The week in GRC: US corporate ownership rule introduced and strikes loom as labor activity surges
– The Wall Street Journal (paywall) reported that Unilever CEO Alan Jope plans to retire at the end of next year. The consumer goods company said it would conduct a formal search for a successor and consider both internal and external candidates. Jope this year faced the emergence of activist investor Nelson Peltz’s Trian Fund Management as one of Unilever’s largest shareholders. Trian said in a statement that it was ‘sorry to learn’ of Jope’s decision and that Peltz, who joined the board of Unilever earlier this year, looked forward to ‘being part of the process of choosing a new leader for the company.’
– The Guardian reported that thousands of workers around the US are going on strike or threatening to do so in October amid a surge of labor union activity. Support for labor unions in the US has grown over the past year, as a surge in organizing has resulted in workers winning union elections at major companies including Starbucks, Amazon, Apple, Chipotle, Trader Joe’s, Google, REI and Verizon.
Union election petitions increased 58 percent in the first three quarters of fiscal year 2022 compared with 2021. Public support for labor unions is at its highest point since 1965, according to the most recent Gallup poll, with a 71 percent approval of labor unions in the US. According to the labor action tracker at Cornell University, strikes in 2022 have significantly outpaced strike activity in 2021, with 180 strikes involving 78,000 workers in the first six months of 2022, compared with 102 strikes involving 26,500 workers in the first six months of 2021.
– Starbucks said it wants to start contract negotiations next month at hundreds of US stores that have voted to unionize, CNBC reported. The company said it sent letters to 238 stores offering a three-week window in October to start negotiations. All of those stores have voted to unionize this year in elections that were certified by the National Labor Relations Board. ‘We look forward to these negotiations and hopefully setting dates and securing locations for contract bargaining,’ the company said in a post on its website.
Casey Moore, a labor organizer and union spokesperson, said stores have reached out to Starbucks to begin negotiations since May but have received no reply. Starbucks said Workers United, the union organizing Starbucks’ stores, has directed the company to schedule all negotiations through the union’s president.
– Reuters reported that, according to a study by the Association of Asian American Investment Managers (AAAIM), almost 60 percent of Asian women working in the US financial services industry say their race has hindered their career, particularly at senior levels. Of the women surveyed, 62 percent said race became a bigger impediment later in their careers. Despite industry pledges to boost diversity, ‘I haven't seen a big shift in the needle in terms of Asian women rising up the ranks,’ said Brenda Chia, capital development chief at Paladin Capital Group, who also serves as co-chair of AAAIM's board.
– According to the WSJ’s Risk & Compliance Journal, a newly operative US law is imposing major hurdles on the importation of goods from China’s Xinjiang region, home of the Uyghur people and other minority groups. Under the Uyghur Forced Labor Prevention Act, goods from Xinjiang are presumed to be made with forced labor – although importers can try to rebut that presumption – a legal shift that has forced companies to examine their supply chains and compliance efforts.
Robert Silvers, a US Department of Homeland Security undersecretary who chairs the inter-agency Forced Labor Enforcement Task Force, called on companies and their top executives to make examining supply chains a priority compliance issue to identify goods tainted by forced labor.
– Business groups sued the Consumer Financial Protection Bureau (CFPB) over a recent move by the agency to tackle potential discrimination in banking services, the WSJ reported. The US Chamber of Commerce, the American Bankers Association and several other trade groups asked a federal court in Texas to stop the CFPB looking for discriminatory behavior when conducting routine examinations of financial services firms.
They argued that the agency overstepped its authority when it indicated in March that discrimination in offering financial services could trigger liability under a law that prohibits ‘unfair, deceptive and abusive acts and practices’ in consumer finance. The agency implemented the policy through changes to its examination manual rather than by proposing a rule and seeking public comment, which plaintiffs say it should have done.
A CFPB spokesperson said the agency voluntarily publishes its examination manuals in an effort to be transparent: ‘The CFPB’s exam manuals allow banks to ensure they are following the law, and help make certain that consumers are receiving the fair and equitable treatment they deserve.’
– According to Reuters, Elon Musk's lawyers urged a federal appeals court to throw out a provision in his 2018 consent decree with the SEC requiring a Tesla attorney to vet some of his posts on Twitter. In a brief filed with the 2nd US Circuit Court of Appeals in Manhattan, lawyers for Musk called the pre-approval mandate a ‘government-imposed muzzle’ that inhibited and chilled his lawful speech on a broad range of topics. The SEC declined to comment. It is expected to file its own brief with the appeals court.
– The WSJ reported that millions of companies in the US will have to disclose their ownership to the federal government under a new anti-money-laundering rule. The US Department of the Treasury action is aimed at closing what national security officials had warned for decades was a hole in corporate regulations. By requiring certain companies to identify their primary owners, officials say they intend to penetrate the anonymity that has enabled drug traffickers, terrorists, corrupt officials and other bad actors to keep their illicit activities hidden.
– CNBC reported that, according to a regulatory filing, Tesla has added Airbnb co-founder and designer Joe Gebbia as an independent member of its board. His addition to the board follows the departure of Oracle chair and chief technology officer Larry Ellison, which was announced in June and finalized after a shareholders’ proxy vote in August. Gebbia stepped down from his operating role at Airbnb in July this year but remains on the company’s board and serves as chair of Airbnb.org, the company’s affiliated non-profit that provides housing to people displaced in times of crisis.
– Delaware is preventing start-up companies with past ties to Russia from maintaining their corporate standing in the state, ensnaring some tech firms that say they have little or no present connection to Russia following its invasion of Ukraine, according to the WSJ. The Delaware Division of Corporations this year told dozens of technology ventures incorporated in Delaware that they can’t do further business with the state after determining their corporate filings contained individual or business addresses in Russia, according to lawyers and start-up founders. Delaware is extending US sanctions meant to punish Russia for its invasion of Ukraine to business ventures incorporated in the state.
A spokesperson for the Division of Corporations said its regulations adhere to, and don’t supersede, federal sanctions rules. In May, acting on an executive order from President Joe Biden, the Treasury Department’s Office of Foreign Assets Control outlawed providing ‘accounting, trust and corporate formation, and management consulting’ services to people located in Russia.