22: Management of the Legal And Regulatory Environment

Establishment and management of the legal and regulatory environment is an integral part of any organisation’s operations. It helps to shape the relationship between stakeholders and businesses.
The organisation’s assurance on regulatory or monetary policy such as taxes & subsidies, influence the industry policy, ensures the ability to follow relevant regulations and provide a favorable regulatory environment for business competitiveness.
If we consider the exploration and production industry, there are a number of sustainability related regulations and regulatory frameworks that frequently change. Companies from such specific industries need to be actively participating in regulatory and legislative processes on various social and environmental factors regularly. These engagements influence environmental laws and regulations that impact the organization's reputation amongst the stakeholders and company’s social license to operate.

Industry best practices

Developing effective legal and regulatory frameworks are considered to be very challenging for the organisations. In today’s business era, industry and the legislative environment keep evolving and it is important for the organisation to keep up with the changes, as it has a huge impact on the businesses operations.

**Some of the challenges faced by the firms to keep up to date with the legal requirements are: **

• Rapid changes
• Extensive and complex regulations
• Diverse nature of regulatory bodies

These are the few techniques that the organisation can practice for an effective legal and regulatory environment:

1. Staying informed and up to date with the changes:

Due to the dynamic nature of the regulatory environment, it is very challenging for the firms to stay informed all the time. The firms can follow some key practices such as:keeping a tab of all the regulatory changes; attending seminars & online conferences to get latest updates; conducting regular audits to review internal processes to ensure the compliance of policies and procedures; identify the gaps and areas that need to be improved etc.
Large scale firms investing in a bigger legal and regulatory team can manage external and internal laws implementation that ensure all practices are within the company’s law in a systematic manner.

2. Providing regular training to employees:

Training the employees on the regular basis regarding the legal and regulatory requirement, makes them aware of the roles and responsibilities in maintaining an effective regulatory environment.
For example, maintaining a database with all the updated legal information and changes that can be accessed by all the employees, will help them to be aware of all the changes. Promoting a culture within the organisation that encourages employees to understand the importance of legal and compliance standards.

3. Using suitable legal compliance software:

Maintenance and documentation of regulatory data will help to track all the tasks and legal deadlines. Storing all the data in a single place will help the organisation to have instant access to the information regarding all the laws and regulations. This can help the organisation analyse and discuss the company’s position related to government regulations and policies that addresses social and environmental factors.

Case Study

Uber

Uber technologies is a drive-hailing company that provides a platform for drivers and passengers, where they can connect through a smart phone app known as a ride sharing service. Due to its disruptive nature of business model and impact on traditional taxi services, the company has faced numerous legal and regulatory challenges in many countries.

Service fares are set by the Uber, where the drivers receive a percentage of the total fare paid by the customers. The licensed drivers undergo background checks and other legal requirements. The company faced one of the most significant legal challenges in London.

In 2017, Uber faced an administrative ban from TfL, which refused to renew uber license to operate in the city, due to its concern over passenger safety (reporting of criminal offense, medical certification and background checks of the drivers).^[1]

To regain the license, the company had to work on its legal frameworks to build trust amopngst the TfL regulators. They provided an innovative combination of litigation, regulatory and corporate governance insights, which included developing a governance structure and establishing new communication protocol. The company’s legal partner focused on updating the regulatory regime and governance process by rebuilding the organisation's compliance frameworks.

After making positive changes and improvement to its culture, system and leadership strategies:

• Uber and TfL came into an agreement by granting a 15 - month license in 2018.
• But in 2019, the TfL refused to renew the license and denied the proposal.
• In 2020, Uber won its legal fight as the judge acknowledged the company’s effort in managing the legal and regulatory environment and introduction of industry-leading systems.

Another legal challenge faced by Uber, is the control of the fare and movement of the car but not the driver’s hour. They classify their driving partners as independent contractors rather than employee. As a result, the drivers are not entitled to minimum wage, overtime pay and other benefits guaranteed to employees.

Uber’s vision is to achieve a zero emission platform by 2040. The areas which they are focusing on are:

• Providing sustainable share alternatives and offering more ways to ride green - Uber comfort electric (riding in a premium electric vehicle). Uber green ride produces 25% fewer carbon emissions than the average rides.^[2]
• Encouraging drivers to go electric - the green future initiative which provides access to resources valued at $800 million to help drivers transition to battery EVs.^[3]
• Partnering to fight climate change - investing in innovation, technologies and talent to fight against climate change.

This demonstrates the importance of the effective management of the legal and regulatory environment for companies like Uber, without which such industries can face significant legal challenges