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North American Edition
12th February 2024
 
THE HOT STORY
House Republicans prioritize recruiting women and minorities to expand majority
House Republicans are critical of diversity and inclusion programs but see recruiting women and minority candidates, along with veterans, as key to expanding their slim majority in November. The emphasis on diversity and recruiting minorities and females makes sense politically given the increased racial and ethnic diversity of U.S. voters. Republicans have made gains in increasing their minority and female members, but still lag Democrats on most fronts. House Democrats have a sizeable advantage when it comes to minority voters and don't intend to cede any ground. The contest to appeal to female and minority voters will certainly be one of the factors determining which party controls the House next year.
TECHNOLOGY
AI hype or reality? SEC warns against misleading claims
Allstate Corp., Starbucks Corp., and other major companies are increasingly mentioning AI in their disclosures to investors. According to Bloomberg Law's review, over 40% of S&P 500 companies mentioned AI in their most recent annual reports. The Securities and Exchange Commission (SEC) is closely monitoring these discussions about the opportunities and risks of AI for businesses. SEC Chair Gary Gensler has warned companies against making misleading AI-related claims, and the SEC may take legal action against such practices. The SEC is also scrutinizing whether companies adequately warn investors about AI-related risks. The use of AI in businesses is on the rise, and companies from various industries are addressing its risks and benefits. The SEC is particularly concerned about AI-washing, where companies make exaggerated claims about their use of AI. Companies that overhype their use of AI could face legal consequences if the technology does not significantly transform their operations. The SEC is also interested in the risks posed by AI being used by others. Companies are increasingly discussing AI on earnings calls and in their annual reports, with a majority of the disclosures focusing on the risks associated with the technology. However, some companies are also highlighting the benefits of AI in their business initiatives. The SEC is drawing parallels between AI and cybersecurity, where companies have faced regulatory actions for inadequate risk disclosures.
WORKFORCE
Silicon Valley's loss: Skilled workers flock to Canada
Silicon Valley's loss is Canada's gain as skilled workers, like data analyst Mengfan Cao and computer engineer Sudeep Datta, choose to move to Canada due to difficulties in obtaining H-1B visas in the United States. Canada has actively pursued foreign workers who fail to obtain H-1B visas, offering benefits such as a points-based visa system and permanent residency. Syndesus, a company founded by former Silicon Valley entrepreneur Marc Pavlopoulos, helps U.S. companies and their noncitizen employees navigate Canada's immigration process. The option of remote work in Canada has gained traction, as it allows companies to retain skilled workers who were unsuccessful in the H-1B lottery. The process of obtaining a Canadian work permit takes about two-and-a-half months, with permanent residency typically granted within 18 months. Skilled workers, such as Fiona Jian, have found Canada's natural beauty and diverse cities to be appealing, leading them to choose to stay in Canada long term.
U.S. Senate committee rejects proposal to raise airline pilot retirement age
A U.S. Senate committee has voted against raising the retirement age for airline pilots from 65 to 67. The decision comes as part of a broader aviation reform bill that aims to enhance safety measures in the industry. The Senate Commerce Committee rejected the proposal with a vote of 14-13. The committee is expected to approve its aviation reform bill, which includes provisions such as prohibiting airlines from charging fees for families to sit together and requiring airlines to accept vouchers and credits for at least five years. The rejection of the retirement age hike is a setback for the bill, which had previously been approved by the U.S. House.
Roche to cut 345 jobs in response to lower profit
Roche is cutting 345 jobs in response to lower profit and a more cautious outlook for the year ahead. The jobs will be eliminated in the product development area, accounting for about 6% of the workforce in that area. Around 1,800 of Roche's 5,800 jobs worldwide in pharmaceutical product development or IT support are in Switzerland, with approximately 100 jobs expected to be affected by the cost cuts. Roche's adjusted operating profit decreased by 1% last year, while sales were 7% lower. The company employs approximately 101,000 people globally, including 14,200 in Switzerland. Roche has not yet commented on the job cuts.
ESG
Investors want companies to prioritize climate change
Investors are calling on companies to prioritize climate change and environmental stewardship, according to a report by EY. The survey of institutional investors representing $50trn in assets found that while attracting and retaining talent was the top priority for companies in 2024, climate change ranked closely behind. The report highlighted a disconnect between investors and boards, with economic conditions and capital allocation being the top priorities for directors. Investors want companies to focus on reducing emissions and innovating for a clean-energy transition. They also want specific emission reduction targets, clear plans for achieving them, and the use of science-based metrics to track progress.

 
Law
DIVERSITY, EQUITY & INCLUSION
Accountants demand more DEI efforts, ACCA survey finds
A new survey from the Association of Chartered Certified Accountants (ACCA) reveals trends in diversity, equity, and inclusion (DEI), artificial intelligence (AI), employee retention, hybrid work, and mental health for accountants. The survey, which polled nearly 10,000 professional accountants from 157 countries, found that a strong diversity and inclusivity culture is a key attraction factor for accountants when choosing an employer. However, some accountants feel that existing diversity initiatives focus too heavily on certain facets, potentially neglecting other types of differences that could enhance creativity and innovation. The survey also highlights concerns over unequal career advancement prospects, favored networks, and a lack of psychological safety. Additionally, it shows that hybrid work is preferred by most employees, but many employers still insist on full-time office arrangements. The report emphasizes the need for employers to prioritize diversity, inclusivity, and mental health support to attract and retain talent in a competitive market.
LEGAL
Dechert to pay £3m in settlement over computer hack allegations
The City office of the US law firm Dechert will pay £3m ($3.8M) to Farhad Azima, an Iranian-American businessman, after facing allegations of orchestrating a computer hack and smear campaign against him. The Times reports that the firm could face a bill of £15m ($19m) after legal costs are taken into account as part of a deal in which it has not accepted liability. Azima had told the High Court in London that the state investment authority in Ras al- Khaimah (RAK), part of the United Arab Emirates, hacked his emails and published them on the dark web. The authority has consistently argued that the allegation is "baseless." Azima also claimed that lawyers at Dechert had overseen the hacking operation. A spokesman for Dechert, which has had a UK office since the 1970s, said that the settlement was done "to bring about a commercial resolution to the proceedings" in London's High Court.
TAX
Georgia lawmakers push for more requirements for film tax credit
Top Georgia lawmakers are calling for stricter requirements for filmmakers to receive the top benefit from Georgia's film tax credit. The lawmakers want companies to meet four of nine goals, including shooting in rural Georgia, hiring more Georgia workers, and supporting production studios in the state. The goal is to provide more value and a better return on investment for taxpayers while sustaining the credits and allowing the industry to thrive. The announcement is part of a review of all tax breaks offered by Georgia. The film tax credit has attracted many productions to the state, but studies show that its cost outweighs its economic benefit. Lawmakers also want to temporarily suspend a sales tax exemption on equipment offered to data centers due to concerns about electricity use. The data centers tax credit is projected to cost the state $44m in foregone sales tax revenue this year.
STRATEGY
Investment banks prepare for more Asia job cuts
Job cuts at western investment banks in Asia are forecast to increase this year amid growing revenue pressures as a consequence of deepening economic and market turmoil in China, even as deal prospects brighten in Japan and India, headhunters and bankers say. Financial institutions on average cut roughly 20% of their workforce in Asia in 2023. Some reductions were at the highest level since the 2008 financial crisis. Overall, investment banking fees collected by global banks in the Asia Pacific dropped 25% in 2023 from a recent peak of $40.6bn in 2021.
CYBERSECURITY
Chicago children's hospital hit by cyberattack, patient records compromised
A large children's hospital in Chicago has been hit by a cyberattack, leaving doctors and nurses unable to access digital patient records and limiting communication with patients. Lurie Children's Hospital shut down its systems for phone, email, and medical records after discovering the breach. The hospital is working with the FBI and other law enforcement agencies to investigate the incident. While the cause of the attack has not been confirmed, it bears the hallmarks of a ransomware attack. Cybersecurity experts warn that healthcare providers are increasingly targeted by ransomware gangs seeking financial gain.
INTERNATIONAL
Australians cheer proposed 'right to disconnect' laws
Australians are celebrating new proposed laws that would give workers the "right to disconnect" from calls and messages outside of work hours. The laws, part of a parliamentary bill introduced by the federal government, have already been passed in the Senate. Similar laws are already in place in France, Germany, and other EU countries. The bill also includes provisions for clearer pathways to permanent work and minimum standards for temporary workers. While many Australians support the idea of being able to switch off after work, some business leaders have criticized the legislation as anti-business. The chambers of commerce and the Business Council of Australia have called for careful reconsideration of the implications of the laws. However, supporters argue that the "right to disconnect" is a reasonable measure to ensure work-life balance.
Decline in overseas Japanese population
The number of Japanese people living abroad has been declining since 2020, with Shanghai and New York experiencing significant drops in their Japanese populations. The Ministry of Foreign Affairs reported that the number of long-term overseas Japanese residents increased annually from 1989 to 2019, reaching 1.41 million. However, in 2020, the number fell to 1.36 million and continued to decline in the following years. While Japanese expatriates in Asia, Europe, North America, and South America have decreased, more Japanese people are living in Africa, the Middle East, Central America, and Oceania. The reasons for the decline in overseas Japanese are varied, including concerns over anti-Asian racism in the U.S., arrests of Japanese nationals in China, and economic factors. Some Japanese families returned to Japan for their children's education.
 


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