Nasdaq has modified parts of the proposal that it submitted to the U.S. Securities and Exchange Commission (“SEC”) late last year, which –if approved – would refashion the public disclosure requirements for companies listed on the stock exchange. The New York-based stock exchange stated in December that the aim of the proposal is to “provide stakeholders with a better understanding of [a] company’s current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors.” In accordance with its proposal, all Nasdaq-listed companies will be required to publicly disclose board-level diversity statistics via Nasdaq’s proposed disclosure framework.

Specifically, the proposal that Nasdaq presented to the SEC in December would require all Nasdaq-listed companies to publicly disclose board-level diversity statistics via Nasdaq’s proposed disclosure framework within one year of the SEC’s approval of the rule. It additionally calls for most of those entities “to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female, and one who self-identifies as either an underrepresented minority” – which Nasdaq defines as “Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander or Two or More Races or Ethnicities” – or as LGBTQ+.

Since its introduction, Nasdaq’s proposal has been the subject of mixed responses. Counsel for the stock exchange alerted the SEC in a letter on February 5 that 86 percent of the 162 substantive comment letters filed in connection with the proposal supported the adoption of the new rules, which aim to make up for a large-scale lack self-reporting by publicly-traded companies when it comes to diversity figures for C-suite executives and board members. 

“While many anticipated that the SEC’s approval of the proposed rules would be a ‘slam dunk’ given the current social climate,” according to Bryan Cave’s Katherine Ashton and Vicki Westerhaus, it has been met with at least some pushback. For instance, 12 Republican Senators on the U.S. Senate Banking Committee submitted a letter of their own to the SEC last month, urging the securities regulator to shootdown Nasdaq’s proposal on the basis that it would “interfere with boards’ duties to their shareholders, violate securities disclosure principles and could impose costs on companies.” In the letter, a dozen Senators “commend[ed] individual firms for the proactive efforts they have already made in recruiting, promoting, and maintaining diverse talent.” Nonetheless, they argued that “it is not the role of Nasdaq, as a self-regulatory organization, to act as an arbitrator of social policy or force a prescriptive one-size-fits-all solution upon markets and investors.” 

Not only does the exchange’s “narrow concept of mandated diversity, one that prioritizes race, gender, and sexual orientation, and pressured board diversity, miss the mark,” the Senators’ letter contends, it “interferes with a board’s duty to follow its legal obligations to govern in the best interest of the corporation and its shareholders,” while also “violat[ing] central principles of materiality that govern securities disclosures” and “harm[ing] economic growth by imposing costs on public corporations and discouraging private corporations from going public.” Ultimately, the Senators state that they “think America’s corporations benefit from boards that avoid groupthink and offer a diversity of perspectives and commend firms that look to increase diversity among their boards,” but Nasdaq should not be using “its quasi-regulatory authority to impose social policies.”

Fast forward a few weeks, and on February 26, Nasdaq submitted a revised proposal in which it amends some of its previously set-out points. The new filing proposes, for example, that companies with smaller boards – i.e., those with five or fewer directors – would need to include one diverse director, instead of the previously proposed two. Another change would allow for extra time for newly-listed companies to become complaint with the diversity rules; they would have an additional two-year period after the phase-in period to fully meet the diversity objective. Meanwhile, Nasdaq has added a one-year grace period in the event a vacancy on the board brings a company under the recommended diversity objective.

As for timing across the board, the diversity disclosure mandates included in the proposal, if approved by the SEC, would come into effect on the later of “one calendar year from the date of SEC approval of the revised proposal” or … “the date the proxy statement is filed for a company’s annual meeting during the calendar year of such SEC approval date.”

In an Op-Ed in the Wall Street Journal this week, Nasdaq President and CEO Adena Friedman revealed that the amendments come in light of critical response to its initial proposal and aim to “strengthen” the proposal and make “allowances for [companies’] needs and concerns.” She clarified that the proposal “is not a quota,” noting that “the only requirement for companies that do not meet this new objective is to provide an explanation to shareholders.” 

“Overall, our proposal seeks to demonstrate that, with proper disclosure and clear objectives, companies and investors can create momentum toward an approach to capitalism that offers more opportunity to more people,” Friedman stated in the article. “We believe this can be accomplished through a market-driven solution—rather than government intervention.” 

The SEC’s extended public comment period for the proposal is slated to end on March 11, at which point it is expected to decide on Nasdaq’s newly-fashioned rules. Nasdaq’s proposed requirements are the first of their kind, but the push for corporate diversity more generally has found favor among lawmakers in states like California, Illinois Massachusetts, and Pennsylvania, which have enacted laws governing board diversity for  publicly traded companies.

“After the financial crisis of 2008/09, policy-makers were so intent on rebuilding their economies that sustainability considerations took a back seat,” Toronto-based media, research, and financial information products company Corporate Knights stated in connection with its annual ranking of the world’s most sustainable corporations. “As the full economic impact of the COVID-19 crisis became apparent during the first half of 2020, there were fears that the same thing would happen this time.” That has not proven to be the case, however, and “rather than abandoning sustainability pledges,” governments around the world have “seized on the opportunity presented” and doubled-down on green investments.

The same is true for private (non-governmental) entities, as well. Presented virtually during the World Economic Forum late last month, Corporate Knights’ 2021 annual Global 100 ranking demonstrated that it is “not just national governments taking action,” as “the number of companies and municipalities signing on to net-zero [initiatives],” for example, “has more than doubled since last year.” 

In terms of the value of such sustainability-centric efforts, Corporate Knights states that its index “continues to demonstrate that sustainability is good business and enables companies to outperform their peers.” For instance, the company claims that total returns for the members of the Global 100 for the calendar year 2020 were “up 26 percent compared with a rise of 16 percent for the MSCI ACWI.” (MSCI ACWI is an international equity index that tracks about 3,000 stocks in 49 developed and emerging market countries). Moreover, Global 100 index members “earn 41 percent of their revenues from products or services aligned with the UN Sustainable Development Goals, compared to just 8 percent for MSCI ACWI companies on a weighted basis.” 

And beyond that, Corporate Knights notes that “sustainable firms also have longer lifespans.” Its analysis with Thomson Reuters Datastream “shows that the average age of a Global 100 company is 74 years, versus 53 for companies in the MSCI All Country World Index.” 

As for what companies landed on Corporate Knights’ 2021 list, the highest-ranking fashion/retail entity is, yet again, Kering, which took the number 7 spot, up from 23 last year. This marks the fourth year in a row that Paris-based Kering – parent to Gucci, Saint Laurent, Bottega Veneta, and Balenciaga, among other luxury brands – has ranked first in the Clothing and Accessory Retail category. (This year’s top 5 are respectively, Schneider Electric SE, Ørsted A/S, Banco do Brasil SA, Neste Oyj, and Stantec Inc). 

Elsewhere on the list, adidas and Industria de Diseno Textil SA were the only other apparel names. The German sportswear giant took the number 76 spot (down from 55 last year), and Zara’s parent company INDITEX came in at number 92 (from 94 in 2020). 

In terms of the methodology for its ranking, which only includes publicly-listed companies with gross annual revenue of a minimum of $1 billion, Corporate Knights considers more than two dozen key performance indicators (“KPIs”) “covering resource management, employee management, financial management, clean revenue and supplier performance.” For its 2021 ranking, the company says that it specifically included several new KPIs to reflect “the social concerns that the pandemic and Black Lives Matter highlighted during 2020,” such as “paid sick leave, executive and board racial diversity, and clean investments (including clean capital expenditures, R&D and acquisitions).” Corporate Knights notes that this information is based on companies’ publicly-disclosed data (e.g., financial filings, sustainability reports). 

Many businesses ground to a halt at the start of the pandemic, but the market for disposable packaging is forecast to grow by 5.5 percent as the demand for single-use plastics has soared. Before COVID-19, the market was already projected to grow by 4 percent per year until 2027. To put the market in perspective: As a result of all the things we buy and discard, the average person in the United Kingdom, for instance, is responsible for 99 kilograms of plastic waste each year.

When people talk about reducing plastic waste, they tend to have a narrow picture of the possibilities, like using reusable bottles or shopping bags. More often than not, the focus is on what consumers can do. But to prevent tons of plastic being made just to be thrown away, businesses need to ensure people can reuse and refill all their packages and products, from ready meals and soft drinks to shampoo and eyeliner. This would mean a system where people do not buy new disposable plastic containers, but have these collected by retailers and manufacturers to be refilled and then returned to the shop floor. 

For many products, the same container would be reused hundreds of times, but this is not something customers can make happen on their own – it requires manufacturers, retailers, and health-and-safety regulators working together.

Reverse supply chains

Currently, businesses take raw materials, make a product, and distribute it to their customers in single-use packaging that is then discarded. In a circular system where the plastic is reused, businesses would also have to collect, clean, store, refill, and redistribute that packaging. All these steps cost money and create new risks – and concerns – for the business, including on the health and safety front. 

Health and safety is one of the biggest concerns for retailers of food, drinks and cosmetics. In a linear supply chain, compliance with regulators is relatively simple. Each product package, whether it is a shampoo bottle or a ready-made meal tray, has to have a unique label in case there is a bad batch that must be recalled due to an unlabeled allergen or bacterial contamination. Packaging can be marked once when it is filled and then discarded. But for a circular economy, there needs to be a way to relabel different batches of products distributed in the same container. 

Skincare company Nivea launched a refill station for shower gel in Hamburg, Germany in 2020. Customers can return their shampoo bottle, refill it in the shop, and a machine prints out a sticker to identify the product batch. This still assumes customers will do much of the work, including adding and removing stickers to ensure their reusable product meets health and safety requirements; ensuring that everyone can easily reuse products will require more elegant solutions. 

The first step is for businesses to track their packaging with a digital product passport. This is essentially a unique QR code that can be scanned at key points on the product’s journey – when it is returned to the shop, when it is cleaned and refilled by the manufacturer at a warehouse, and when it is returned to a shop or ordered online. The packaging will be scanned hundreds of times, allowing businesses to show that they are complying with health-and-safety standards. And each package can be identified and recalled if there are any contaminated batches of shampoo or curry.

New business models

Digital product passports can also help businesses figure out if reusable packaging is profitable. Calculating the cost of a single-use package is simple. A cardboard takeaway box may cost 20 cents to make and that money goes into the cost of the takeaway meal. With reusable packaging, businesses could recoup the costs and even save money if the meal packaging is reused and refilled enough times. 

But reusable packaging will probably cost more per unit because it will need to be made more durable. Reusable takeaway containers could cost 25 times more than disposable ones to make. But this does not mean that the business will recoup the full cost and begin to make a profit if the container is returned and refilled 25 times. There are additional costs – such as labor and energy – that are required to collect, store, clean, and refill the packaging. 

While these things can be calculated to determine the cost per use of a reusable package, businesses will not know the actual price unless they have a way to track their package and find out the return rate. And return rates will vary widely depending on the product, how easy it is to return the package, and even cultural norms. Without investment in tracking, there are very few case studies to turn to.

Reusable packaging presents an array of new risks for businesses. How do you make packaging that can be frozen, dropped and then heated to 200°C in an oven and confidently claim that it can be used 400 times and still be of the same specification as when it was first produced? How can you set up a reverse supply chain so that at least 50 percent of your shampoo bottles are returned and refilled 400 times? Because they allow businesses to track how many times different types of packaging can be reused and how often people will return them, digital product passports are the first step to solving both of these challenges. Now businesses need to put these ideas into practice.

Katherine Ellsworth-Krebs is a Senior Research Associate in Sustainability at Lancaster University. (This article was initially published by The Conversation)

“Political leaders in the San Francisco Bay Area are forming task forces and speaking out against anti-Asian violence,” the Wall Street Journal reported last week, amid “a spate of recent incidents that include two assaults against elderly men that were captured on video.” Alameda County District Attorney Nancy O’Malley, who recently created a special response unit in response to such enduring violence, told the Journal that “since the onset of COVID-19, we have seen an uptick in crime against Asian Americans.” 

The most recent outbreak of violent attacks in Northern California comes months after the New York City Commission on Human Rights (“NYCCHR”) was forced to launch a COVID-19 Response Team dedicated to handling an influx of reports of harassment and discrimination related to the pandemic, and specifically directed at Asian American individuals. As of last spring, the NYCCHR stated that 40 percent of all harassment and discrimination cases related to COVID-19 involved anti-Asian harassment or discrimination, marking a striking rise compared to the same time period one year prior. 

The NYCCHR revealed that its task force would focus on efforts, such as working with community organizations to track and monitor reports of discrimination, hosting forums in “heavily Asian-American communities” in order to educate these communities of their rights and protections under the law, and launching an online resource page outlining New Yorkers’ rights and protections from COVID-19 related discrimination, among other things. Around the same time, the New York Police Department said that it was planning an initiative of its own due to a rise in COVID-related hate crimes. 

Such efforts have not prevented further instances of abuse. NBC New York reported this week that there were “more than 2,500 reports of anti-Asian hate incidents related to COVID-19 between March and September 2020,” and according to the WSJ, based on preliminary data, “New York City had a record year of hate crimes against Asians in 2020, while in Los Angeles and San Jose, such crimes more than doubled [compared to] 2019.” 

Not limited to violence on the street, these instances of ill treatment have spilled over into the workplace, according to U.S. Equal Employment Opportunity Commission Chair Janet Dhillon. “There have been reports of mistreatment and harassment” on the job, Dhillon revealed last year, emphasizing that “in the workplace, these actions can result in unlawful discrimination on the basis or national origin or race,” and not only for the individual engaging in such discrimination but his/her employer, as well. And she is right: both federal and state laws protect employees from discrimination based on race or national origin, and employers can be held liable in connection with the actions of their employees, since employers have an affirmative duty to prevent harassment, discrimination or retaliation from occurring in the workplace. 

(And just because the pandemic has shifted many jobs from in-house to work-from-home scenarios does not mean that potential risks of hostile environment claims are extinguished. While experts “believe a remote setting increases the risk of a hostile work environment, citing an EEOC task force report observing that decentralized work may make employees feel less accountable,” according to Faegre Drinker attorneys Taylor Haran, Ken McIntosh, and Michael Giudicessi, “others suspect that claims arising in the home workplace could occur less often.” Either way, they note that the increase in remote working “almost certainly will alter how employers investigate and defend them and, more importantly, how in the first instance companies modify policies and train to prevent wrongful conduct irrespective of location.”)

Against that background, Fisher Phillips attorney Seth Kaufman has encouraged employers to “be cognizant of any complaints of harassment, discrimination, or retaliation that involve Asian employees or COVID-19 issues.” Employers “must ensure that these types of complaints are thoroughly investigated” and that “remedial action [is taken] if warranted” in order to avoid potential legal ramifications, Kaufman asserts, noting that in light of the formation – and continued actions – of the NYCCHR’s COVID-19 task force, “it is clear that the NYCCHR will closely scrutinize all steps that employers take to deal with these types of complaints.” 

UPDATED (March 22, 2021): The U.S. Equal Employment Opportunity Commission has “unanimously approved a resolution condemning the recent violence, harassment, and acts of bias against Asian Americans and Pacific Islanders in the United States,” the agency announced.  The resolution – which states that “advancing equal employment opportunity for people of all races, national origins, and ethnicities is critical to guaranteeing safety and security in the workplace” – reaffirms the “Commission’s commitment to combat all forms of harassment and discrimination against members of AAPI communities, and to ensure equal opportunity, inclusion, and dignity for all in the workplace.”

“The Commission condemns the recent violence and discrimination against AAPI persons in the strongest possible terms,” said EEOC Chair Charlotte A. Burrows in connection with the resolution.  “Hatred, xenophobia, and racism violate our nation’s core principles.  The Commission stands in solidarity with the victims, their families, and AAPI communities across the nation, and we pledge to work together to address harassment, bias, and discrimination in the workplace.”

Whole Foods and its parent company Amazon prevailed against racial bias allegations lodged by nearly 30 current and former employees, who accused the supermarket chain of discrimination and retaliation this summer. In a decision on Friday, Judge Allison Burroughs of the US. District Court for the District of Massachusetts determined that Whole Foods and Amazon did not run afoul of federal law by “disciplining” Whole Foods employees across the U.S. “for wearing Black Lives Matter masks” during their shifts in violation of the company’s dress code. 

According to the proposed class action complaint that more than two dozen Whole Foods employees filed in a federal court in Massachusetts in July, “Whole Foods and its parent company Amazon have professed to support the Black Lives Matter movement.” However, the plaintiffs asserted that Whole Foods and Amazon engaged in discrimination in violation of Title VII of the Civil Rights Act of 1964 “both against Black employees who are participating in and leading the employee protest,” and against other non-Black employees “who are associating with and advocating for Black Whole Foods employees and protesting racism and discrimination in the workplace by wearing the masks and showing support for their Black co-workers.”

The plaintiffs took issue with Whole Foods’ BLM ban, alleging that while the company’s dress code policy “nominally prohibits employees from wearing clothing with visible slogans, messages, logos, or advertising that are not company-related,” the policy “had not [been] previously strictly enforced,” with the company failing on numerous occasions to discipline “employees for wearing other messages, including political messages.” 

For example, the plaintiffs argued in their complaint that “Whole Foods employees have worn apparel bearing various logos, such as those of local sports teams,” and have “commonly worn Pride flags in support of their LGBTQ+ coworkers without being disciplined by Whole Foods.” In particular, the plaintiffs argued that “employees have not been sent home or received discipline for wearing Pride pins or apparel.” 

Since Whole Foods took action against employees that were wearing BLM masks, including sending some employees “home without pay,” and “threaten[ing] employees with termination if they continue wearing the masks,” the plaintiffs claimed that Whole Foods was not merely enforcing a neutral dress code requirement, but was targeting employees who were protesting “racism and police violence against Blacks and show[ing] support for Black employees.” 

Whole Foods and Amazon responded to the plaintiffs’ racial discrimination and retaliation lawsuit in August, stating in a motion to dismiss that plaintiffs “wrongfully presume that Title VII, which addresses discrimination on account of an employee’s race, entitles them to display messages on their masks or clothing in the workplace.” What the statute does prohibit, per Whole Foods, is “discrimination against an employee on account of his or her race,” which is not what happened here, and “is not what the plaintiffs are alleging.”  

In her January 5 decision, Judge Burroughs held that even if “the allegations in the complaint” are true, the companies were “at worst, selectively enforcing [their] dress code” in order “to suppress certain speech in the workplace.” As “unappealing that might be,” the judge stated that that “is not conduct made unlawful by Title VII,” which she noted, “does not protect free speech in a private workplace,” and thus, that Whole Foods and Amazon did not violate federal civil rights law. 

Not an across-the-board win for Whole Foods and Amazon, the court has given one of the plaintiffs the go-ahead to pursue a retaliation claim against the defendants. 

In a statement provided to Bloomberg, the plaintiffs’ counsel Shannon Liss-Riordan said, “The court adopted a very narrow frame for analyzing race discrimination, which goes against the tide of caselaw recognizing the critical importance of eradicating race discrimination from worksites across our country,” noting that an appeal of the lower court’s decision is likely. 

*The case is Suverino Frith et al v. Whole Foods Market Inc, 1:20-cv-11358 (D. Mass.).