By Dylan Tokar

Concerns about global warming and racial inequality in today's world are spurring the compliance function of Marsh & McLennan Cos. to change with the times.

Marsh McLennan's compliance team was heavily involved in putting together a recent report on how the New York-based professional services group plans to address environmental, social and governance-related issues -- a sign of how compliance work is evolving, according to Marsh McLennan's deputy general counsel and chief compliance officer.

"If you go back 10 or 20 years, [compliance] was a check-the-box exercise in large part," Katherine Brennan said in a video interview ahead of her appointment as general counsel of Marsh LLC, the group's insurance brokerage arm, on Tuesday. "It was about designing policies that were this thick," she said, gesturing to indicate the size of a heavy book, "so that if a regulator came asking you if you had the appropriate policies in place, you had a corporate defense."

Today, compliance is more broadly about communicating values and influencing behavior, Ms. Brennan says. That's why Marsh McLennan's compliance function plays a leading role on ESG-related topics such as diversity and inclusion, she said.

"Compliance and ESG, in my mind, are so driven by the values of the organization," she said. "You're trying to align people behind the purpose of the firm and the values that underpin and are foundational to that purpose."

Ms. Brennan will oversee Marsh's compliance program as general counsel at the unit. She will remain Marsh McLennan's chief compliance officer for now as well, until the company finds someone to replace her in that role.

What is happening at Marsh McLennan is emblematic of two overlapping trends: Businesses increasingly are being measured by their performance on ESG-related metrics, and compliance officers are taking on responsibilities beyond merely telling employees what not to do.

In addition to insurance brokerage, Marsh McLennan runs a reinsurance business through Guy Carpenter & Co. and offers consulting services through Mercer LLC and Oliver Wyman Inc. The ESG report, the company's first, seeks to align the company's internal values with the work it does advising clients on the same topics, Marsh McLennan says.

In the report, which was released March 31, Marsh McLennan shines a light on its own diversity efforts, publicizing for the first time detailed information about representation at different levels of the company and turnover by women and nonwhite employees. The company also said it has committed to reducing its carbon emissions by 15% from 2019 levels by the end of 2025.

Ms. Brennan, who chairs the company's ESG committee, said she was involved in the company's decision to boost transparency about diversity in its workforce. "Whether or not it's the best story in the world, you are holding yourself accountable," she said. As a compliance officer, she can use the report to drive change within the company, Ms. Brennan said.

The legal and compliance team also helped advise on internal messages about a number of issues involving race and equality over the past year, Ms. Brennan said, including the unrest following the murder of George Floyd and the debate over voting rules.

Some companies have tried to steer clear of issues that can be polarizing. Leaders of Chicago-based software company Basecamp, for example, tried to ban political conversations at work earlier this year. While the move garnered support from some leaders at other companies, it also fueled a backlash that led to the departure of a significant number of employees.

Speaking up is one of the pillars of Marsh McLennan's compliance program, she said. "It's important to raise issues, even when they are hard," she said. "Being in a compliance role gives you the platform to do that."

By moving to Marsh, Ms. Brennan will work in closer proximity to Marsh McLennan's largest business by revenue. She said a changing regulatory environment under the Biden administration and authorities globally, as well as the growing use of data in compliance, will be top of mind in the new position.

Meanwhile, her continuing role on the ESG committee keeps her in demand in other parts of the company. Ms. Brennan said she often is asked to sit in on calls with clients who are seeking advice on starting an ESG program. She is scheduled to give a keynote address at a client's board meeting in August.

One thing she has learned from the process: Change takes time. "Having patience, and being willing to listen to many different perspectives is critical," Ms. Brennan said. "And to always go into these conversations with that independence and willingness to adapt, learn, test...and constantly evolve our thinking."

Write to Dylan Tokar at dylan.tokar@wsj.com

(END) Dow Jones Newswires

05-31-21 0914ET