Business hates regulation. We can all agree on that, can’t we? 

Set aside the rationale behind any number of laws and regulations propagated over the years by federal, state and local authorities, not to mention foreign governments. All of it amounts to one big burden on a company’s ability to service its customers, reward its investors and make a profit. 

Except. Turns out there are times when the interests of business and regulators align. Safety laws are a prime example (even if companies kvetch about them as frequently being overly protective in scope). But there’s no better fit today between what businesses should be doing for the good of the company, and what they must be doing at the behest of regulators, than in the world of ESG. 

The initials stand for Environmental, Social and Governance, for anyone who’s been hibernating for the last few years. They cover everything from green manufacturing and distribution methods to human rights, fair labor policies and corporate ethics. 

Read our new print issue: 2023 Supply Chain ESG Guide

Any one of those three areas would be sufficient to fully occupy the attention of embattled compliance officers in the C-suite. Bundled together, they present a massive challenge to global supply chains. So for companies already shouldering the burden of regulations touching every other aspect of the business, what’s the good news? 

History holds a clue. Ten years ago, U.S. Customs and Border Protection issued what was dubbed the 24-Hour Rule. It mandated that ocean carriers submit to Customs vessel manifests 24 hours prior to the loading of containers aboard ships bound for a U.S. port. The rule might have seemed onerous to some at the outset, but it brought a level of predictability to vessel operations that was welcome from a commercial as well as a regulatory perspective. Then there was the Customs-Trade Partnership Against Terrorism (C-TPAT), offering expedited import processing to carriers and other members of the trade community. Granted, the program was voluntary, but who wouldn’t want to grab the opportunity to speed up the movement of their international cargoes, while fighting global terrorism? 

Now comes the raft of regulation and legislation associated with ESG, and the potential impact on traders is even greater. There’s no question that companies will, in many cases, have to overhaul practices for where they source goods and how they get them to market. And again, despite the additional administrative burden they have to bear, there are distinct benefits to be gained in doing so, including a higher degree of supply chain visibility.  

As for the “S” in ESG, consumer brands are well aware of the risk to their reputation if their products are discovered to originate from a farm, factory or mine where workers are being mistreated or denied their natural rights. Ditto in cases where production or distribution is causing harm to the environment. And failure to practice good corporate governance can undermine investor confidence and drag down share prices. (We stipulate, of course, that ESG compliance is first and foremost a moral issue, one that just happens to yield business benefits over the long term.) 

Meeting ESG targets is no easy task, though, so to guide you toward that goal, we present our second annual issue devoted entirely to ESG-related topics. In these pages, you’ll find dozens of industry experts offering advice on fulfilling the moral and commercial imperative to comply — to do the right thing from all perspectives. 

Burden? What burden?