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News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

California’s Contractor Law Stirs Confusion Beyond the Gig EconomyND

Kate Conger & Noam Schieber, The New York Times, Wednesday September 11, 2019

A landmark bill passed by legislators in California could force companies like Uber and Lyft to reclassify hundreds of thousands of independent contractors as employees, paying overtime and giving access to other benefits. The new law has not gone down well with the companies in question. Companies like Uber and Lyft are concerned as their drivers who are currently classified as contractors are not covered by minimum-wage, overtime laws, and they do not receive any insurance schemes. Uber also declared the law would not apply to its drivers. Uber’s Chief Legal Officer, Tony West, stated: “Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces”. He added that the company was “no stranger to legal battles”.

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Politically incorrect speech can be good politicsND

Ephrat Livni, Quartz, Friday September 13, 2019

A new study by researchers at Harvard and Berkeley universities, published in the Journal of Personality and Social Psychology, examines the idea of political correctness and its interplay with authenticity. Researchers defined “correctness” as what seems morally right during a certain time with a certain group. One of the study's key findings was that being politically incorrect in communication can signify authenticity, but politically correct communicators come across as more sensitive and warmer.

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Sainsbury's pledges to halve plastic packaging by 2025ND

BBC News, Thursday September 12, 2019

Sainsbury’s, the second largest supermarket chain in the United Kingdom has pledged to halve the amount of plastic used in its stores by 2025. "We can't do this on our own and we will be asking our suppliers and our customers to work with us," said Sainsbury’s CEO Mike Coupe. Talks with food manufacturers, suppliers, scientists and the waste and recycling industry have already begun to identify some initiatives to implement the changes. The supermarket giant’s first major policy is to remove all plastic bags from its fruit and veg sections, which will take place at the end of the month. Instead, customers will be asked to bring their own bags or use reusable bags made from recycled bottles. Helen Bird from packaging campaign group Wrap praised Sainsbury’s sensible approach to the issue. "To achieve this they'll need significant levels of innovation,” she said. “They'll also require suppliers to come to them with fresh business models for how they can deliver products to customers in a way that will not have a significant effect on prices as well as carbon and food waste implications."

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Government orders Google not to restrict employees’ free speechND

Annie Palmer, CNBC, Thursday September 12, 2019

Google has been told by the National Labor Relations Board that it is within employees’ rights to openly debate political and workplace issues. This decision comes after a controversial community guideline sent by CEO Sundar Pichai in August ruled against such discussions in Google’s offices and online forums. In a series of employee complaints taken to federal regulators, an agreement was reached on a proposed settlement. A Google spokesperson said in a statement: “Under that settlement, we have agreed to post a notice to our employees reminding them of their rights under the National Labor Relations Act. There is absolutely no mention of political activity in the proposed settlement, and the updates we made to our Community Guidelines are completely unrelated and unaffected.”

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Business Action Critical to Secure a Sustainable FutureND

Tina Nybo Jensen, IISD, Tuesday September 10, 2019

In a recent review of the 2030 Agenda for Sustainable Development and the Global Reporting Initiative (GRI), the United Nations High-level Political Forum found countries are not on track to meeting the Sustainable Development Goals (SDGs) set four years ago. An evaluation of the GRI found a fall in the number of countries providing information on private sector participation in implementing the agenda. While governments are primarily responsible for implementing SDGs, businesses can play a part too. Indeed, the importance of companies in realising the Goals is reflected in SDG target 12.6, which states that companies should be encouraged to adopt sustainable practices and integrate sustainability information into their reporting cycle. Sustainability reporting is becoming more important to large companies as community expectations change. And with progress towards meeting SDGs moving slowly, the impact of sustainability reporting could become even more significant.

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States led by Texas target Google in new antitrust probeND

Rachel Lehrman & Marcy Gordon, Associated Press, Tuesday September 10, 2019

Google will face an antitrust probe after fifty US states and territories announced they will examine “potential monopolistic behaviour”. Scrutiny of large tech companies from US congressional authorities and European regulators has mounted recently, with an investigation into Facebook’s dominance announced by two US states last week. Google’s online and advertising dominance is a point of focus as critics say the tech giant’s acquisition of advertising company DoubleClick in 2007 was pivotal to its success in the market. Jen King, director of privacy at Stanford’s Centre for Internet and Society said: “There’s definitely concern on the part of the advertisers themselves that Google wields way too much power in setting rates and favouring their own services over others.”

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Women going backwards at the top of corporate AustraliaND

Peter Ryan, ABC News, Tuesday September 10, 2019

The annual census by Chief Executive Women (CEW) which represents 560 female corporate leaders and analyses gender equality amongst Australia’s top 200 companies has said progress is slow with 17 companies still having no women in their leadership teams. CEW President Sue Morphett said she is disappointed by the findings. “There are some figures saying that we'll be waiting about 80 years for it to be equal, which means my granddaughter will be 84 by the time we have equal representation," she said. Ms Morphett also suggested company boards and recruitment agencies should more thoroughly consider the pool of available female candidates.

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Amazon, Facebook and Google hit back at tax on digital companies’ sales, warn of trade warsND

Nassim Khadem, ABC News, Tuesday September 3, 2019

Tech giants Amazon, Facebook and Google are the targets of a suggested tax on sales as the Australian Government discusses an OECD and G20 plan to resolve tax avoidance in the digital economy. Europe are already acting, with the French Senate recently passing a three per cent turnover levy that will apply to companies with more than 25 million euros in French revenue and 750 million euros worldwide. In a hearing called by the US Trade Representative Office, the tech giants argued that the French tax is not just discriminatory but also that it harms global tax reform. Google’s trade policy counsel said, "It's a sharp departure from long-established rules, and uniquely targets a subset of businesses." Amazon also warned that the costs associated with increased tax burdens may be passed onto consumers. The matter is not expected to be resolved until the OECD and G20 release the plan in 2020.

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Miners face higher bar to maintain ‘social licence’, report warnsND

Nick Toscano, Sydney Morning Herald, Monday September 2, 2019

A Deloitte report being circulated within the mining industry has warned companies that conflict with communities could face losing their social licence if they are unable to go beyond their required stakeholder and environmental obligations. "In many countries, the true economic contribution of mining is being questioned," said the report. The report went on to suggest mining companies must utilise “innovative strategies” to maintain their social licence in the modern economy. These findings come as mining companies are forced to operate in more remote areas of the world, as sustainability, corporate responsibility and climate change pressures mount. This comes as BHP recently introduced a world-first $500 million decarbonisation plan for its customers in July to address environmental issues in the industry.

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Why CEOs Surround M&A Announcements with Unrelated Good NewsND

Harvard Business Review, Friday August 30, 2019

Mergers and Acquisitions (M&A) are often received negatively by the market. It’s for this reason that CEOs communicate differently to manage the impressions of the firm and its strategy after the decision is made. In new research, HBR examined ‘impression offsetting’, an impression management tactic in which firms publish unrelated positive news alongside strategic announcements. Research by the Academy of Management shows that firms anticipate negative reactions from the market when an M&A announcement is made and impression offsetting is used to reduce backlash. In the HBR’s study, they found that impression offsetting is an indicator of low CEO confidence. The research is an example of the strategic importance of external communications, and highlights that in addition to content, communication timing matters.

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Apple apologises for allowing workers to listen to Siri recordingsND

Alex Hern, The Guardian, Thursday August 29, 2019

Apple has issued an apology in a statement to its customers after a Guardian report revealed Apple contractors could listen to voice recordings of Siri users. “As a result of our review, we realise we have not been fully living up to our high ideals, and for that we apologise,” Apple said in a statement on its website. This comes as producers of voice-assistant technologies have been caught running secret human-oversight programmes for years. Companies such as Amazon and Google have both made changes to their programs after extensive reviews. Apple has committed to changing the way Siri is run, saying it will no longer keep audio recordings from Siri and an opt-in setting to share recordings will be built for users.

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US opioid crisis ruling leads to $845 million fine for drug maker Johnson & Johnson in Oklahoma ND

ABC News, Tuesday August 27th, 2019

The Cleveland County District has ordered American pharmaceutical company Johnson & Johnson and its subsidiaries to pay $844 million, ruling that it helped fuel the opioid crisis in Oklahoma after launching an aggressive and misleading marketing campaign. The US state has been ravaged by opioids, with Attorney-General Mike Hunter stating that between 2007 and 2017, 4,653 people were killed in opioid overdoses. Lead lawyer for Johnson & Johnson, Larry Ottaway said in his closing argument that opioid drugs serve a critical health need while one of its other lawyers, Sabrina Strong called the decision “flawed”. The company is expected to appeal the ruling.

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Google's new community guidelines tell employees not to talk politics on internal forums or bad mouth projects without 'good information' ND

Nick Bastone, Business Insider, Friday August 23rd, 2019

Google outlined its latest set of community guidelines to employees last week, restricting conversations to focus only on ‘fact-based’ and ‘work-related’ matters. The move could be seen as an attempt by Google’s CEO, Sundar Pichai to restore order to internal message boards which have created divisions among employees. The memo went on to state that “while sharing information and ideas with colleagues helps build community, disrupting the workday to have a raging debate over politics or the latest news story does not.” The memo also stated that managers are expected to address discussions that violate the written rules. The memo has garnered criticism, with some analysts seeing it as a step away from the ‘free-thinking’ and ‘challenge’ culture that has differentiated Google from other firms in Silicon Valley.

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Banks condemn Hong Kong violence in newspaper adverts ND

BBC News, Thursday 22nd August 2019

HSBC and Standard Chartered, two British financial services companies with large presences in Asia have taken out newspaper ads in Hong Kong criticising the ongoing protests that have rocked the region. In its newspaper advert, HSBC called for a return to civility and the rule of law. "We strongly condemn violence of any kind and the disruption caused to the communities in which our customers, staff and shareholders live," the advert read. Standard Chartered also placed ads in pro-China newspapers, stating the company strongly supports the Special Administrative Region government in maintaining social stability and safety under ‘one country, two systems’.

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Group of US Corporate Leaders Ditches Shareholder-First MantraND

Richard Henderson & Patrick Temple-West, Financial Times, Monday 19th August 2019

The Business Roundtable is one of the largest and most influential business groups in the United States and it includes CEOs from JP Morgan, Amazon, General Motors and Apple. In a new statement released this week on the Purpose of a Corporation, the Business Roundtable dropped the “shareholder primacy” ideology that has driven corporations for over 50 years. The statement includes a more complete view of corporate purpose as the range of stakeholders now include employees, customers, suppliers and communities. Mohamed El-Erian, chief economic adviser for Allianz said, “it reflects an emerging consensus about the importance of more inclusive capitalism.”

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‘Dark art PR’: Amazon uses Twitter army of workers to fight criticism ND

Jonah Engel Bromwich, Sydney Morning Herald, Tuesday 20th August 2019

Amazon employees going by the title of ‘FC Ambassadors’ have been stepping in on Twitter whenever the company’s poor working conditions at its fulfillment centres are mentioned. The ambassadors are supposedly both warehouse workers and public relations representatives as they offer an ‘on-the-ground’ perspective of working for the retail giant. First introduced in 2018, Amazon said that there were 14 FC Ambassadors and that they were paid to patrol social media full time. Although Amazon is not the only company to use ‘employee advocates’, Lizz Kannenberg from Sprout Social said Amazon is using employees to address criticism which is "something I haven't seen done successfully before."

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Cathay Pacific’s CEO resigns following Hong Kong ProtestsND

SBS News, Saturday 17th August 2019

After a torrid week for the Hong Kong airline, Cathay Pacific announced the shock resignation of its CEO Rupert Hogg. The flagship airline and its CEO became embroiled in the pro-democracy protests that have plunged Hong Kong into crisis. Some of Cathay Pacific’s 27,000 workforce participated in the protests, which led to Chinese state media condemnation and Beijing’s aviation regulator preventing any employee involved with, or supportive of the protests working on flights to mainland China. Cathay Pacific reacted by firing four employees involved in the protests. Seemingly, this wasn’t enough. On Friday, Cathay said Mr Hogg had resigned as "the Board of Directors believes that it is the right time for new leadership to take Cathay Pacific forward."

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Useless Dads and Placid Women: U.K. Bans 2 Ads Over Sexist StereotypesND

Palko Karasz, The New York Times, Thursday 15th August 2019

The United Kingdom’s Advertising Standards Authority has banned two television ads in Britain after they were deemed harmful to society. The banned ads were from German car giant, Volkswagen and American multination, Mondelez. The regulator said Volkswagen’s ad showed a series of men “engaged in adventurous activities,” while the only two women depicted were asleep in a tent and sitting by a baby carriage. The main characters of the ad from Mondelez were two distracted young fathers in a restaurant who appeared “unable to care for children effectively.” Jessica Tye, the investigations manager at the regulator said the two ads were banned because of “the cumulative impact of those harmful gender stereotypes being depicted.” This comes after new regulations came into effect which give additional powers to Britain’s advertising regulators.

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Why Cathay Pacific changed its tune on Hong Kong protestsND

Bill Wilson & Robert Plummer, BBC News, Tuesday 13th August 2019

Cathay Pacific has warned its staff that anyone participating in the pro-democracy demonstrations in Hong Kong will lose their jobs as the company takes a zero-tolerance approach to the matter. Cathay Pacific were forced to renege on their previous pledge to not interfere if staff members wanted to participate in the pro-democracy demonstrations. This comes as Beijing’s aviation regulator placed mounted pressure on the Hong Kong airline through new regulations that require Cathay Pacific to submit lists of staff working on flights that go into mainland China. The regulator went on to state that any Cathay Pacific staff member involved in the “illegal protests” will be banned from working on those flights. The regulator also demanded a report on increased internal control measures.

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Rupert Stadler, Ex-Audi Chief, Is Charged With Fraud in Diesel ScandalND

Melissa Eddy, The New York Times, Wednesday 31st July 2019

Rupert Stadler, the former Chief Executive Officer of Audi, was charged with fraud related to the Volkswagen diesel scandal that continues to plague the German car giant. The charges relate to Volkswagen and its subsidiaries such as Audi, deliberately installing illegal diesel emission software devices in cars that would cheat regulatory tests. Both European and American regulators have brought charges against Volkswagen and its subsidiaries leading to $US22 billion in penalties and settlements. Criminal investigations have continued with Volkswagen’s former CEO, Martin Winterkorn also being charged with fraud earlier this year. Further documents show Audi were just as willing as Volkswagen to claim market dominance at any cost. In one internal email sent in January 2008, an employee in Audi’s diesel motor development department summarised road tests confirming diesel models would not meet emissions standards. “We won’t make it without a few dirty tricks,” he wrote.

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