Start Planning Your 2024 Proactive Compliance Budget

In the complex manufacturing sector, regulatory scrutiny is intensifying, creating an intricate web of compliance requirements that companies must navigate. The stakes have never been higher: You could face financial penalties, reputational damage, and potential market access restrictions if you fail to meet evolving expectations. Reacting to compliance challenges as they arise is no longer a viable strategy. Instead, a proactive approach to compliance is not just advantageous — it’s essential.

Our eBook, Budgeting for Compliance: Proactive Compliance in 2024, offers a deep dive into the regulatory challenges manufacturers will face in the coming year, and provides expert insights about the activities that will affect your compliance budget. Here are some of the top takeaways from the eBook:

The Regulatory Landscape Is Evolving Faster Than Ever

Regulatory monitoring is challenging due to the dynamic nature of the regulatory landscape. Here are just some of the current and upcoming shifts in the regulatory landscape that require urgent action:

• Global per- and polyfluoroalkyl substances (PFAS) requirements, including updates to EU REACH Annex 17, the U.S. Toxic Substances Control Act (TSCA), U.S. state and regional level legislation, and the Canadian Environmental Protection Act (CEPA)
• The Uyghur Forced Labor Prevention Act (UFLPA) and cascading forced labor acts in the EU, Canada, and Mexico
• Updates to the Restriction of Hazardous Substances (RoHS) Directive, including a potential recast as a RoHS 3 Regulation as well as the addition of tetrabromobisphenol A (TBBP-A) as a newly-restricted substance under RoHS 2
• Increased scrutiny on conflict and extended minerals reporting data, shifting focus from smelter data to also include country of origin data
• Mandatory corporate sustainability reporting and climate impact reporting

Many manufacturers struggle to keep up with regulatory changes and stakeholder expectations for sustainability. A proactive solution involves engaging regulatory experts to oversee monitoring, ensuring that built-in reports meet your requirements and reduce non-compliance risks. Today’s trade and product regulations often incorporate environmental, social, and governance (ESG) requirements. For example, PFAS face restrictions due to their environmental and health impacts, and conflict mineral reporting requirements aim to eliminate forced labor in supply chains. A comprehensive compliance program integrates sustainability and product data, enabling manufacturers to assess total risks to their compliance and providing an audit trail for defensible due diligence.

Don’t Overlook These Compliance Budget Items

Each regulation you are in scope of requires a specific allocation of time, budget, and resources. Implementing a proactive compliance program can optimize your resource usage by streamlining data collection and work hours, ultimately reducing what you spend on compliance activities. Your compliance program will include people, tools, and processes, each of which has associated costs in terms of time, money, and other resources. When planning your budget, these considerations should not be overlooked:

• In response to increased regulatory pressure, some manufacturers opt to hire full-time employees (FTEs) for their compliance teams. However, leaning too heavily on hiring can indicate inefficient or manual processes. Instead, an automated solution for supply chain sustainability management can maximize efficiency, empowering your existing team to keep up with reporting and data requirements without additional workload.?
• Educating your suppliers about changes in data requirements or other sustainability goals is another crucial aspect of maintaining compliance. This task requires budgeting for a staff member’s time. Alternatively, using a pre-built proactive solution that includes supplier training services can save time and resources.
• Implementing a third-party compliance solution configured to match your specific regulatory requirements and sustainability goals is a proactive strategy. Developed at scale, third-party technology is often more cost-effective than in-house development and quicker to implement.?

How to Get Executive Support for Your Budget

Securing C-suite buy-in is an essential step in implementing a proactive compliance program. Here are some tips to make it easier:

• Find an executive sponsor: Find an advocate who can influence cross-department budget sharing.
• Find value beyond your own team. For example, how many hours can your program save your procurement team??
• Focus on cost reductions. Executives are more concerned with how your activities reduce overhead.?
• Communicate the cost of being reactive: what risks will your plans mitigate? What are the regulatory fines you are trying to avoid??

There are more insights into earning C-suite buy-in in the eBook, which is available for download here.?

Start Planning Your 2024 Proactive Compliance Program

By adopting a proactive approach, you can transform compliance from a reactive, time-consuming burden into a strategic advantage. Don’t wait for compliance challenges to disrupt your business. Instead, start planning now for proactive compliance as the key to sustainable growth and resilience in the face of regulatory pressures. Begin your journey by downloading our eBook today.

This article by Cally Edgren originally appeared on https://www.assent.com/blog/