The week in GRC: Banks create group to address climate risks and Engine No 1 eyes diversity and workforce issues
– The Wall Street Journal reported that the SEC is planning to require more transparency from big private companies, with regulators concerned about the lack of oversight of the private fund-raising that has fueled their rise. The number of so-called unicorns – private companies valued at $1 bn or more – has continued to grow even amid the recent boom in IPOs.
The SEC has begun work on a plan to require more private companies to routinely disclose information about their finances and operations, according to a semi-annual rule-making agenda and people familiar with the matter. It is also considering tightening the qualifications investors must meet to access private markets and increasing the amount of information some non-public companies must file with the agency.
‘When they’re big firms, they can have a huge impact on thousands of people’s lives with absolutely no visibility for investors, employees and their unions, regulators or the public,’ said commissioner Allison Herren Lee, who has called for the change. ‘I’m not interested in forcing medium and small-sized companies into the reporting regime.’
– Reuters noted that, according to a report from the Thomson Reuters Institute and Georgetown Law’s Center on Ethics and the Legal Profession, law firms must find other ways alongside competitive pay to make attorneys feel invested in their firms so they stay put. ‘Reinventing how the law firm works is going to be the critical task of every law firm leader this year,’ said report co-author James Jones, a senior fellow at the Georgetown Law Center.
The past year was busy and lucrative for law firms, with demand and billing rates both up 4 percent from 2020 and double-digit growth in profits per equity partner across all law firm segments, according to the report. But data shows law firms are spending more money than ever on associate compensation, only to see record turnover in those ranks. As of November, 23 percent of associates had left their firm during the past year, the researchers found. That’s despite multiple rounds of bonuses throughout the year and widely adopted increases in associate salaries at large law firms.
– A second Starbucks location in Buffalo, New York, has become unionized after the National Labor Relations Board (NLRB) certified the results of last month’s election there, CNBC reported. The coffee company has 10 days to challenge the NLRB’s decision. A Starbucks spokesperson said the company is evaluating its options and believes the employees whose ballots were set aside should be able to vote. ‘We’ve been clear in our belief that we are better together as partners, without a union between us at Starbucks, and that conviction has not changed,’ he said.
– CNN reported that Facebook parent Meta is delaying its return to US offices until March 28 and will require proof of Covid-19 booster shots for employees in those offices. The company already requires that in-office workers be vaccinated. Janelle Gale, vice president of Meta’s human resources department, said the move is intended to give employees ‘more time to choose what works best for them.’
‘We’re focused on making sure our employees continue to have choices about where they work given the current Covid-19 landscape,’ Gale said. ‘We understand that the continued uncertainty makes this a difficult time to make decisions about where to work.’
– According to the WSJ, a group of large banks including Bank of America, Wells Fargo & Co and Royal Bank of Canada have formed a consortium to jointly address climate-related risks. The consortium, formed by 19 banks and the Risk Management Association (RMA), intends to develop standards for measuring and managing climate risk. The group plans to develop consistent frameworks and standards for climate risk management, RMA said.
Nancy Foster, president and chief executive of RMA, said banks could eventually be involved not only in determining, for example, what assets have exposure to weather events, but also in collecting data on their clients’ carbon emissions. She compared the expected scrutiny from banks to their role in combating money laundering by criminals.
– MarketWatch reported that Facebook parent Meta Platforms added DoorDash CEO Tony Xu to its board. Xu’s addition brings Meta’s board to 10 members.
– Following its landmark win at ExxonMobil over climate concerns last year, activist investor Engine No 1 is broadening its sights to press companies on diversity and workforce issues in 2022, Reuters reported. Michael O’Leary, who oversees investment stewardship at the firm, said it will want more explanation from portfolio companies about their obligations to employees as stakeholders, their workforce demographics and other matters.
‘You saw the way something can go from being seen as a gadfly proposal to being truly understood as a core value driver. Just as with climate, we expect to see that spread to other issues like the workforce and racial diversity,’ O’Leary said.
– CNN reported that Goldman Sachs is extending its work-from-home guidance by another two weeks amid the wave of Covid-19 infections. The bank encouraged US employees who can work remotely to do so until February 1, in line with new health policies Goldman Sachs has rolled out. The bank recently said it will require all employees and visitors to its US offices to show proof of boosters, effective February 1. Other banks have developed similar policies.
– The WSJ reported that President Joe Biden will nominate Sarah Bloom Raskin, a former top US Department of the Treasury official, to serve as the Federal Reserve’s top banking regulator. If confirmed by the Senate, Raskin would become the central bank’s vice chair of supervision, the government’s most influential overseer of the US banking system.