The week in GRC: Companies face vaccine mandate questions and SEC’s Gensler outlines agenda
– CNN reported that Senator Elizabeth Warren, D-Massachusetts, called for the Federal Reserve to break up Wells Fargo following years of scandal at the bank. ‘Every single day that Wells Fargo continues to maintain these depository accounts is a day that millions of customers remain at risk of additional negligence and willful fraud,’ Warren wrote in a letter sent to Federal Reserve chair Jerome Powell. She urged the Fed to revoke Wells Fargo’s status as a financial holding company and require the company to separate its traditional banking activities from non-banking activities. A Fed spokesperson said the central bank received the letter and plans to respond.
Without responding directly to Warren’s letter, Wells Fargo issued a statement detailing the various regulatory hurdles it has cleared in recent years and milestones it has achieved since it came under scrutiny. ‘Meeting our own expectations for risk management and controls – as well as our regulators’ – remains Wells Fargo’s top priority,’ the company said. ‘We are a different bank today [from the one] we were five years ago because we’ve made significant progress.’
– SEC chair Gary Gensler told lawmakers he was taking a hard look at cryptocurrency trading platforms and firms that pay to execute individual investors’ trades while also calling for more funding for the agency, according to The Wall Street Journal. Gensler appeared before the Senate Banking Committee to outline a policy agenda that would require more disclosures from public companies and shake up some Wall Street firms’ business models.
The SEC plans to increase requirements regarding companies’ disclosures about their workforces and risks stemming from climate change. Gensler also said he has asked SEC staff to enhance disclosures from private funds to their investors.
– Reuters reported that activist investor Bluebell Capital Partners urged Belgian chemicals company Solvay to replace CEO Ilham Kadri, saying she failed to stop the discharge into the sea of waste from a soda-ash production plant in Italy. The move is part of Bluebell’s campaign intended to create change at companies it says are falling short on ESG issues and reflects a growing trend among activists to target companies over ESG shortcomings.
Bluebell began engaging with Solvay in September 2020 over the damage Bluebell says is being caused by the dumping into the sea of soda-ash waste from Solvay’s Rosignano factory. Solvay says the discharge is harmless and non-toxic, and the process complies with all relevant laws. In its letter to Solvay’s board, Bluebell said Kadri was in ‘total denial’ over the environmental and social impact of the discharge at issue.
Solvay’s chair Nicolas Boël noted in a statement that Kadri had the board’s ‘full support.’ He said: ‘Since her appointment in 2019, she has taken decisive action to shape the company’s strategy and align its portfolio with powerful sustainability trends, while also implementing an ambitious new sustainability program, Solvay One Planet.’
– According to the WSJ, spending on share buybacks by US companies increased much faster than capital expenditures in the first half of the year, after pullbacks in both categories last year amid the pandemic. Share repurchases at companies in the S&P 500 increased to $370.4 bn, up 29 percent from the first six months of 2020. Capital spending rose to $337.17 bn, up 4.8 percent from the year-earlier period. Government stimulus efforts, such as those launched amid the coronavirus pandemic, are aimed partly at encouraging companies to invest in their businesses. But companies have faced criticism for using funds for stock buybacks or dividends.
– Brazil’s central bank announced new rules making it mandatory for banks to incorporate climate change-related risks into stress tests, starting in July 2022, Reuters reported. Central bank director Otavio Damaso said the new regulation aims to avoid potential financial instability stemming from climate-related risks. The regulator also made it mandatory for banks to disclose climate-related information as part of financial reporting by July 2022 in accordance with the TCFD.
– The SEC announced whistleblower awards of roughly $110 mn and $4 mn. The awards mean that the agency’s whistleblower program has now paid a total of more than $1 bn in awards to 207 whistleblowers, including more than $500 mn in fiscal year 2021. The $110 mn award is the second-largest in the program’s history.
‘Today’s announcement underscores the important role whistleblowers play in helping the SEC detect, investigate and prosecute potential violations of the securities laws,’ said SEC chair Gary Gensler in a statement. ‘The assistance whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.’
– Chevron chair and CEO Mike Wirth told CNBC that the oil company’s lower-carbon investments focus on areas such as renewable natural gas and hydrogen because it sees significant potential to create shareholder value. ‘One of the things we’ve chosen not to go into is wind and solar,’ Wirth said. ‘These are technologies that are relatively mature. There is plenty of capital available. The returns in wind and solar are actually being bid down, and we’ve concluded that management in our company can’t create value for shareholders by going into wind and solar.’
Instead of committing capital in those areas, Wirth said Chevron would rather the money ‘go back to our shareholders and let them plant trees, go invest in a wind and solar developer and have the right to do that with a growing dividend that comes out of our company.’
– The WSJ noted that employment and compensation lawyers say companies preparing to implement the Biden administration’s Covid-19 vaccine mandate face logistical challenges and unanswered questions about how to comply. Businesses are awaiting more details in a formal rule the Occupational Safety and Health Administration (OSHA) plans to issue in the coming weeks.
One of the biggest unknowns is who will be responsible for covering the cost of testing for employees who choose to remain unvaccinated, lawyers said. Under the mandate, all employers with 100 or more workers would have to require that their workers be vaccinated or undergo at least weekly Covid-19 testing.
Companies are also wondering exactly how OSHA will determine the threshold for which businesses are covered by the requirement, and about exemptions for employees who continue to work from home or who have religious or medical accommodations that are protected under the Americans with Disabilities Act.