The week in GRC: Ben & Jerry’s co-founder likens companies stepping down DEI policies as ‘appeasement’

The week in GRC: Ben & Jerry’s co-founder likens companies stepping down DEI policies to ‘appeasement’

This week’s governance, compliance and risk-management stories from around the web

– One of the co-founders of ice cream brand Ben & Jerry’s has said that corporate America’s retreat from adopting DEI policies under political pressure amounted to ‘appeasement’, the Financial Times reported (paywall).

The often-outspoken Ben Cohen also said that consumers cared more than ever about corporate ‘purpose’, even as companies including Goldman Sachs, Citigroup and Walt Disney have scaled back diversity targets or policies under pressure from US President Donald Trump.

Cohen told the FT that the backtracking indicated that, while companies were notionally doing DEI, they ‘didn’t really believe in it’.

‘All these corporations made these statements after the murder of George Floyd,’ he added. ‘[DEI] was just some little bauble that they stuck on because consumers were demanding it.’

– A federal judge has dismissed a lawsuit challenging the SEC rule changes that made it harder for shareholders to file proposals at companies’ annual meetings, including for reforms on ESG issues, according to Reuters (paywall).

District Judge Reggie Walton in Washington, DC, rejected arguments that the SEC arbitrarily and capriciously adopted the changes, including on the alleged pretext it supported corporate opposition to reforms on contentious issues such as climate change and workplace diversity.

The SEC was required to determine whether the changes would ‘promote efficiency, competition and capital formation, and it did so,’ Walton wrote in a 64-page decision.

Adopted in November 2020, late in Trump's first White House term, the SEC rule changes increased how much stock shareholders had to own – and how long they had to own it –before submitting proposals.

– The CEO and co-founder of AI startup Anthropic has argued that a Republican proposal to block states regulating AI for 10 years is ‘too blunt’ and would quickly be outpaced by the evolution of the technology.

Writing in the New York Times, Dario Amodei instead called for the White House and Congress to work together on a transparency standard for AI companies at a federal level, so that emerging risks are made clear to people.

‘A 10-year moratorium is far too blunt an instrument. AI is advancing too head-spinningly fast,’ Amodei said. ‘Without a clear plan for a federal response, a moratorium would give us the worst of both worlds – no ability for states to act, and no national policy as a backstop.’

It came as Reddit filed a lawsuit against Anthropic accusing it of stealing data from the social media discussion website to train its AI models, despite public assurances it would not.

– Shares in Toyota Industries sank this week after minority shareholders heavily criticized a proposed $33 bn privatization as severely undervaluing the car parts supplier and trampling over their rights, the FT reported.

The deal to delist the supplier of forklifts, car parts and textile looms, which Toyota Motor was spun out of in 1937, has provoked outrage, with shareholders warning that the allegedly unfair price and lack of transparency were a setback to Japan’s decade-long progress in corporate governance reforms.

‘Toyota Industries’ directors have behaved shamelessly… they have given the fox access to the hen house,’ said Drew Edwards, head of Japan equities at asset manager GMO.

Others said it was ‘completely unacceptable’ and minority shareholders were ‘absolutely screwed’ under the deal terms.

– Activist investor Farallon Capital Management has taken a top-three position in one of Japan’s largest insurance groups and is pushing for rapid changes in investment and governance, as it aims to tap opportunities on the ‘final frontier’ of the sector, the FT reported.

The San Francisco-based firm has reportedly built a stake of between 4 percent and 5 percent in T&D Holdings and is pushing for it to reduce investment risk at a faster pace, concentrate on its core insurance business and address its conglomerate discount

It has also proposed the appointment of two new external directors. T&D, which has a market value of $12 bn, has already declared its opposition to Farallon’s board candidates. Its annual meeting is set for June 26.

– The American oil industry has allied with the green energy lobby to ask Republican senators not to axe Joe Biden-era tax credits for clean hydrogen, warning their repeal would enable China to dominate the emerging sector, according to Politico (paywall).

The American Petroleum Institute, Business Council for Sustainable Energy and chemical giant DuPont are among numerous organizations who have written to senior Republicans in the Senate urging them to retain a $3-per-kg tax credit for clean hydrogen production.

The incentive, which is known as 45V, is one of the tax breaks contained in former president Biden’s Inflation Reduction Act, which the Republican-controlled House of Representatives voted to terminate by the end of the year.