In a world shaped by fast-moving risks and shifting regulatory expectations, compliance has evolved far beyond checklists and box-ticking. It’s now a strategic lever for resilience, trust, and long-term value creation. Below are 13 critical challenges businesses are contending with — not in the distant future, but right now.
1. Biodiversity Loss and Natural Capital
Nature is not a fringe issue — it’s infrastructure. Over 50% of the global economy depends on healthy ecosystems, yet biodiversity loss is accelerating due to deforestation, pollution, and climate change. Regulatory pressure is mounting, with frameworks like the TNFD requiring companies to disclose their nature-related impacts and dependencies. Companies must map supply chains, identify biodiversity hotspots, and integrate these risks into core governance. It’s not just about compliance — it’s about survival.
2. Artificial Intelligence and Generative AI
AI is no longer experimental — it’s operational. But the hype masks real risks: opaque decision-making, baked-in bias, lack of accountability, and colossal energy demand. With regulations like the EU AI Act on the horizon, organisations must get ahead by developing AI governance policies, establishing human oversight, and ensuring ethical deployment. Generative AI in particular raises new questions around copyright, misinformation, and algorithmic control — and regulators are watching.
3. Circular Economy and Waste Reduction
The age of overproduction is coming to an end. As materials become scarcer and waste systems buckle, regulators are rewriting the rules. The EU’s Ecodesign for Sustainable Products Regulation will force businesses to prove their products are durable, repairable, and recyclable. Circular economy principles — product take-back, waste valorisation, material recovery — aren’t nice-to-haves. They’re future-proofing mechanisms. Companies must reengineer product lifecycles, rethink packaging, and prepare for Digital Product Passports that will leave nowhere to hide.
4. Geopolitical Instability
From trade wars to military conflicts, geopolitics is now a frontline compliance concern. As governments weaponise regulation and restrict market access, businesses with global footprints face escalating supply chain risk. “Friend-shoring” — relocating operations to politically aligned countries — is gaining traction, but it’s no silver bullet. Companies must monitor political developments in real-time, build diversification into their sourcing strategies, and scenario-plan for worst-case disruptions. It’s not about reacting — it’s about anticipating.
5. Water Scarcity and Management
Water is fast becoming the new carbon — and just as consequential. Climate change, population growth, and pollution are straining freshwater supplies worldwide. With global demand projected to outstrip supply by 40% by 2030, sectors like agriculture, food, textiles, and energy are facing severe operational risks. Compliance now means more than avoiding fines; it means securing your licence to operate. Companies must conduct basin-level water risk assessments, set conservation targets, and report transparently under frameworks like CDP Water Security.
6. Cybercrime and Third-Party Risk
Cybersecurity isn’t just an IT issue — it’s an existential one. The July 2024 global outage, linked to a software update gone wrong, showed how vulnerable interconnected businesses really are. With third-party platforms now central to everything from finance to logistics, organisations need a new playbook. Regulations like DORA and the UK’s Critical Third Parties regime are raising the bar, demanding deeper vendor oversight, stronger internal protocols, and zero-trust models that treat every access point as a potential breach. Hope is not a strategy.
7. Greenwashing and Sustainability Claims
Making vague or misleading environmental claims is no longer just bad PR — it’s a legal liability. The EU’s Green Claims Directive and the UK’s Green Claims Code are setting clear lines in the sand: prove it, or don’t say it. With consumers more informed and regulators more aggressive, the bar for sustainability communications is rising fast. That means evidence-based claims, third-party verification, and real internal accountability for what your brand puts out into the world. Empty virtue signalling is now a compliance risk.
8. Modern Slavery and Forced Labour
Forced labour is a global epidemic — and it’s lurking deep in the supply chains of some of the world’s biggest brands. With the EU’s Forced Labour Regulation and Canada’s new supply chain laws, regulators are cracking down. The days of plausible deniability are over. Businesses must map supply chains down to the raw material level, enforce supplier codes of conduct, and conduct real, on-the-ground due diligence — not just desktop audits. Ethical sourcing is now a regulatory baseline, not a marketing badge.
9. Supply Chain Decarbonisation
For most companies, Scope 3 emissions — those from suppliers, logistics, and product use — make up the lion’s share of their carbon footprint. Yet they’re also the hardest to measure, let alone reduce. With disclosure mandates like the EU’s CSRD coming online, the pressure is on to understand and act on emissions across the entire value chain. That means supplier engagement programs, lifecycle carbon accounting, and a serious pivot toward renewable energy and low-emission logistics. You can’t offset what you haven’t measured — and soon, you won’t be allowed to.
10. Ethics and Organisational Culture
Culture eats compliance for breakfast. It’s no longer enough to have policies in a drawer — regulators, investors, and employees want to see how your values show up in practice. With rising reports of bullying, discrimination, and misconduct, organisations must proactively foster psychological safety, strengthen whistleblower protections, and ensure ethical leadership at every level. Culture isn’t intangible — it’s measurable. And increasingly, it’s enforceable.
“Strong workplace culture isn’t just about policies — it’s about building trust and ensuring that employees feel protected and valued.” — FCA Workplace Culture Review
11. Financial Crime
Despite decades of enforcement, financial crime continues to thrive — aided by new technologies and global loopholes. Criminal networks use crypto, shell companies, and digital finance to launder trillions annually. New enforcement bodies, like the EU’s AML Authority, are raising the stakes. Companies must strengthen KYC processes, enhance monitoring capabilities, and use AI to spot suspicious patterns in real time. Being caught unaware isn’t an excuse — it’s a liability.
12. Expanding and Conflicting Regulations
As the EU, UK, and US roll out overlapping and often contradictory rules on ESG, AI, and corporate governance, businesses are stuck trying to navigate a regulatory minefield. The lack of global harmonisation increases the cost and complexity of doing business across borders. Compliance teams must monitor legislative updates, embed flexibility into internal systems, and develop global frameworks that adapt to regional requirements. Staying ahead means seeing around corners — not just reacting to headlines.
13. Polarisation and Workplace Tension
The culture wars aren’t confined to social media — they’re spilling into the boardroom and breakroom. DEI initiatives, ESG priorities, and corporate activism are now flashpoints for public and internal backlash. Companies that take a stand risk alienating customers. Those that stay silent risk losing employees. Navigating this minefield requires strong leadership, clear communication, and a culture that values respectful dialogue over ideological echo chambers. In the age of polarisation, cohesion is a competitive advantage.
14. These challenges aren’t just compliance issues
They’re business imperatives. Each one reflects a deeper shift in how companies are expected to operate in a rapidly evolving world. The organisations that succeed won’t be the ones that react the fastest — but the ones that build compliance into the very DNA of their strategy, operations, and culture. The future doesn’t reward the most compliant. It rewards the most prepared.
