One of the IndustryWeek articles that always grabs my attention is “Top 10 Most Corrupt Countries of 2021.” Obviously, there is an immediate incentive to check the list and see if you do business (or even can do business) in any of the countries listed.

Leaving the list aside, one trend for manufacturers that operate globally that always seems to be an issue is deciding how to sell products in other countries. Some manufacturers open sales offices; others pursue joint ventures. Some manufacturers have distributors, while others have authorized sales representatives.

There are key differences among all of these options, but many of our clients continue to express frustration with the “results” they are getting. Some manufacturers enter into financial agreements that never seem to work out. Or, alternatively, they negotiate exclusivity that isn’t very exclusive.

The bottom line is that as the agreements renew, it is important to assess whether changing to a different model makes sense, particularly in countries where there can be compliance challenges (such as bribery) that can impact a business in a significant way.

Thank you to Jonathan Schaefer for this post. Jon focuses his practice on environmental compliance counseling, occupational health and safety, permitting, site remediation, and litigation related to federal and state regulatory programs.

Growing evidence suggests that corporate focus on ESG—Environmental, Social, and Corporate Governance—may offer short- and long-term advantages to both companies and investors. These advantages are in addition to and apart from the residual benefits to society-at-large that may be created by a company with a strong ESG performance.

While some may view ESG as a set of factors used solely by socially conscious investors to screen potential investments or environmentalists to pressure a company into changing its operations, ESG is becoming an increasingly mainstream set of criteria. Investors are starting to focus on ESG to forecast and manage risks, and corporate leaders are looking to ESG for marketing and production efficiency.

What is ESG?

ESG stands for Environmental, Social, and Corporate Governance. The term refers to the three central factors in measuring the sustainability and societal impact of an investment in a company. For many, the term ESG brings to mind environmental issues like sustainability, climate change, and resource scarcity. These issues form an important element of ESG, but ESG means so much more. The environmental pillar of ESG looks at how a company performs as a steward of the environment. The social pillar examines how a company manages its labor practices, talent, product safety, data privacy, and relationships in its local communities. The governance pillar deals with a company’s leadership, executive and board compensation, internal audits and controls, anti-corruption, and shareholder rights.

ESG criteria may help to better determine the future financial performance of companies by balancing risk and return in the context of how a company’s business handles or interacts with these environmental, social, and corporate governance issues.

Recent Federal Activity

Despite this increased focus, some may still believe that ESG is not mainstream enough to justify spending limited corporate time and resources on it. For companies that are subject to regulation by the U.S. Securities and Exchange Commission (SEC), that perception may be changing. The SEC issued guidance in 2010 advising companies to disclose climate change-related developments that are material to their businesses. But that guidance does not carry the force of law, and it gives companies leeway to decide what is and is not material. The disclosures can either paint a rosy picture (when a company is likely to save money by switching to renewable energy) or a gloomy one (when a company has operations in flood zones that are facing rising waters). Currently, companies also do not have to reveal any quantitative data about their greenhouse gas emissions to the SEC.

However, the SEC recently announced that it would increase scrutiny of how thoroughly companies evaluate and disclose ESG risks, specifically climate change, and the impacts such risks may have on operations. The SEC’s new Climate and ESG Task Force will seek to uncover wrongdoing by looking for gaps or misstatements in a company’s reporting about climate risks under current rules. In addition, the Task Force will look for potential disclosure and compliance problems concerning the ESG strategies of investment advisers and funds.

In addition to creation of the Task Force, both the Acting Chair of the SEC and President Biden’s nominee to chair the SEC have signaled that establishing a mandatory, comprehensive framework for public company reporting of ESG issues could be forthcoming.

This week’s article was co-authored with Alisha N. Sullivan and Emily A. Zaklukiewicz who are members of Robinson+Cole’s Labor, Employment, Benefits + Immigration Groups.

Although millions of people in the United States have been vaccinated since COVID-19 vaccine distribution began in December 2020, a large percentage of the population still remains unvaccinated. Many lawmakers and companies are brainstorming ways to remove barriers to individuals obtaining the vaccine, especially frontline workers who remain at a higher risk of COVID-19 exposure and infection. One such barrier is the time away from work that may be required to obtain the vaccination and the risk that the time will be unpaid. Many employers, including manufacturers, are questioning whether they must, or should, provide employees with paid time off for time spent related to obtaining the COVID-19 vaccine. Continue Reading Are Employers Required to Pay For Employee Time Spent Receiving COVID-19 Vaccine?

This week we are pleased to have a guest post from Edward Heath and Kevin Daly. Attorneys Heath and Daly are members of Robinson+Cole’s Manufacturing Industry Team and regularly counsel clients on trade compliance, anti-corruption compliance, and other corporate compliance issues.

Proposition 65 is the California law that requires warning labels on products sold to California customers that potentially expose users to certain chemicals which may cause a risk of cancer or reproductive harm. The state maintains  a list of approximately 900 chemicals that fall within Prop 65, and the statute provides detailed guidance on what the warning label must contain.  Because of the steep penalties that can be imposed under Prop 65 litigation, compliance with the warning requirements is vital for any company selling products into California. Recently, the California Office of Environmental Health Hazard Assessment (OEHHA) has proposed amendments to the format requirements for Proposition 65 warnings that will require companies to re-assess the sufficiency of their current warnings.

Prop 65 provides two forms of “safe harbor” warnings. If a warning label conforms to the statutory specifics, it is deemed to shield the company from liability. Continue Reading California Regulators Propose New Regulations to Limit Use of “Short Form” Proposition 65 Warnings

This post was authored by Linn Foster Freedman and is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

Aerospace and energy equipment manufacturer Honeywell has reportedly been hit with a cyber-attack in the form of a malware intrusion that disrupted some of its information technology systems. Honeywell issued a statement on March 23, 2021, stating that it “took steps to address the incident, including partnering with Microsoft to assess and remediate the situation.”

Honeywell confirmed that it has returned to service and that it has not identified “any evidence that the attacker exfiltrated data from our primary systems that store customer information. If we discover that any customer information was exfiltrated, we will contact those customers directly.”

Manufacturing companies have been hit hard recently with cyber-attacks, which is a wake-up call to evaluate cyber-hygiene and data theft prevention protocols.

Below in an excerpt from an article authored by Robinson+Cole Labor and Employment Group lawyers Britt-Marie K. Cole-JohnsonRachel V. KushelAbby M. Warren and Kayla N. West that was published in Industry Week on March 12, 2021.

The changing social climate has companies reevaluating their approach to diversity, equity and inclusion.

Many businesses faced a call for action in 2020 to clearly state their positions on the social justice and civil rights issues of the day. This has left employers wondering how best to respond, particularly if they haven’t done so in the past. There are many best, or even good, practices for cultivating a workplace that promotes a culture of diversity, equity and inclusion (DEI) while also supporting manufacturers’ overall business objectives.

Ideally, getting DEI right this year is a priority for employers, including those that may be federal contractors subject to affirmative action laws and regulations seeking to strengthen their commitments and strategies.

For many manufacturers, considering the following questions may help: Read the full article.

As a part of its ongoing efforts to increase workplace attention on COVID-19, OSHA recently released a new COVID-19 National Emphasis Program (NEP), signaling a commitment to expand its inspection and enforcement efforts to protect workers at high risk for contracting the virus.

The NEP indicates that OSHA will target its inspections on high-risk industries with the goal of significantly reducing or eliminating worker exposure to COVID-19. To support this effort, OSHA developed lists of specific industries that will be targeted for inspection. The highest priority industry continues to be health care, but there are a number of manufacturing industries included in the NEP target lists, such as:

  • Meat Processing
  • Food and Beverage Manufacturing
  • Chemical Manufacturing
  • Plastics and Rubber Product Manufacturing
  • Primary Metal Manufacturing
  • Petroleum and Coal Products Manufacturing
  • Industrial Machinery Manufacturing
  • Transportation Equipment Manufacturing

OSHA will develop programmatic inspection priorities by focusing on the industries listed in the NEP. It will further identify specific establishments for targeted inspection by reviewing 2020 Form 300A injury and illness data.

In addition to programmatic inspections under the NEP, OSHA will continue to perform unprogrammed inspections, particularly at facilities that have experienced COVID-19 related fatalities, and then at facilities with alleged employee exposures to COVID-19 related hazards. The NEP also establishes procedures for follow-up inspections of facilities that have already been inspected as a result of a COVID-19 hazard.

While OSHA has not developed an emergency temporary standard with regard to COVID-19 (at least not yet), it has issued numerous guidance documents that we have covered on the blog. The most recent COVID-19 guidance was posted on January 29, 2021. OSHA continues to rely on this guidance and existing statutes and regulations to support the issuance of citations for COVID-19 workplace deficiencies. In fact, in referencing the potential for citations, the NEP makes specific reference to the OSH Act’s General Duty Clause, which requires employers to provide a workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm.” OSHA has used the General Duty Clause to cite employers for COVID-19 related hazards, and this reference in the NEP signals a continued willingness to do so.

The NEP became effective on March 12, 2021, with inspections under the NEP commencing immediately and industry targeting to begin within at least two weeks (or by March 26, 2021). Based on this, we can expect to see heightened inspection activity related to COVID-19, particularly in industries listed in the NEP.

This post was authored by Linn Foster Freedman and is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

Manufacturers of products often are not prepared for, or aware that cybersecurity incidents can disrupt production and distribution of product. A recent filing by Molson-Coors Beverage Company illustrates that manufacturers face similar cybersecurity risks as other industries.

On March 11, 2020, Molson-Coors filed a Form 8-K with the Securities and Exchange Commission stating that:

Molson  Coors  Beverage  Company  (the  “Company”)  announced  that  it  experienced  a  systems  outage  that  was  caused  by  a  cybersecurity incident. The Company has engaged leading forensic information technology firms and legal counsel to assist the Company’s investigation into the incident and the Company is working around the clock to get its systems back up as quickly as possible.

Although the Company is actively managing this cybersecurity incident, it has caused and may continue to cause a delay or disruption to parts of the Company’s business, including its brewery operations, production, and shipments. In addition to the other information set forth in this report, one should carefully consider the discussion  on  the  risks  and  uncertainties  that  cybersecurity  incidents  and  operational  disruptions  to  key  facilities  may  have  on  the  Company,  its  business  and financial results contained in Part I, “Item 1A. Risk Factors” in its 2020 Annual Report on Form 10-K, filed with the SEC on February 11, 2021.

Manufacturing businesses may wish to consider prioritizing cybersecurity readiness in their processes, including backup plans, contingent operations plans, and disaster recovery plans.

Below in an excerpt from an article authored by Robinson+Cole Labor and Employment Group lawyers Natale V. DiNatale and Kayla N. West that was published in Industry Week on March 5, 2021.

Within hours of his inauguration, President Biden fired the National Labor Relations Board’s (NLRB’s) general counsel, Peter Robb, whose term was set to expire in November 2021. The Biden Plan for Strengthening Worker Organizing, Collective Bargaining, and Unions emphasizes President Biden’s goals for promoting workers’ rights to organize. After less than a month in office, he had already begun to take action, signaling that these issues are a priority for the administration. The following highlights current and potential developments within labor law under the new administration that may impact manufacturers in 2021. Read the full article.

This week’s post was co-authored by Robinson+Cole Labor and Employment Group lawyer Emily A. Zaklukiewicz.

Over the past year, employees have faced a number of challenges in light of the current pandemic, both personal and professional. Employees who are engaged in “frontline” work have been particularly impacted including those working in manufacturing facilities that have not closed and have been operating consistently over the last year. Many companies are recognizing the signs of exhaustion, burn-out and stress in their workforces and are actively searching for ways to engage, and re-engage, their frontline workers.

Continue Reading Incentivizing and Engaging “Frontline” Workers