Speaking of federal goings-on… Over on TheCorporateCounsel.net, Dave Lynn blogged about what’s happening with DEI in the federal government and what that could mean for public companies. He has wise words for those embroiled in the uncertainty of what it means for SEC filings:
“While some specific disclosure items potentially relate to diversity matters (such as the human capital disclosure requirement and the board diversity disclosure requirements), much of the disclosure that companies presently include in their Form 10-Ks and proxy statements is what we often call ‘voluntary’ disclosure. It is important for companies getting ready to file their upcoming Form 10-K to take a step back and evaluate existing risk factor and other disclosures to determine if any changes need to be made to reflect changes in the company’s DEI practices that may result from these Executive Orders or other material implications, recognizing that it may be too early to evaluate the potential impacts arising from these Executive Orders.”
He gives this final bit of valuable advice:
“Companies with federal government contracts may also want to evaluate their disclosure in the business and risk factors sections addressing the ability of the federal government to terminate contracts to determine whether it is appropriate to note this new initiative in that context.”
Adding to the complexity, there is this excerpt from a LinkedIn post from Michelle Leder about how Pintrest handled DEI as a risk factor in its latest SEC 10-K filing:
“They actually included the potential for diversity as a risk factor, something that I personally haven’t seen before! Here’s the language in full:
‘Further, if efforts around diversity, equity and inclusion are perceived as insufficient or overdone, we may not be able to attract and retain talent, we may be subject to investigations, litigation and other proceedings and our brand and reputation and stock price may be harmed.’
This reads like they could end up losing either way! Too much diversity and they’ll be sued; not enough diversity and they’ll be sued. How’s a poor company to handle this in the current environment?”
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