How a Decision Process Can Create Evidence of Compliance

When a decision process is adapted to comply with a policy, it will include new components – new actions, roles, responsibilities, among others. At the same time, the process needs to be further adapted to ensure that when it is executed, data is collected that can be used as evidence of compliance later on.

Let’s assume that a hypothetical company adapted its decision process for infrastructure investments to comply with a policy that resembles the US EPAct, and that it did so as described in the text here. How can the company adapt the same decision process to ensure that evidence of compliance is being collected when the process is executed?

This text is part of the series on the design of decision governance. Decision Governance refers to values, principles, practices designed to improve the quality of decisions. Find all texts on decision governance here, including “What is Decision Governance?” here.

Adapting the Process to Create Evidence of Compliance

It is assumed below that the company uses the generic decision-making process with five stages: reaction, explanation, search, decision, and action. Below, each stage includes guidelines adopted to ensure compliance with the policy, and then the guidelines that need to be part of decision governance to ensure that evidence of compliance is collected.

Reaction Stage

The reaction stage involves recognizing situations where energy efficiency improvements could address business challenges or create opportunities. This is the first step in identifying potential actions and determining their relevance to public policy goals.

Implemented Guidelines:

• Establish Energy Efficiency Triggers: Define criteria for recognizing opportunities, such as aging infrastructure, rising energy costs, or regulatory requirements.
• Monitor Energy Metrics: Use audits or monitoring systems to track consumption patterns, inefficiencies, and potential cost savings.
• Regulatory Awareness: Ensure decision-makers are informed about policy provisions, including available tax credits and deductions for energy-efficient investments.

Guidelines for Collecting Compliance Information:

• Document energy metrics and audit findings to provide evidence of inefficiencies or opportunities.
• Record observations of triggers and their connection to policy requirements, such as regulatory deadlines.
• Maintain summaries of regulatory updates and their relevance to identified opportunities.

Explanation Stage

The explanation stage involves building a case for energy-efficient actions by analyzing the underlying situation and connecting it to policy requirements and operational benefits. This stage sets the foundation for justifying action.

Implemented Guidelines:

• Quantify the Impact: Analyze energy usage data and calculate cost savings and environmental benefits from upgrades.
• Link to Policy Goals: Articulate how proposed actions align with policy objectives, such as energy conservation or renewable energy use.
• Evaluate Non-Action Risks: Highlight risks of inaction, such as missed incentives, higher energy costs, or reputational damage.

Guidelines for Collecting Compliance Information:

• Record energy usage analyses and cost-benefit calculations that support the case for action.
• Document how proposed actions align with specific policy goals or incentives.
• Maintain risk assessments that outline the consequences of not taking action.

Search Stage

The search stage involves identifying and refining potential options for addressing the identified opportunity. This stage prioritizes solutions that maximize energy efficiency and align with policy incentives.

Implemented Guidelines:

• Explore Eligible Investments: Focus on options qualifying for tax deductions or other policy benefits.
• Use Industry Benchmarks: Compare potential solutions against best practices and standards.
• Engage Experts: Consult with energy efficiency consultants or vendors familiar with policy provisions.
• Perform Cost-Benefit Analysis: Evaluate the financial implications, including costs, savings, and tax benefits for each option.

Guidelines for Collecting Compliance Information:

• Maintain a checklist of options assessed against policy eligibility criteria.
• Record benchmarks and expert consultations to demonstrate the thorough evaluation process.
• Retain cost-benefit analyses for each option, showing compliance alignment and expected benefits.

Decision Stage

The decision stage involves committing to a specific option that aligns with policy objectives and provides tangible benefits. This step formalizes the selection process and ensures accountability.

Implemented Guidelines:

• Document Compliance: Verify that the selected option meets policy requirements and record eligibility criteria.
• Set Clear Goals: Define measurable outcomes, such as energy consumption reductions or payback periods.
• Consider Long-Term Impact: Choose solutions offering sustained efficiency benefits and aligning with broader sustainability goals.

Guidelines for Collecting Compliance Information:

• Retain documentation showing the selected option’s compliance with policy requirements.
• Record defined goals and their alignment with policy objectives.
• Maintain notes on why non-compliant options were rejected, creating a transparent decision-making audit trail.

Action Stage

The action stage involves implementing the chosen option to realize the benefits of compliance. This step ensures that planned actions are executed effectively and results are tracked.

Implemented Guidelines:

• Leverage Financial Incentives: Ensure timely submission of claims for tax deductions or other incentives.
• Monitor Performance: Track energy savings to verify that implementation achieves projected benefits.
• Report and Share Results: Document outcomes and share success stories to reinforce commitment to energy efficiency.
• Evaluate for Continuous Improvement: Use lessons learned to refine future decision-making and identify additional opportunities.

Guidelines for Collecting Compliance Information:

• Retain detailed records of implementation activities, including timelines and progress reports.
• Document financial incentive claims and their supporting evidence, such as receipts and certifications.
• Maintain performance tracking reports to demonstrate achieved benefits and policy compliance.
• Record lessons learned and adjustments for continuous process improvement.

General Information to Determine Compliance with a Policy

To demonstrate compliance of a decision process, or more broadly decision governance with public policies, an organization can collect and keep various types of information. The following are key types of information applicable across various policies.

1 Documentation and Records

• Purpose: Verifies adherence to specific provisions of the policy.
• Examples:
  • Internal policies and manuals showing alignment with regulatory requirements.
  • Financial records documenting investments in policy-compliant initiatives.
  • Supporting documentation for claiming benefits or meeting obligations under the policy.

2 Performance Metrics

• Purpose: Provides measurable evidence of compliance with policy objectives.
• Examples:
  • Reductions in energy consumption or emissions as required by environmental policies.
  • Adoption rates of new technologies incentivized by the policy.

3 Audit and Inspection Reports

• Purpose: Confirms compliance through independent or internal evaluations.
• Examples:
  • Reports from regulatory audits or internal reviews.
  • Inspection records verifying adherence to safety, efficiency, or operational standards.

4 Training and Certification Records

• Purpose: Demonstrates that personnel have the knowledge and qualifications to implement policy requirements.
• Examples:
  • Attendance records for mandatory training programs.
  • Certifications relevant to the roles involved in policy compliance.

5 Stakeholder Feedback

• Purpose: Provides insight into compliance effectiveness from those directly impacted by the policy.
• Examples:
  • Customer surveys regarding the organization’s alignment with regulatory or ethical expectations.
  • Employee input on internal compliance practices and challenges.

6 Financial Records

• Purpose: Supports compliance claims and validates resource allocation to meet policy objectives.
• Examples:
  • Invoices and receipts for equipment or services aligned with policy standards.
  • Documentation of incentives received or penalties avoided due to compliance.

7 Monitoring and Reporting Systems

• Purpose: Tracks ongoing compliance and highlights areas needing attention.
• Examples:
  • Real-time data logs of operational performance.
  • Reports generated for regulatory bodies or internal use.

8 Incident and Breach Reports

• Purpose: Demonstrates transparency and corrective action following compliance issues.
• Examples:
  • Reports documenting non-compliance incidents and their resolutions.
  • Records of preventative measures implemented to avoid future breaches.

9 Independent Certifications

• Purpose: Provides third-party validation of compliance with specific policy requirements.
• Examples:
  • Certifications such as ISO standards or industry-specific accreditations.
  • Awards or recognitions for achieving policy-driven goals.

10 Legal and Regulatory Notices

• Purpose: Confirms compliance through official communications.
• Examples:
  • Notices from regulators confirming adherence to policy mandates.
  • Absence of legal actions or fines related to non-compliance.

11 Environmental and Social Impact Assessments

• Purpose: Demonstrates alignment with broader policy goals.
• Examples:
  • Assessments of the environmental or social impact of projects.
  • Reports on progress toward sustainability or equity objectives.

When designing decision governance, it is necessary to understand the information to keep to demonstrate compliance with applicable policies – from performance metrics and financial records to certifications and stakeholder feedback. Practices which ensure relevant information, and only the necessary such information is made and kept, will be part of decision governance.