comprehensive set of rules, practices, and processes that ensure legal, ethical, and responsible conduct in accordance with relevant laws, regulations, and industry standards. Furthermore, it should balance the interests of diverse stakeholders, including shareholders, employees, suppliers, customers, financiers, governments, and the local community.
Significantly, Park emphasizes that sustainability and climate change have become integral components of corporate compliance. Evolving corporate reporting requirements mandate greater transparency regarding the sustainability of products, services, and operations, as well as the disclosure of climate-related risks.
Ensuring Compliance: The OECD Guidelines
To ensure compliance, Park highlights the “OECD Guidelines for Multinational Enterprises on Responsible Business Conduct” as an internationally recognized framework. These guidelines serve as a cornerstone for sustainability regulations, addressing key challenges and issues that modern, responsible companies must confront. These include:
- Disclosure and Transparency: Companies must openly share relevant information about their operations, performance, and impact on society and the environment. This builds trust with stakeholders and provides a “license to operate” by demonstrating accountability.
- Human Rights: Businesses are expected to respect human rights throughout their operations and supply chains, addressing issues like forced labor, discrimination, and ensuring fair treatment. Due diligence is critical to identify and mitigate potential human rights risks associated with business activities.
- Employment and Industrial Relations: Fair labor practices, including safe working conditions, fair wages, and the right to collective bargaining, are essential for responsible business conduct. Companies should foster positive relationships with employees and respect their rights as workers.
- Environment: Companies should minimize their environmental impact by reducing pollution, conserving resources, and mitigating climate change. Due diligence must assess and address adverse environmental impacts, including climate change and biodiversity.
- Bribery and Extortion: Companies must refrain from engaging in bribery or extortion in any form, maintaining ethical business practices and upholding the rule of law. Robust anti-corruption policies and training programs are necessary to prevent and detect bribery.
- Consumer Interests: Businesses should provide consumers with safe, reliable products and services, as well as accurate information about their features and impacts. Protecting consumer rights and addressing complaints effectively are key to building customer trust.
- Science and Technology: Companies should develop and use technology responsibly, considering its potential social and environmental impacts. This includes data management, protection for at-risk groups, and recommendations on disclosure of responsible business conduct and information.
- Competition👉 Rivalry between entities striving for a shared goal or limited resource.: Companies should engage in fair competition, adhering to antitrust laws and refraining from anti-competitive practices. Promoting a level playing field fosters innovation and benefits consumers.
- Taxation: Businesses should comply with tax laws and regulations, paying their fair share of taxes and avoiding tax evasion. Transparent tax practices contribute to public finances and support government services.
The updated 2023 guidelines extend due diligence to environmental and technological considerations, emphasizing the need for risk-based assessments of adverse environmental impacts, including climate change and biodiversity. They also focus on due diligence in the development, financing, sale, licensing👉 Permission to use a right or asset granted by its owner., trade, and use of technology, with an emphasis on data management, protection for at-risk groups, and disclosure of responsible business conduct.
Integrating IP into the Corporate Compliance Structure
Park emphasizes that a practical approach to corporate compliance involves implementing a comprehensive program with clearly defined rules and regulations. These are often formalized in a Code of Conduct, which outlines business principles for suppliers and partners and includes integrity due diligence procedures. Critically, IP issues, such as the management of IP rights, confidential information, trade secrets, and data security, must be integrated into these policies and guidelines.
The Relevance of IP to Corporate Compliance and Governance
As companies establish sustainability goals and identify ESG risks, new commercial priorities emerge. Park introduces the concept of the “triple bottom line” (people, planet, profit), which necessitates a re-evaluation of value creation. Implementing and managing new business ecosystems requires innovation and the adoption of enabling technologies. Furthermore, companies must monitor and adhere to evolving legislation, regulations, and technical standards.
To navigate these complexities, Park recommends the “Plan-Do-Check-Act” cycle, a process-oriented approach that facilitates the analysis and management of IP within the context of sustainability. He stresses that sustainability commitments and reporting requirements are fundamentally changing how companies manage their activities, ensuring a focus on ethical, social, environmental, and economic values.
Collaboration with external stakeholders, including authorities, suppliers, and customers, is essential. This collaboration often entails sharing sustainability information and data. Many companies are forming consortiums and integrated ecosystems with sophisticated analytics to achieve their sustainability commitments and reporting objectives.
IP Risks Related to ESG and Sustainability
Park identifies several key IP risks associated with ESG and sustainability, emphasizing the need for proactive risk👉 The probability of adverse outcomes due to uncertainty in future events. management strategies.
- Reputational Risk
The risk of “greenwashing,” making misleading or unsubstantiated claims about the environmental benefits of a product, service, or company, poses a significant threat to a company’s brand👉 A distinctive identity that differentiates a product, service, or entity. and reputation. Overcommitting or failing to deliver on promised social initiatives can damage customer relationships and erode trust in a company’s product quality and innovation.
- Regulatory and Litigation Risks
Greenwashing is not solely an ethical issue; it also carries regulatory and litigation risks. Companies may face legal action from a broader range of claimants, not just government agencies or individuals.
- Mitigation Strategies
Park advocates for good governance, transparent disclosure, and comprehensive due diligence as the best defenses against greenwashing. A thorough understanding of the sustainability profile of products, activities, and transactions is crucial.
- The Role of Open Innovation
Achieving sustainability goals requires a more transparent and collaborative approach to open innovation, involving the entire value chain👉 A series of activities that create and deliver value in a product for end-users., including suppliers, partners, and customers. This collaborative approach will influence the application of new enabling technologies to deliver sustainable solutions. Identifying and capturing the value of intangible assets within these complex systems is key to success, as is mitigating associated risks. Due diligence should include a review of third-party systems and their internal processes for data and IP management👉 Strategic and operative handling of IP to maximize value..
- Operational Risks
Increased collaboration with third parties throughout the value chain elevates cybersecurity risks, including data loss and corruption. This can also lead to the loss of ownership of critical IP assets.
- Financial Risks
A lack of understanding of new sustainability ecosystems can hinder a company’s ability to demonstrate the added value of IP and achieve a return on investment. This can result in the ineffective use of IP assets and a subsequent loss of investment value.
Conclusion: Integrating IP Risk Management for a Sustainable Future
Duncan Park concludes that corporate compliance and governance provide a vital internal structure for managing and making decisions within a company, considering not only legal obligations but also broader ethical and environmental issues. The IP risks associated with ESG and sustainability necessitate the integration of these considerations into the compliance structure and contractual agreements with third parties. By proactively managing IP risks, companies can strengthen their sustainability efforts, enhance their brand reputation, and secure long-term business success in an increasingly environmentally conscious world.
In essence, Park’s lecture serves as a call to action for businesses to recognize the strategic importance of IP in their sustainability journeys. By integrating IP risk management into their corporate compliance frameworks, companies can fortify their operations, foster innovation, and contribute to a more sustainable future.
