The week in GRC: Gensler eyes human capital disclosure and Walmart hires compliance chief
– Reuters reported that, according to a law student group, US law firms are handling ever more deals and litigation for the fossil fuel industry despite growing concerns over climate change. The second annual scorecard report from Law Students for Climate Accountability gives out more failing grades to Vault Law 100 firms than it did last year. The organization flunked 36 law firms based on the litigation, transactions and lobbying they handled for fossil fuel companies between 2016 and 2020. Last time the organization gave failing grades to 26 law firms for their work between 2015 and 2019.
‘Communities most affected by climate catastrophe have made it clear that critical consciousness and action for environmental justice are imperative and past due,’ Michaela Anang, a student at UC Davis School of Law and the report's lead researcher, said in a statement. Anang said she hopes the report ‘will be one tool for law students and professionals to challenge the continuing complicity of the legal field, and commit ourselves to do better.’
Law Students for Climate Accountability invites firms to pledge to not take on any new work to support the fossil fuels industry and to phase out existing work by 2025. Law students are asked to pledge to not work for poor-scoring firms if their financial and personal circumstances permit.
– The BBC reported that Adam Crozier, the former head of the Royal Mail, ITV and the Football Association, will become the new chair of BT. Crozier will succeed retiring chair Jan du Plessis and will join the telecoms company’s board in November. He will join BT as it looks to speed up its roll out of full-fiber broadband to 25 mn homes by 2026. When he joins BT, he will step down as chair of Asos and will also step down as an non-executive director of Sony Corporation at the end of this year.
– According to Reuters, investors are rushing to form special purpose acquisition companies (Spacs) as capital shifts from traditional oil and gas investments to low-carbon alternatives. More than 412 Spac IPOs raising $121 bn have taken place so far in 2021, up from 247 raising $83 bn total last year, said Jay Ritter, a professor at the University of Florida. Healthcare, financial technology and autonomous vehicles continue to be heavily represented, but alternative energy is gaining traction, the data shows. ‘I would expect there would be more energy-related Spac mergers,’ Ritter said.
Spacs are also facing additional regulatory scrutiny. Last month, Reuters reported that the SEC was ramping up its inquiry on Wall Street's Spac frenzy, homing in on potential conflicts of interest and deal structures that may lead underwriters to create unsuitable deals.
– CNBC noted that SEC chair Gary Gensler is moving the agency closer to requiring carbon disclosures from companies but that in a recent outline of his thinking he made an important caveat: the SEC may still opt to not include Scope 3 emissions in any forthcoming regulation. That is a sign of how hard it is for companies to track all Scope 3 emissions.
Gensler noted last month that some companies already provide voluntary disclosures related to Scope 1 and Scope 2 greenhouse gas emissions but that many investors are looking for information on Scope 3. ‘Thus, I’ve asked staff to make recommendations about how companies might disclose their Scope 1 and Scope 2 emissions, along with whether to disclose Scope 3 emissions — and if so, how and under what circumstances,’ Gensler said.
– The SEC announced the appointment of Sanjay Wadhwa as deputy director of the agency’s division of enforcement. Wadhwa was most recently the senior associate director of the division of enforcement in the New York regional office, where he managed more than 150 personnel in enforcing federal securities laws.
‘Over the hundreds of investigations he has overseen, Sanjay has helped the SEC root out wrongdoing, pursue charges against those who seek to manipulate or defraud investors, and partner with criminal authorities to prosecute bad actors,’ Gensler said. ‘Sanjay's breadth of experience and dedication to protecting investors make him well qualified to serve as deputy director of the enforcement division. I look forward to working with him in his new role.’
– Walmart has hired a former official from the US Department of Justice’s criminal division as compliance chief, the WSJ reported. Matt Miner, who was a deputy assistant attorney general during the Trump administration, has been appointed global chief ethics and compliance officer at the company. Miner will report to Rachel Brand, Walmart’s chief legal officer and another Justice Department veteran.
– According to CNBC, Gensler earlier this week said he is asking the agency officials to begin thinking about a human capital disclosure requirement for public companies. ‘Investors want to better understand one of the most critical assets of a company: its people,’ Gensler said in a tweet.
The human capital disclosure he has asked SEC staff to consider could include a number of metrics, such as workforce turnover, skills and development training, compensation, benefits, workforce demographics including diversity, and health and safety, Gensler wrote.
– The Guardian reported that Apple has told its global workforce they will not return to its corporate offices until January at the earliest, over concerns about a rise in Covid-19 cases driven by the spread of the Delta variant. The company, which will keep its retail stores open, had previously told staff there would be a phased return to work from October.
– The WSJ reported that Johnson & Johnson CEO Alex Gorsky is stepping aside and will become executive chair effective January 3. Joaquin Duato, who led Johnson & Johnson’s pharmaceuticals business before becoming a Gorsky deputy, will become CEO and join the company’s board of directors.