Q&A: Magnit on Imperatives of Compliance for Sustainability

The compliance landscape in the energy sector is becoming increasingly intricate, with regulatory frameworks evolving at an unprecedented rate.

As companies navigate this dynamic environment, expert knowledge is essential to avoid costly mistakes and maintain operational excellence.

Compliance encompasses a wide range of disciplines and components, but sustainability stands out as a particularly crucial — and increasingly complex — area of focus.
For the energy industry specifically, adhering to sustainability regulations is not just a requirement but ensures long-term viability, makes economic sense and benefits both society and the environment.

Initiatives like the EU Green Claims Directive and the UK Sustainability Disclosure Standards highlight the critical need to stay ahead of the curve.

Dale DeMicoli is Vice President of Client Services at Magnit and has spent the past decade helping businesses optimise their regulatory strategies.

“The transformation the industry has experienced in the last decade has been intense to say the least — and required a new level of flexibility and innovation,” she says.

Here, Dale outlines how leveraging in-house expertise and collaborating with compliance consultants can assist energy companies in addressing evolving regulatory challenges.

Q. In your own words, what is Magnit and how does it contribute to the energy space? 

Magnit specialises in workforce solutions, particularly focusing on contingent labour management for various industries, including the energy sector. 

In the energy space, Magnit contributes by helping organisations navigate the rapidly changing landscape of skills required for the transition to green energy. 

We offer AI-driven technology, real-time pay and talent intelligence and strategic partnerships to assist energy companies in bridging emerging skills gaps. 

Ultimately, Magnit's services enable energy firms to implement flexible workforce strategies, leveraging contingent workers to access specialised skills quickly. 

This approach is particularly valuable as the industry shifts towards renewable energy sources, requiring new expertise in areas such as AI, machine learning (ML) and smart grid technologies.

Q. With regulation evolving so rapidly, what strategies do you recommend energy organisations adopt to effectively adapt to new compliance requirements? 

To effectively adapt to rapidly evolving regulations in the energy sector, organisations should adopt a multifaceted approach. 

Firstly, it's crucial to get the C-suite involved in compliance programmes, ensuring commitment from the top down. Secondly, rather than merely addressing missteps, companies should focus on proactively avoiding compliance issues altogether, as the consequences can be severe and far-reaching. 

Thirdly, creating a scalable compliance programme is essential. This should be designed to keep tabs on the changing regulatory landscape and have the agility to adapt as guidelines shift. Additionally, organisations should recognise that contingent worker compliance is just as important as full-time employee concerns. 

To support these strategies, energy companies should consider investing in in-house legal teams, implementing training programmes, deploying software for ongoing improvements and partnering with a Managed Service Provider (MSP), such as Magnit, to maintain compliance without diverting focus from core business objectives.

Q. What are some of the most common compliance issues that energy sector organisations face today? How can they proactively address these challenges to avoid operational pitfalls? 

Getting visibility into external labour and worker spend is a challenge in the sector. If energy companies cannot see what contingent workers they have and where they are, it is very difficult to put the appropriate controls in place.

Energy companies also deal with complexities regarding offshore and cross-border work. Specific rules and regulations can apply in these scenarios and organisations need to have the right processes and expertise to set things up properly. 

Paying taxes incorrectly or in the wrong place, for example, can open up the organisation to considerable risk down the line. The increase of remote work has also made this more difficult considering there is free movement within the EU as well.  

Additionally, there is a lot of specialised talent in the energy sector that is business critical and much of it is made up of independent contractors (ICs). ICs are common in some countries, but aren’t in others. 

Legislation regarding the engagement of ICs, what qualifies for a genuine IC and how hiring managers should interact with ICs so they do not open their business up to additional risk can all vary. To manage such risks effectively, having robust vetting processes and ongoing risk assessments, such as re-screening IC relationships, is critical. 

Misclassification risk in general is common in the energy sector. Managers may engage talent via Statement of Work, which includes ICs, because it is easier to get approvals or there are contingent headcount restraints. 

Having governance in place to ensure the correct buying channel is used is critical and the first step to mitigating compliance and risk.

Q. How can energy organisations best leverage the expertise of their employees and partnerships with talent vendors to navigate the complexities of international compliance? 

Energy organisations should consider supplementing the expertise of their in-house legal and HR teams with external vendors who have expertise in the contingent workforce space and the unique regulations regarding these workers. Leveraging these external talent vendors can help with: 

• Global expertise: Whether navigating large-scale infrastructure projects that span multiple countries or simply looking to expand their talent pool, energy companies often need to manage talent across borders — and every country has unique legislation around labour compliance.
  With that in mind, energy companies should partner with talent vendors that have a strong global presence and a deep understanding of international labour laws and compliance requirements.
  These vendors can provide valuable insights into local regulations, helping organisations navigate complex compliance landscapes.
• Technology solutions: Many talent vendors offer technology platforms that streamline compliance management.
  These platforms can automate tasks such as background checks, work authorisation, and tax compliance, reducing the risk of human error and ensuring consistency across different regions.
• Localised support: Talent vendors with a presence in the countries where the workforce is deployed can offer localised support, helping organisations address specific compliance challenges in real-time. This includes assistance with contract negotiations, payroll management and adherence to local employment laws.
• Risk management: Vendors can help mitigate compliance risks by conducting thorough audits and offering advice on best practices for managing a diverse, international workforce.

Energy companies should collaborate with whatever third-party vendor they choose on developing joint compliance strategies and then regularly review and update these strategies to reflect the latest changes in international laws and regulations.

Q. What role do you see technology and data analytics playing in helping energy companies stay ahead of compliance challenges?

Technology and data analytics play a crucial role in helping energy companies navigate compliance challenges. 

AI-driven technologies can provide real-time insights into regulatory changes and workforce composition, enabling organisations to stay agile and responsive. 

These tools can help monitor and predict compliance risks, allowing companies to proactively address potential issues before they escalate.

Data analytics can assist in creating more efficient and accurate compliance reporting, reducing the risk of human error and ensuring timely submissions to regulatory bodies. Additionally, advanced analytics can help in identifying patterns and trends in compliance data, providing valuable insights for strategic decision-making.

In workforce management, technology can aid in maintaining compliance with complex regulations surrounding contingent workers. It can help to accurately classify workers, manage work hours, and ensure proper compensation across different jurisdictions.

Moreover, data analytics can support skills-based hiring practices, helping energy companies to efficiently fill crucial skills gaps whilst adhering to compliance requirements.

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