The following blog post highlights key takeaways from the Diligent Market Intelligence (DMI) 2024 compliance report. Three themes emerge from the report that boards should have on their radar, explored below. To read the full report, click here.

Sanctions and their impact on FCPA enforcement

The 2024 compliance report indicates that 2023 was marked by heightened sanctions activity, resulting in the addition of 21,784 new records. In the second half of 2023 especially, the report notes a surge in records created to impede war efforts in Ukraine and Palestine.

Amid this flurry of sanctions activity, FCPA enforcement actions declined, with 21 enforcements made, compared to 26 in 2022.

An ESG reporting evolution

The report marks a shift in ESG reporting from reputational risk to regulatory risk. Consideration of third-party ESG oversight is in the spotlight, driven by regulations from the EU, Canada, and California which mandate third-party greenhouse gas emissions and human rights processes reporting.

The EU’s Corporate Sustainability Reporting Directive (CSRD), effective as of January 2023, aims to standardize global ESG reporting. It compels U.S. companies with European branches to comply and report on ESG due diligence, even as the SEC has yet to formalize climate disclosure rules, expected later this year.

The Department of Justice’s reform initiative

There are still questions regarding the effectiveness of recent M&A safe harbor rules. Compliance experts argue that these rules, designed to incentivize voluntary disclosure of wrongdoing within six months of a deal closing for potential declination, lack transparency regarding the specific requirements for achieving declination.

In response to recent clawback regulations from the U.S. Securities and Exchange Commission (SEC), companies are advised to review their compensation and compliance policies.