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The Morning Risk Report: Social Activism Prioritizes Push for Integrity, Inclusion |
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PHOTO: Crazymedia007/Shutterstock.com
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Good morning. Organizations are focusing on issues of integrity, diversity and inclusion as pressure from social activism drives new priorities among senior leadership, according to a report from BSR, a global nonprofit sustainability organization.
The report, set to come out in mid-September, was compiled from responses of chief sustainability officers or similar-type positions at each of BSR's 152 client companies that participated in the survey. Results this year point to a striking change from previous years, and they speak to the growing pressure companies are feeling on ethics and values beyond compliance, on the growth of socially responsible activism and on the #MeToo movement, said Alison Taylor, BSR's managing director.
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"Issues previously regarded as ‘compliance’ now are concerns across the company as the C-Suite grapples with new dynamics forcing them to consider and communicate what ethics and values mean at their companies," said Ms. Taylor.
Other interesting results from the survey:
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Climate change and human rights remain in the top four priority issues, while less than half of companies are prioritizing inclusive growth or public policy frameworks;
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Disruptive technologies such as artificial intelligence, concern over data privacy and ownership, and disruptions to climate and energy systems are shaping future business strategies; and
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Priority issues are still more driven by risk management than value creation.
"It is also very interesting to me that this is coming up from people outside the compliance function, speaking to the need for a new and more holistic approach to ethics," she said.
The growth of socially responsible activism, especially in the U.S., is driving a rethink on political engagement and corporate values. This requires more coordination between legal, sustainability, and corporate affairs teams, she said. And there is increasing concern over corporate lobbying and taxes from the public, accelerated by a new whistleblowing model of large-scale data leaks.
"We are in an era of hyper-transparency where companies need to behave as if everything they say or do may become public; reputation management is complex and has high stakes," said Ms. Taylor.
"Investor pressure to demonstrate social purpose and long-term resilience is increasing as awareness grows that good management of sustainability issues is aligned with good financial performance over the long term."
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| Risk & Compliance Journal Exclusive |
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U.S. blacklists Iran-based leader of Bahraini group. The U.S. put sanctions on an Iranian leader of a Bahrain group, the State Department said Monday.
Qassim Abdullah Ali Ahmed is an Iran-bsed leader of the al-Ashtar Brigades, the U.S. said. He's recruited terrorists in Bahrain, facilitated weapons and explosives training for members of the group and has supplied members with funding, weapons and explosives to carry out attacks, the U.S. said.
The U.S. State Department put sanctions last month on the al-Ashtar Brigades, saying the group aims to overthrow the Bahraini governmment. The group claimed responsibility for numerous terror attacks against police and security targets, the U.S. said.
Mr. Ali Ahmed was identified in November 2017 as being involved in an Ashtar plot to assassinate prominent figures in Bahrain and target three oil pipelines, the U.S. said. -- Samuel Rubenfeld
Zurich bank admits helping Americans evade taxes. A Swiss bank agreed to pay $98.5 million after admitting it helped thousands of Americans evade U.S. taxes, and two of its executives pleaded guilty.
Zurcher Kantonalbank struck a deferred-prosecution agreement with U.S. authorities in New York, admitting that it helped U.S. taxpayers with accounts at the bank evade their obligations, file false tax returns and hide accounts held at the bank from the Internal Revenue Service. The bank held about 2,000 undeclared accounts on behalf of American taxpayer-clients who collectively evaded more than $39 million in U.S. taxes between 2002 and 2013, prosecutor said.
The bank's chairman said he's relieved that the seven-year probe is over, and that the bank can now move forward without any "related uncertainties."
Two Zurcher Kontanalbank bankers also pleaded guilty; they are scheduled to be sentenced Nov. 30. and face a maximum of a year in U.S. prison. -- Samuel Rubenfeld
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Royal Mail vans are parked in the Leytonstone post office depot in London on July 6, 2017. PHOTO: RUSSELL BOYCE/REUTERS
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The Royal Mail has been fined 50 million pounds for discriminating against Whistl, its only major competitor delivering letters, Reuters reports, citing the regulator Ofcom. Royal Mail will challenge the fine, BBC reports.
Chinese regulators have blocked sales of a Tencent Holdings Ltd. videogame where players hunted fearsome creatures, WSJ reports. It's the latest setback to its PC games business. The tech giant pulled “Monster Hunter: World” off its WeGame distribution platform after Chinese regulators canceled the game’s operating license, citing “a large number of complaints” about the game’s content, Tencent said. Shares slumped on the news, Bloomberg
reports.
India is reworking proposed e-commerce rules after a draft, which had signaled a shift toward boosting domestic startups, sparked criticism, according to people familiar with the matter speaking to Bloomberg.
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For Saudi Arabia’s sovereign-wealth fund, financing a takeover of Tesla Inc. may be harder than it sounds, WSJ reports. The common perception is that Saudi Arabia’s oil wealth gives the fund unlimited resources, but in reality the kingdom’s finances are tight, advisers and government officials say. Elon Musk said he talked to the fund about taking Tesla private. Some of his biggest investors may not be able to follow the plan, Reuters reports.
Financial-technology startups are stepping into a void increasingly left by credit-card-issuing banks: lending to customers with poor credit histories, WSJ reports. LendUp Global Inc. and Fair Square Financial LLC, which focus more heavily on riskier borrowers, mailed out roughly 35 million credit-card offers during the first half of the year, according to market-research firm Competiscan, up from 7 million during the same period last year.
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Indian policy makers are looking for ways to tamp down American tech behemoths, a shift that could crimp growth potential in one of the biggest remaining open markets for their expansion, WSJ reports. India wants to slap new rules on Amazon.com Inc., Apple Inc., Alphabet Inc.’s Google, Facebook Inc. and other firms, using a page from China’s playbook to take control of its citizens’ data and shelter homegrown startups.
Google, Apple, Facebook and other technology firms may be forced to help Australian police decode certain forms of encrypted communications on their systems and devices, FT reports, or face fines of up to A$10 million ($7.3 million) under a draft law published on Tuesday.
Major tech companies committed Monday to removing technological barriers that have hindered patient and provider access to health-care data online, WSJ reports. At a Trump administration event focused on developing more health-care apps, companies including Amazon.com Inc., Alphabet Inc. unit Google and Microsoft Corp. said they would “share the common quest to unlock the potential in health care data, to deliver better outcomes at lower costs."
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Carl Icahn no longer plans to solicit votes from Cigna Corp. shareholders against the health insurer’s $54 billion deal to buy Express Scripts Holding Co. after two proxy-advisory firms recommended shareholders support the deal, WSJ reports the billionaire activist investor as saying. Significant shareholder overlap between the two companies, which he initially hoped had decreased since the deal was announced, was also a factor in his decision, he said.
Netflix Inc. on Monday announced the resignation of Chief Financial Officer David Wells, WSJ reports, who is well regarded on Wall Street for helping investors understand the company as it has transformed itself from a DVD-by-mail service into a Hollywood powerhouse and global streaming behemoth.
Citigroup Inc. is making changes to its consumer-banking leadership, in a bid to deliver a more seamless approach to customers, WSJ reports.
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Expletive-laced rants and physical threats. Punched walls and broken phones. Emails ripping junior colleagues. The chief investment officer at Post Advisory, a junk-bond firm, routinely bullied and intimidated his colleagues for years with relative impunity, Bloomberg reports. He declined to comment, deferring to the firm’s parent company, which declined to directly address the allegations, citing a confidentiality policy related to personnel matters.
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Readers can subscribe to The Morning Risk Report here: http://on.wsj.com/MorningRiskReportSignup. Follow us on Twitter at @WSJRisk.
Follow the WSJ Risk & Compliance Team on Twitter: @WSJRisk, @srubenfeld and @LikelyMara.
Send complaints, comments and kudos to Samuel Rubenfeld at samuel.rubenfeld@wsj.com.
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