‒The Wall Street Journal (paywall) reported that the Public Company Accounting Oversight Board (PCAOB) issued two proposals that would require audit firms to disclose metrics on the involvement and turnover of their auditors and provide new details on fees and cyber-security vulnerabilities.
Audit firms at present must publicly identify the lead partner on the audits they perform and the other firms that helped with that work. Firms also share information each year such as a list of their public company audit clients and the addresses of their offices. Some firms voluntarily disclose firm-level data such as average staff turnover and employee-survey results on culture, but the metrics aren’t consistent and widespread.
One proposal would require hundreds of firms to publicly disclose a set of 11 metrics, ranging from auditor turnover to partner involvement, workload and work experience. Firms would have to provide these metrics for both their individual audit efforts and overall audit practices, although there are exceptions. The second proposal would strengthen requirements around firms’ reporting annually and for special circumstances, such as a filed lawsuit.
‒CNN reported that the European Court of Human Rights (ECHR) ruled that Switzerland’s failure to adequately tackle the climate crisis was in violation of human rights in a landmark judgment that could have global effects. The ECHR made its ruling in a case brought by more than 2,000 Swiss women against Switzerland’s government. They argued that climate change-fueled heat waves undermined their health and quality of life and put them at risk of dying.
The court ruled that the Swiss government had violated some of the women’s human rights due to ‘critical gaps’ in its national legislation to reduce planet-heating emissions, as well as a failure to meet past climate targets. It is the first time the court has ruled on climate litigation. There is no right of appeal and the judgment is legally binding.
Experts say the ruling could boost other human rights-based climate cases pending before international courts and could open the door for numerous similar lawsuits to be launched in the future. The ruling could also force Switzerland to reduce its consumption of fossil fuels more rapidly.
‒Collin Janich and Peter Golding, students at the University of Cambridge’s Judge Business School, are creating a pledge by which MBA candidates at the world’s top business schools would commit to championing sustainable initiatives and fighting for a net-zero future for the rest of their careers, according to the WSJ. ‘Nothing exists challenging future business leaders,’ Janich said. ‘We’re in a position to impact change so this is a call to action to transform business leadership and put climate change into business leadership.’
The students launched the Climate Legacy Commitment last month. It was based on the idea that MBA students will go on to hold a level of power when it comes to effecting change in future business practices.
‒Reuters (paywall) reported the Science-based Targets initiative (SBTi), which announced a plan this week to allow companies to offset greenhouse gas emissions from their supply chain with carbon credits, has come under pressure to drop the policy. A group of 21 technical advisers asked the board of trustees of the SBTi in a letter seen by Reuters ‘to retract this decision immediately’ because it was made without their advice.
On Tuesday, the SBTi said it would accept ‘environmental attribute certificates for abatement purposes’ for Scope 3 emissions, including from the use of a company's products. The decision was a policy reversal and led to an angry letter from SBTi staff to the leadership of the global non-profit. The letter criticized the move and called for the CEO and board members who backed it to resign.
Requests for comment from two SBTi board members via LinkedIn were not immediately returned, Reuters said.
‒CNBC reported that Macy’s said it had settled its proxy fight with real estate investor Arkhouse and that it would add two new directors to its 15-person board. Ric Clark, a former executive at Brookfield, and Rick Markee will join Macy’s board effective immediately. Markee is also on the board of discount retailer Five Below. Both Clark and Markee were Arkhouse nominees.
‘The board is open-minded about the best path to create shareholder value,’ the company said. Macy’s also said it had given the Arkhouse-led investor group confidential business information as the two sides negotiated the terms of a possible sale. The new directors will be part of the committee reviewing Arkhouse’s bid to buy the company.
‒The Guardian reported that Jennifer Abruzzo, the National Labor Relations Board’s (NLRB) general counsel, accused some of the US’s largest companies of ‘jumping on the bandwagon’ in bringing legal challenges to the labor regulator, which has found itself in the middle of the battle between the companies and a wave of unionizing efforts by workers. Attorneys representing several large companies have argued in recent months that the NLRB is ‘unconstitutional’ and has overstepped its authority.
‘There is no way, despite our very limited resources and board agents being overwhelmed with quite a number of cases… that we’re going to succumb to the pressures imposed in addressing these challenges and in defending the constitutionality of our agency structure,’ Abruzzo said. She said the legal challenges against the NLRB had been launched in retaliation for the agency doing its job.
The NLRB’s constitutionality was upheld in a 1937 ruling before the US Supreme Court and it is not yet certain the court will revisit that ruling.
‒Reuters reported that a federal judicial panel called for greater transparency requirements for outside groups that file amicus briefs in cases by requiring they disclose when much of their revenue comes from a party involved in the lawsuit or its attorneys. The US Judicial Conference's Advisory Committee on Appellate Rules endorsed the proposal following calls by Democratic lawmakers and others for changes to improve transparency about the extent to which litigants secretly fund efforts to influence cases' outcomes through amicus briefs.
The panel voted to publish a draft rule for public comment that would require groups such as non-profits, charities or trade associations that file amicus briefs to disclose if a party or its counsel in a given case contributed 25 percent or more of the organization's annual revenue. The proposed rule would also require an amicus brief to name any donor who contributed more than $100 for preparing, drafting or submitting the brief if that person or entity had only been a member of the organization filing it for less than 12 months.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
