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The latest news headlines on issues and developments affecting the internal audit profession.

April 23, 2021

Countries Pledge Bold Action to Fight Climate Change at Summit

On Thursday, conversations at U.S. President Joe Biden's climate change summit began, representing a significant change in what the U.S.'s role on the world stage should be in mitigating this risk. Biden pledged to reduce U.S. emissions by at least 50% by 2030, more than doubling the country's previous pledge under the 2015 Paris climate agreement, CNBC reports. "This is a moral imperative, an economic imperative," Biden said. Leaders of Brazil, Canada, Japan, and South Korea also committed to reducing greenhouse gas emissions, while India and Russia made statements highlighting their commitment to tackling the issue. In a new development, the U.S. and China have agreed to cooperate on climate change issues, despite tensions regarding trade and human rights.

Airline Executives Consider Long-term Impacts Of Pandemic

Even as new restrictions cloud prospects for the summer vacation season in Europe and North America, airline executives are focusing on the lasting impact of the COVID-19 pandemic on the industry, according to Reuters. The executives, gathering virtually for the World Aviation Festival, are concerned about many carriers' ability to survive another summer washout. But they also are looking at long-term impacts, including a permanent decline in business travel. Meanwhile, Southwest Airlines said it earned $116 million in the first quarter, the first major U.S. airline to report a profit since the pandemic started, MSN reports.

EU Privacy Watchdog Seeks to Set Boundaries on Facial Recognition Software

The European Union privacy watchdog on Friday stated that facial recognition should be banned in Europe. The European Data Protection Supervisor (EDPS) said the prospect of remote biometric identification "presents extremely high risks of deep and non-democratic intrusion into individuals' private lives," Reuters reports. The EDPS statement comes two days after a European Commission proposal to allow facial recognition to be used to search for missing children or criminals and in cases of terrorist attacks. In light of the EU's proposal, the EDPS said it would focus on "setting precise boundaries" for tools and systems it sees as introducing risks to data protection and privacy rights. According to its website, the EDPS has the power to conduct audits to verify compliance related to data protection regulations. The EDPS announcement also follows recent news that some U.S. banks have begun deploying cameras tied to facial recognition software for the purposes of analyzing customer preferences, monitoring employees, or verifying customer identification at ATMs.

Solar and Wind Could Replace Fossil Fuels Globally by 2050 

report from think tank Carbon Tracker finds that falling solar and wind costs will enable these resources to replace fossil fuels in electricity production by the mid-2030s and in the total energy supply by 2050. The renewables industry continues to grow at a rate of 15% to 20%. According to the report, 60% of the world's solar resources and 15% of its wind resources are economically comparable with local fossil fuel generation already. By the 2030s, all solar technology and more than half of wind will be economically preferable compared to other forms of electricity generation. "The technical and economic barriers have been crossed and the only impediment to change is political," the report says.

April 21, 2021

U.K. to Set Law to Achieve the World's Most Ambitious Climate Change Target

The United Kingdom will set in law the "world's most ambitious climate change target," which aims to cut emissions by 78% (compared to 1990s levels) by 2035, according to a press release. The announcement precedes Prime Minister Boris Johnson's address on Thursday — Earth Day — at the opening session of the U.S. Leaders' Summit on Climate, hosted by President Joe Biden. Johnson is expected to urge countries to set targets for reducing emissions to align with net zero by 2030. The U.K. was the first country to enact legally binding carbon budgets into legislation, beginning in 2008. With its sixth carbon budget to be put into law by the end of June, the U.K. will incorporate the nation's share of international aviation and shipping emissions. Also ahead of the Leaders' Summit, Australian Prime Minister Scott Morrison has proposed spending an extra $417 million to build new hydrogen-producing hubs and carbon sequestration technologies. These moves are estimated to create more than 2,500 jobs while reducing Australia's greenhouse gas emissions, AP News reports.

George Floyd's Death Has Since Sparked Businesses to Improve Equity

Although the highly publicized trial regarding the death of George Floyd has concluded, the conversation regarding what it represents is far from over. Many businesses are finding ways to express solidarity with the social justice movement and further illustrate their commitment to encouraging meaningful societal change. For example, since May 25, 2020, more than 80 companies in the S&P 100 have promised to improve hiring for Black and other minority workers, and almost half expressed goals for improving representation in management, according to data collected by Bloomberg. Moreover, 22 S&P 100 companies joined the OneTen Coalition, pledging to add 1 million middle-income jobs for Black workers in a decade. Also, more than 75 companies have signed up with either the Board Diversity Action Alliance or the Board Challenge, which seek to get at least one Black director on each public company board, Bloomberg reports. Additionally, over 100 Black directors have been added to S&P 500 boards — a record-setting number. "It is more than virtue signaling," said Yusuf George, managing director for corporate engagement at JUST Capital. "What's different in this moment is companies are really thinking more deeply about how these societal issues impact their stakeholders."

New GM Policy Lets Workers Able to Work Remotely to Continue Remote

In another example of changing workplace practices, General Motors Co. (GM) on Tuesday announced it will allow many of its employees to continue working remotely after the pandemic, Reuters reports. GM's new "Work Appropriately" program applies to remote employees who do not work on assembly lines or with on-site equipment and allows them to come into the office on an as-needed basis. GM said the move offers employees more flexibility and gives the company access to a wider pool of talent that will be needed for its electric vehicle strategy. GM stated that the future of work "will not be a one-size fits all approach," and that its new policy would apply to its 155,000 employees worldwide.

U.S. Banks Experiment With Facial Recognition, Other AI Systems

Several U.S. banks have started deploying camera software that can analyze customer preferences, monitor workers, and even spot people sleeping near ATMs, even as they remain wary about possible backlash over increased surveillance, Reuters reports. The previously unreported trials at City National Bank of Florida and JPMorgan Chase, as well as earlier rollouts at banks such as Wells Fargo, offer a rare view into the potential U.S. financial institutions see in facial recognition and related artificial intelligence (AI) systems. The widespread deployment of such visual AI tools in the heavily regulated banking sector would be a significant step toward their becoming mainstream in corporate America.

April 19, 2021

Commitments and Concerns Ahead of Leaders' Summit on Climate

The U.S. and China, the two largest emitters of greenhouse gases, issued a joint statement Saturday committing to cooperatively tackle global climate change, including by "raising ambition" for emissions cuts during the 2020s. The two nations will join nearly 40 other world leaders in a two-day, virtual Leaders' Summit on Climate, beginning on Thursday. Because "the U.S. has been playing a game of 'red light, green light' on climate change for decades," Axios reports, the country needs to cut emissions by at least half by 2030. It also must secure agreements from allies to do the same. Reuters details the perspectives of corporate executives and investors, who say they want world leaders to embrace a unified and market-based approach to reducing carbon emissions. Such an approach should account for rising energy demand in the long-term, which will require technological advancements, mineral supply chains, and industrial transitions.

DOJ Set to Ramp Up Criminal Investigations of Collusion

The U.S. Department of Justice (DOJ) is likely to increase antitrust enforcement efforts against organizations, based on factors that include historical data, budget increases, and increased international cooperation, the National Law Review reports. For instance, cartel enforcement — or enforcement against businesses that collude on prices, output, or bidding — historically increases after economic downturns and major national stimulus packages. The DOJ's Antitrust Division also has a 10% budget increase for 2021, with legislation pending for an additional $300 million. The National Law Review predicts antitrust criminal enforcement will focus on violations in areas and industries such as: healthcare (including health insurance), financial services, labor markets (including wage-fixing and no-poach agreements), technology, construction (especially in relation to government contracts), and defense/procurement.

Pandemic Caused Fewer Business Failures Than Feared, U.S. Fed Study Says

Fewer than U.S. 200,000 businesses may have failed during the first year of the COVID-19 pandemic, according to Reuters. That is a lighter toll than initially feared and one that may have had relatively little impact on unemployment, the news service notes, citing a Federal Reserve study (PDF). Business failures among firms engaged in close-contact services such as nail salons and barbershops were counter-balanced by fewer failures than usual at service-oriented businesses such as carryout restaurants, groceries, and outdoor recreation companies, the Fed said. However, polls continue to show large percentages of small business owners are worried about their survival.

Marijuana Legalization Bills Move Forward at U.S. Federal and State Level

In the last few weeks, there has been a flurry of action across multiple states regarding the legalization of cannabis for recreational use. On March 31, New York became the 16th state to legalize the substance by allowing individuals 21 and older to possess and purchase up to three ounces at one time, according to law firm Gibson Dunn. Just two days ago, a bill was introduced in the Pennsylvania House of Representatives to both legalize marijuana and sell it through the existing state store system, The Post-Journal reports. Meanwhile at the federal level, a bipartisan bill designed to protect banks that service state-legal marijuana businesses from penalties by federal regulators will receive a House floor vote. Full legalization remains popular with the U.S. public, with 91% supporting legalization for either medical or recreational purposes, according to a recent Pew Research Center poll. As these trends continue, organizations need to clarify or update their policies regarding employee cannabis use.

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