The week in GRC: Investors urge focus on global access to Covid-19 vaccine and Wells Fargo risk chief to retire
– The Wall Street Journal reported that the Financial Accounting Standards Board (FASB) plans to propose new rules on how companies disclose expenses. It also plans to propose important changes to its long-term agenda this year. FASB in recent months has received more than 500 letters in which companies, investors, academics and other stakeholders shared their opinions on what it should focus on. Many finance executives and investors want it to write rules on how to account for cryptocurrency assets and on financial instruments tied to ESG issues. In both cases, there are no specific rules companies can follow.
– According to CNBC, Starbucks is preparing its workforce to comply with the Biden administration’s vaccine-or-test Covid-19 requirements for private businesses. The Occupational Safety and Health Administration is mandating that private companies with at least 100 employees enforce weekly testing and masking for unvaccinated workers as part of a broader plan to encourage vaccinations and slow viral spread. The mandate has faced court challenges from Republican-led states and business groups.
Starbucks, meanwhile, is asking its US employees to disclose their vaccination status by January 10. If they aren’t fully vaccinated by February 9, when enforcement of the federal mandate is set to begin, workers will have to present a negative Covid-19 test no more than seven days before their next shift and once a week thereafter. Unvaccinated workers will have to procure their own tests, and at-home tests will not be accepted. Starbucks said it will update its timeline for workers if the enforcement date changes due to the legal battle over the mandate.
– According to Reuters, activist investor Jana Partners is increasing pressure on customer service platform Zendesk to drop plans to acquire Momentive Global, the parent of SurveyMonkey, arguing the deal is too expensive and that shareholders oppose it.
‘Zendesk’s proposed acquisition of Momentive appears to be a reactive and impulsive decision,’ Jana wrote in a letter to the board. It said it wants Zendesk to stop wasting time and money on a deal that it expects shareholders to reject and urged the board to ‘immediately terminate the transaction and pivot to focusing on far more promising avenues to resolve Zendesk’s growing discount.’
A representative for Zendesk was not immediately available for comment.
– The EU proposed treating nuclear energy and natural-gas investments as similar to renewables in coming years as part of efforts to reach a carbon-neutral economy but the approach faces criticism from some member state governments, according to the WSJ. The proposal from the European Commission spells out changes to what counts as investment in environmentally sustainable energy. Known as the ‘green taxonomy,’ it is being closely watched by investors and industries including power generation, transportation and manufacturing.
– The WSJ reported that Bridgewater Associates named two new co-CEOs to lead the world’s largest hedge fund firm after CEO David McCormick said he would be stepping down to consider running for the US Senate in Pennsylvania. Bridgewater promoted to co-CEO deputy chief executive Nir Bar Dea along with former Aetna CEO Mark Bertolini, who has been a member of Bridgewater’s board for three years.
– Wells Fargo & Co chief risk officer Mandy Norton will retire in June, according to a memo that said the bank will name a successor in coming weeks, Reuters reported. Norton, who joined Wells Fargo in June 2018 from JPMorgan Chase & Co, took on the job of overhauling the bank’s risk management framework at a time when it was still facing costs and restrictions from its sales practice scandals.
‘Under [Mandy’s] leadership, we have made tremendous progress, and our risk organization is completely different from what existed when she arrived,’ wrote Wells Fargo CEO Charlie Scharf in a memo to staff. ‘Mandy has strengthened all areas of risk management – financial and non-financial – and enabled heightened oversight of our lines of business, with chief risk officers aligned to each one.’
– The WSJ reported that since the Omicron variant has emerged, Wall Street banks have hit the brakes on bringing workers back to the office. The banks hope the pause is short-lived but, even after Omicron subsides, they could find themselves facing a more deep-seated problem. Many of their employees have grown used to more flexible working arrangements and aren’t willing to go back into the office full time. How their return-to-work experiment plays out could set the stage for other white-collar industries.
– Meanwhile, CNN reported that New York City Mayor Eric Adams is not pleased with the shift back to remote work by Wall Street banks and other major employers. ‘We have to open up,’ he said. ‘I need my city to open. And we have to be safe, we have to double down on vaccinations and booster shots. We have to double down on testing. But we have to reshape our thinking on how we live with Covid.’
Adams is concerned that empty offices will hurt the broader ecosystem of businesses that rely on office workers and business travelers, including dry cleaners, restaurants and hotels.
– A group of top international investors said drug companies need to prioritize global access to Covid-19 vaccines and tie management pay to equitable distribution, the Financial Times reported. Sixty-five institutional investors representing more than $3.5 tn in assets under management wrote to leading pharmaceutical companies urging them ‘to make the global availability of vaccines part of the remuneration policy of managers and directors.’
The investors said in the letter: ‘It is clear that currently a large part of the world population still does not have sufficient and equitable access to vaccines. A pandemic [that] remains out of control in many parts of the world is and should be at the top of our agenda as global investors, and also for governments and the companies in which we invest.’
– The SEC announced an award of more than $13 mn to a whistleblower whose information and assistance it said prompted the opening of an investigation and significantly contributed to the success of an enforcement action. According to the agency, the whistleblower promptly alerted SEC officials to a fraud and provided extensive assistance by meeting in person and helping the SEC understand the mechanics of the scheme. The SEC has awarded roughly $1.2 bn to 238 individuals since issuing its first award in 2012.