The week in GRC: SBTi proposes change to net-zero standard and Starboard Value launches boardroom battle at Autodesk

– Reuters reported that UBS has dropped references to establishing women in management roles and hiring employees from ethnic minority backgrounds from its 2024 annual report, instead focusing on meritocracy.

UBS had said in its previous annual report that it aspired to staff 30 percent of global roles at director level and above with women by 2025. It also aimed to hire more people from ethnic minority backgrounds to make up 18.8 percent of US financial and client advisers by 2025, up from 12.2 percent in 2023. The diversity targets, and an update on last year’s progress, were not included in UBS’s latest report.

‘We are committed to being a diverse and inclusive workplace based on meritocracy,’ the report said. A UBS spokesperson said the bank had a workforce with a variety of skills, experiences and backgrounds: ‘We aim to hire and retain the best people for the right roles... We will continue to recruit, develop and promote a diverse employee base with meritocracy at the forefront of any decision we make.’

– The Wall Street Journal reported that the Trump administration sent letters to 20 major law firms expressing concerns about their diversity programs and employment practices. Andrea Lucas, the Trump-appointed acting chair of the US Equal Employment Opportunity Commission, said the firms have diversity, equity and inclusion (DEI) practices that could be illegal under federal civil-rights laws.

The EEOC is seeking several years of information about the firms’ hiring practices and is questioning programs they have supported to boost minorities and other underrepresented groups in the legal profession. The commission also said it was creating an email address where whistleblowers could send information about potentially unlawful DEI practices at law firms.

The EEOC letters point to specific hiring initiatives, public statements about goals to increase the number of women and people of color and diversity work that their clients touted in previous years.

– According to Reuters, one of the asset managers co-leading climate talks with Equinor on behalf of more than 600 investors said it has sold its stock because the oil company’s board failed to align its strategy with limiting global warming. The UK’s Sarasin & Partners had helped lead talks with the company as part of the Climate Action 100+ initiative.

Despite originally seeing Equinor as a ‘potential leader in the energy transition’ that would ‘set a standard for the industry,’ a letter to the company seen by Reuters said the company had failed to align its strategy with the Paris climate agreement. Despite making statements supporting such a pathway, ‘Equinor has not revised its strategy to deliver on these,’ the letter to Equinor chair Jon Erik Reinhardsen said.

Equinor said its strategy remained firm but, because the energy transition was moving slower than it expected, it had to adapt its speed of transition to markets and opportunities. ‘Our ambition is to be a leading company in the energy transition and as an example of this leadership we are now preparing to receive the first shipment of CO2 at the Northern Lights transport and storage facility,’ an Equinor spokesperson said. Northern Lights is a carbon capture and storage facility in Norway. The company said it considered its strategy to be compatible with the transition to a sustainable economy in line with the goals of the Paris Agreement.

– The WSJ reported that Ben & Jerry’s has accused its parent company Unilever of removing the ice cream maker’s CEO for defending the brand’s social-activism efforts. The company said in a court filing that Unilever has breached the terms of their merger agreement by removing David Stever as CEO of Ben & Jerry’s without approval from its independent board.

Unilever removed Stever because of his commitment to the brand’s social mission and willingness to work with its independent board, not because of any genuine concerns about his job performance, Ben & Jerry’s said in the filing. Unilever reprimanded Stever in his annual performance last January for ‘repeatedly acquiesce[ing] to the demands of the independent social mission board’ at Ben & Jerry’s, according to the filing.

Ben & Jerry’s claims Unilever is trying to dismantle the independent board even though it was empowered to make decisions about the brand’s social mission by the unusual deal Unilever struck to acquire the brand in 2000.

A spokesperson for Unilever said the company has tried to engage with the independent board of Ben & Jerry’s to discuss the CEO’s employment. ‘We are disappointed that the confidentiality of an employee career conversation has been made public,’ the spokesperson said. ‘We hope that the [Ben & Jerry’s] independent board will engage as per the original, agreed process.’

– According to the BBC, a law firm representing claimants says Google has agreed to pay $28 mn to settle a lawsuit that claimed white and Asian employees were given better pay and career opportunities than workers from other ethnic backgrounds. The company confirmed it had ‘reached a resolution’ but rejected the allegations made against it.

The settlement has been given preliminary approval by Judge Charles Adams of the Santa Clara County Superior Court in California. The case against Google relied on a leaked internal document, which allegedly showed that employees from some ethnic backgrounds reported lower compensation for similar work.

‘We reached a resolution but continue to disagree with the allegations that we treated anyone differently, and remain committed to paying, hiring and levelling all employees fairly,’ a Google spokesperson said.

– Swiss drugmaker Roche has dropped global diverse workforce targets and Novartis is ending its use of diverse panels for US hiring, according to Reuters. Among its measures, Roche said its chief diversity offices in the US and at its Basel headquarters ‘will focus on inclusion and belonging, and responsibilities will be re-scoped accordingly.’ Diversity was not mentioned under the offices’ new remit. According to a memo to staff reviewed by Reuters, the changes were made to ensure that Roche ‘can continue to deliver medicines and diagnostic solutions to patients.’

Novartis said evolving laws and policies in the US would require it to change and listed the end of its use of diverse panels as one immediate change to its own policies. The company continues to believe in ‘embracing varied perspectives and fostering equal opportunity for all of our people,’ it added.

– Reuters reported that Starboard Value launched a boardroom battle at Autodesk, raising concerns over the design software maker’s margins and intensifying the activist investor’s struggle to effect changes at the company. Starboard intends to nominate a minority slate of director candidates for election at the 2025 AGM, it said in a letter to Autodesk shareholders.

‘Board change is necessary at Autodesk,’ said Starboard, which lost an effort to appoint its nominees to the board last year.

Autodesk said it had reached out to Starboard to participate in the process of appointing new directors, an offer that the activist investor dismissed. The company said it would review Starboard’s candidates as part of its regular director evaluation process if the investor proceeds with the nominations.

– Delaware lawmakers are expected to vote as soon as next week to overhaul the state’s corporate law to protect its business-friendly reputation, while opponents have called the legislation a giveaway to billionaires, according to Reuters. The bill makes it difficult for investors to sue over certain transactions involving controlling shareholders, such as buying a controlling shareholder’s business, if the deal follows certain steps. It also applies to deals with board members and executives but will not affect existing rules for a takeover of the company by the controlling shareholder.

Lawyers who represent shareholders have called it ‘the billionaire’s bill’ and have launched a public campaign against it. Two-thirds of Delaware’s House of Representatives members must approve the bill for it to pass. Delaware’s Senate approved the bill last week and Governor Matt Meyer has said he will sign it.

– According to the WSJ, the Science Based Targets initiative (SBTi) will allow companies to buy carbon removals to meet their most challenging net-zero goals under proposed guidelines that include setting tougher goals for firms operating in richer countries or those that are larger in size and new options for tackling supply-chain emissions.

The SBTi published a proposed update to its corporate net-zero standard, outlining how companies could meet their net-zero goals. As part of this, the group said carbon removals are now one way that companies can meet those goals, although only in mitigating their emissions that are impossible to abate, also known as residual emissions. The changes would only relate to direct emissions, otherwise known as Scope 1.

Some companies, most notably large technology firms, argue that some carbon emissions will always be unavoidable, and that credits have to be used to offset them. Other companies say allowing companies to purchase credits gives them a license to continue producing emissions that they can then negate through credits. 

– Reuters reported that the EEOC has warned employers that their DEI policies may be illegal. The commission posted a ‘technical assistance document’ on its website saying that some common features of US workplaces, including diversity training and affinity groups such as those for women or LGBTQ+ people, can violate the federal law banning employment discrimination.

The EEOC had for years, including through Trump’s first term, maintained that diversity policies are typically lawful and often help employers comply with anti-discrimination laws provided they do not explicitly favor, exclude or marginalize workers based on their race, sex and other protected characteristics.