The week in GRC: Minority directors hold fifth of Russell 3000 board seats and Home Depot to give hourly workers a raise
– Reuters (paywall) reported that according to data from ISS Corporate Solutions, racial and ethnic minorities now hold a fifth of board seats at Russell 3000 companies, up from 12 percent in 2019, but remain under-represented. The increase comes amid growing pressure on US companies from investors to add more racially and ethnically diverse director voices to their boards. Most minority groups hold a smaller share of board seats than their share of the total US population. That is particularly true for directors of Hispanic or Latino origin, who hold 3.6 percent of board seats but account for 18.9 percent of the US population.
‘While this is a huge sea change in terms of the percentages, it still falls short of the ethnic breakdown of the US population,’ said Marija Kramer, head of ISS Corporate Solutions. ‘It’s a watershed moment but probably not something to pat ourselves on the back too much about.’
– According to CNBC, Home Depot said it will spend an additional $1 bn to give its hourly employees a raise, as retailers and restaurants compete for workers. The company did not disclose the new average wage for employees but said every market’s starting wage is at least $15 an hour. Home Depot is the latest major retailer to signal that the labor market is still tight, particularly when it comes to lower-wage hourly workers.
– Reuters reported that the UK’s Financial Conduct Authority (FCA) insisted that new rules to protect retail consumers of financial products such as insurance or mortgages will come into force in July on schedule despite some ‘resistance’ from the financial services industry. The consumer duty rule seeks to change the culture at banks, insurers and investment firms to prevent further retail mis-selling scandals. ‘The deadline of July 31 will not be moved, and we are here to help,’ said Sheldon Mills, FCA executive director for competition and consumers. Firms supervised by the FCA must nominate a board member to ‘champion’ the new duty, from designing a product to selling it, even through third-party distributors.
– A group of 83 large US law firms has backed Covington & Burling’s effort to resist a demand by the SEC that it identify clients caught up in a cyber-attack on the firm, according to Reuters. The firms joined forces in an amicus brief that called the SEC’s subpoena for Covington’s clients a breach of client confidentiality that any firm would resist under similar circumstances. The commission’s subpoena would risk turning attorneys ‘into witnesses against their own clients,’ the firms wrote in a filing in Washington, DC federal court.
The SEC has sued Covington to force it to identify roughly 300 publicly traded clients whose information was accessed or stolen in the 2020 hack, as part of an investigation into potential securities law violations. The SEC has said the hack was carried out by a Chinese-linked cyber-espionage group. In its own filing, Covington called the subpoena ‘an assault on the sanctity and confidentiality of the attorney-client relationship’ that could open up the firm’s clients to SEC scrutiny without initial evidence of misconduct. The agency has said its demand is narrowly tailored and does not seek information covered by attorney-client privilege.
Representatives for Covington and the SEC did not immediately respond to requests for comment.
– CNN reported that Toyota Motor said it would accept a union demand for the biggest base-salary increase in 20 years and a rise in bonus payments. As one of Japan’s biggest employers, Toyota has long been seen as a bellwether of spring labor talks, which are taking place at large companies. Many are expected to conclude swiftly as the Japanese government seeks inflation-beating wage increases to ease burdens on consumers. Toyota’s incoming president Koji Sato said the decision to accept the union’s demands in full at the first round of talks was meant not just for the company but ‘also for the industry as a whole, and in the hope that it will lead to frank discussions between labor and management at each company.’
Within hours of Toyota’s announcement, Honda Motor said it had agreed to union demands for a 5 percent pay increase.
– The Wall Street Journal (paywall) reported that Gucci is to launch a hub in Tuscany promoting more durable and less wasteful fashion, as it joins efforts by the industry to meet pending EU regulations requiring companies to limit their impact on the environment. The ‘circular hub’ will be a research-and-development center to study ways to improve circularity, including through better durability and recyclability of products, in addition to minimizing waste and pollution from production to end of life.
Parent company Kering said the hub should promote the use of fewer natural resources and reduce greenhouse gas emissions. The company said it would cut the emissions from managing waste generated by Gucci’s leather goods production by up to 60 percent.