Regulatory Pain Relief

Here’s What You Need to Know

Thousands of complex regulations were set aside when the U.S. Department of Health & Human Services (HHS) declared COVID-19 a public health emergency (PHE) in early 2020, thanks to waivers by HHS, Centers for Medicare & Medicaid Services (CMS), Food & Drug Administration (FDA), and other agencies to get care to those in need during what became a global pandemic. Freed of these constraints, America’s healthcare sector adopted new, innovative approaches to access and care provision. While HHS recently extended the PHE declaration through October 13, 2022, it will ultimately end, along with much of this regulatory flexibility.

The Biden Administration has promised to provide states 60 days’ notice before ending the PHE to allow sufficient time to prepare for changes to certain programs and regulatory authorities, but public affairs professionals in the healthcare industry cannot wait until the last minute to protect the advancements made in these challenging times. Here’s what you need to know to make the case.

Flexibility That Allowed Innovation

The waivers enacted under the PHE offered flexibility to a wide range of industry participants – from manufacturers to hospital systems to care providers and others  – to deliver technologies, testing, and treatments to as many patients as quickly as possible. The future of this regulatory relief remains uncertain after the PHE lapses.

Emergency Use Authorizations (EUAs) Brought Vaccines, Treatments, Diagnostic Tests, and Medical Supplies at Warp Speed. Based on the PHE, the FDA allowed manufacturers to bring COVID-19 countermeasures to market under EUAs. Firms whose products remain under EUA will have to seek full FDA approval to keep their products on the market after the PHE expires. During the pandemic, EUAs got medicines, tests, vaccines, and other lifesaving technologies to patients at a far quicker rate than under the typical FDA approval process. A study published in JAMA Internal Medicine found that over the past decade the median FDA clinical development period (from trial to approval) for a vaccine was just over eight years. By comparison, the Pfizer COVID-19 vaccine was granted an EUA in seven months.

Expanded Telehealth Coverage Connected Millions of Patients in Underserved Populations with Healthcare Professionals. Under the PHE, CMS enacted a waiver granting more Medicare and Medicaid beneficiaries much broader access to telehealth services. The waiver was especially important for both urban and rural underserved communities facing impediments to accessing healthcare. Once the PHE ends, so does the authority for these flexibilities. While Congress has extended telehealth access for five months following the end of the PHE, it is still considering whether to make it permanent. About half of states have passed their own telehealth legislation, but many have yet to do so, leaving patients, providers, and insurers to navigate a patchwork of rules. As these debates continue, the recent Supreme Court abortion decision and heightened scrutiny over possible overprescribing by telehealth providers, particularly healthtech startups, could complicate advancing those measures in a timely fashion.

Liability Protections Ensured Health Systems Could Focus on Caregiving and Not Court Cases. The PHE provides liability protections to developers, manufacturers, and providers of COVID-19 countermeasures, unless the plaintiff can prove gross negligence, willful misconduct, or failure to comply with public health orders, depending on the standard specified in each state’s law. Without them, medical manufacturers and providers would face greater exposure to litigation, and it may inhibit them from providing that care. It also could make it more difficult for to recruit and retain caregivers concerned with incurring litigation.

Common Sense Waivers Ensured Providers Could Secure Needed With hospitals across the country still grappling with staffing shortages, the expiration of the PHE will create an additional headache, particularly since hospitals would also lose a number of CMS waivers related to workforce flexibilities, home care programs, and reporting. The added strain would come just as

A Push to Make the ‘New’ Normal a Permanent Normal

As we wrote in April 2020, “While the country of course needs some degree of regulation to safeguard our people and our economy, the pandemic pause of regulations offers the promise of sanity and simplification in the future.” The practices listed above, enabled by the PHE, were not permitted in the regulatory landscape that existed pre-COVID and won’t last after the PHE lapses unless policymakers act to permanently adopt them. As public affairs professionals in the healthcare sector work to secure these industry-shifting changes, they must understand which policymakers and stakeholders will engage in the debate shaping the post-PHE regulatory environment and how that engagement will help or hurt their advocacy efforts. That’s the information advantage public affairs professionals will need to ensure success and reduce surprises along the way.

Trustbusting the Midterms

Here’s What You Need to Know

“Bring down the price … And do it now,” President Biden tweeted earlier this month, directing “companies running gas stations” to sell gasoline at cost. The demand defied logic (the majority of gas stations are independently-owned and have very low profit margins), but it did highlight how frustrated presidents can become over their limited ability to address economic headwinds hindering their party’s electoral prospects. If we have reached this level of rhetoric in early July, just imagine how heated things will get after Labor Day.

It is not just the price of gas drawing ire from elected officials feeling the heat from voters. Progressives and even more establishment Democrats are increasingly blaming corporations, from grocery stores to car companies and beyond for rampant inflation. As Congresswoman Alexandria Ocasio-Cortez (D-NY) told Yahoo! Finance, “A lot of these price increases are potentially due to just straight price gouging by corporations,” which the publication noted, “echoes comments in recent weeks from Sen. Sherrod Brown (D-OH), Sen. Elizabeth Warren (D-MA), and the White House.” Progressive voices, such as The Nation, have cheered on such claims, warning, “A failure to be blunt about profiteering leaves a void that will ill serve their party in 2022.”

While it ignores economic reality, left unchecked this rhetoric – and the accompanying policy responses – could cause lasting damage to companies and industries already struggling to hire workers, navigate supply chain disruptions, and prepare for a potential recession. Public affairs professionals cannot wait for the results of the midterms to stave off the lasting reputational and policy impacts. Here’s what you need to know to take action now.

Profiteering Claims Aren’t Just Rhetoric – They’re Driving Policy Action.

Blaming business for economic woes isn’t limited to rhetorical gestures—it’s manifesting itself in an agenda that is being pushed by the President, his appointees, and members of his party in Congress.

Anti-Trust Laws: Last year, President Biden was already laying the groundwork for Democrats’ midterm arguments, directing federal agencies to take investigative action to rein-in corporations, urging direct government intervention in a wide array of industries ranging from meat and poultry to oil production and announcing 72 new antitrust initiatives targeting a dozen industries. Many of these initiatives are being led by financial regulators who have a record of hostility towards the private sector that The White House nominated.

Presidential Appointments: The seeds of the current regulatory environment were sown with appointments made by Biden upon becoming President, including: Lina Khan, Chair of the Federal Trade Commission; Rohit Chopra, Director of the Consumer Financial Protection Bureau; and Jonathan Kanter, Assistant Attorney General of the Department of Justice’s Antitrust Division. All three have pursued a more aggressive approach to regulating firms.

Wage and Price Controls: In charging that companies are price-gouging, some Democrats are considering price controls as a remedy. In May, the House passed a bill banning “excessive” gasoline prices. Senator Bernie Sanders (I-VT) and five Democratic members of Congress have introduced legislation that would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1, while some have called for implementing a maximum wage.

Ending Stock Buybacks: In April, Senate Democratic Leader Chuck Schumer (D-NY) and leaders of the House Oversight and Reform Committee demanded executives of major oil and gas companies stop stock buybacks and dividends to provide relief at the pump. Of course, suspending buybacks and especially dividends could make it even harder for oil companies to attract the capital required to fund expensive drilling programs that generate more oil. Beyond the energy sector, there had previously been a push among some Democrats to ban stock buybacks entirely.

What’s Really to Blame for Economic Woes?

As we wrote in May, in addition to Russia’s invasion of Ukraine, growing demand post-pandemic and difficulties faced by oil producers in ramping up output have been contributing to an upsurge in gas prices. Beyond the pinch at the pump, there are several factors driving inflation:

  • Monetary Policy. The pandemic spurred unprecedented levels of stimulus spending, introducing trillions of dollars of cash into the American economy that would not be circulating under normal circumstances.
  • New Spending Habits. After receiving stimulus payments and accumulating cash savings during the pandemic, American consumers now have greater purchasing power that is accelerating consumer spending.
  • Supply Chain Issues. Even as Americans want to buy more products, they are unable to do so because the supply chain can’t produce and deliver enough of them. Producers must contend with skyrocketing prices for materials, labor, fuel costs, and shipping, ultimately weighing production costs with guesses on future consumer demand.
  • Shrunken Workforce. America’s labor market is still recovering from the pandemic. Meanwhile, the federal government continues to extend eligibility for social safety net programs like Medicaid, food stamps, and unemployment insurance, which some scholars argue deters workforce reentry.

Despite Democratic focus on corporate profits, many economists, including those aligned with past and current Democratic administrations, say the price-gouging and antitrust zeal fails to understand the true nature of the inflationary spike, which they say are more a product of market forces and government policies than corporate greed.

As The Midterms Rhetoric Heats Up, Public Affairs Professionals Must Be Ready

Faced with unhappy constituents frustrated with the party in power, Democrats in Congress and the Biden Administration hope to refocus the conversation on “Big Business” profiteering, and no industry or company will be safe from scrutiny. That means public affairs professionals must be armed with the facts necessary to make their case to the public and policymakers about the current economic reality. Otherwise, damaging ideas based on false premises can gain traction and set the terms of debate for future policy proposals. The right competitive intelligence can equip public affairs professionals with the tools they need to anticipate and address such challenges with calm and confidence.

Forbes Column: Do You Know How Government Is Impacting Your Business?

In his latest Forbes column, Delve CEO Jeff Berkowitz outlines how an ever-changing legislative and regulatory landscape can have a significant impact on your business. To learn the key actions that keep you ahead of change, read the except below, then head to Forbes.com to read the full article.

From mom-and-pop shops on Main Street to Fortune 500 companies trading on Wall Street, the last two years of the pandemic have made clear just how much government action (or inaction) can determine whether and how businesses can operate and grow. That reality was made clear by the frequent changes to Covid-related rules by officials at every level of government, from The White House and U.S. Supreme Court to governors and even city councils. This volatility forced businesses to constantly adapt to ever-changing guidance and regulations, from shutdowns to vaccine mandates to masking ordinances and beyond. Even as we move beyond the pandemic, businesses must remain cognizant of just how much influence elected (and unelected) officials have on their business operations.

Such government involvement is not new or unique to the pandemic. In some places, its intervention is obvious, such as permitting processes under the National Environmental Policy Act or labor rule disputes at the National Labor Relations Board (NLRB). In recent years, however, governmental scrutiny has compounded, and businesses must increasingly consider the role that lawmakers and regulators have on less obvious day-to-day functions of their business, from pressuring corporations on their boards’ demographic makeup to licensing rules that come with costly repercussions.

At every turn, the government is adopting policies that affect businesses, industries and sectors. Whether your organization is large or small or your industry niche or broad, you may have significant policy challenges that make operating your business more difficult, more time-consuming and costlier. That means you need to stay ahead of government actions, so you can help shape policy in a positive way.

Continue reading at Forbes.com and find out three key actions to help your business manage a growing and complex web of governmental influence.

Trade Winds Blow Against Renewables

Here’s What You Need to Know

From the Kyoto Protocol to the Paris Climate Accords, international agreements have historically been a boon to the growth of renewable energy. However, as a recent U.S. Department of Commerce investigation of possible Chinese dumping of solar panels into the U.S. highlights, international currents can also inhibit renewables development. The inquiry, which stalled solar projects across the U.S., is just the latest example of an escalating trend of international trade turbulence disrupting the development of renewable energy infrastructure.

While China’s dodging of U.S. trade rules is nothing new, it is just one example of the way trade rules hinder growth in the renewable energy sector. Public affairs professionals helping firms navigate the energy transition will have to factor in the shift in global attitudes towards trade taking place and how that shift will complicate renewable power development and corporate commitments to a net zero carbon future.

Trade Disruptions Are Impacting Growth of Renewables

The ongoing Commerce Department investigation has grabbed recent headlines, but it is not even the first trade case on Chinese dumping, which has caught flak in the U.S. and European Union for years. The trade issue also stretches well beyond this silicon schism:

Why Are Trade Disruptions Accelerating Alongside the Energy Transition?

Competing Policy Priorities: Even as countries push to accelerate the energy transition, national interests are complicating their environmental ambitions. That is because nations are confronted with two competing interests: investing in a domestic manufacturing base of the clean energy technologies that will secure the country’s energy future and constructing as much renewable power capacity as quickly and economically as possible to meet aggressive emission reduction commitments. As Georgetown professor Joanna Lewis warned nearly eight years ago, “there is a fundamental conflict between the political economy of domestic renewable energy support and the basic principles of global trade regimes, with direct implications for nations’ abilities to transition to low-carbon economies.” The emerging post-COVID policy environment has only accelerated countries’ interest in protecting and reshoring industries with national and economic security implications, such as clean power generation.

The Return of Geopolitics: In addition to the U.S. and China’s continued decoupling, Russia’s invasion of Ukraine is the latest signal geopolitics is back, with countries issuing sanctions and other restrictions in response to Russian aggression. Russia, however, is a major producer of copper, nickel, platinum, and other minerals vital for renewable energy, and the global divestment from Russia has skyrocketed the price of such materials. Nickel, for example, has reached an 11-year high. Rising geopolitics has seeped into the renewable market, as these developments have shaken up the supply chain and impeded the upward trajectory of renewables’ share on the world’s energy grid.

Clean Energy Requires Clean Trade, too: Today, many companies are making social impact commitments and enforcing environmental, social, and governance (ESG) standards in their operations. Even for companies not doing so proactively, an increasing number of investors expect their portfolio companies to meet such standards. For an industry that presents itself as a cleaner, more responsible alternative to incumbent power producers, there will be considerable scrutiny for failing to live up to such commitments, some of which are also becoming government mandates. Just last week, The Uyghur Forced Labor Prevention Act went into effect restricting the importation of goods manufactured in the Xinjiang region of China “unless an importer can establish that the products were not made with forced labor.” This new mandate adds a layer of complexity for renewable developers, as the region produces 50% of world’s supply of polysilicon, a key solar panel component. Nor is it the first-time Congressional action regarding trade has complicated renewables development. 2010’s Dodd–Frank Wall Street Reform and Consumer Protection Act mandated the disclosure of the use of conflict minerals, which are crucial to building renewable infrastructure.

Where Do We Go from Here?

As the demand for renewables continues to grow, the industry and its investors and consumers will face more trade winds causing uncertainty in the marketplace. Consequently, clean energy public affairs professionals will have to go to trade school, because navigating this new reality and bringing more renewables on to the grid will mean understanding the broader trends and interests shaping trade policies and the geopolitical landscape, both within and outside of the energy industry.

As FinTech Grows, So Does the Scrutiny

Here’s What You Need to Know

Four out of five U.S. consumers have used “Buy Now, Pay Later,” or BNPL, which lets consumers split online purchases into installment plans or loans. It is not surprising then that Apple yesterday announced it will be the latest entrant into the sector. Yet the tech giant may come to regret the decision. Amidst the pandemic and now with inflation at record highs, consumers are increasingly turning to this new fintech vertical as an alternative to credit cards for purchases they otherwise wouldn’t be able to afford, and the shift has been rapid.

As its adoption has grown however, so have concerns from regulators, consumer advocates, and political activists skeptical of financial services companies. How this regulatory debate unfolds could have a significant impact on the larger push for innovation in financial services and retail sectors. To ensure the regulatory environment is shaped responsibly, here is what fintech public affairs professionals need to know.

As “Buy Now, Pay Later” Booms, Policymakers Worry About a Bust

BNPL Usage Has Grown Exponentially. Last year alone, shoppers made nearly $100 billion in BNPL purchases, up from just $24 billion in 2020—an astronomical 316% increase. BNPL is especially popular with younger consumers—a coveted demographic reticent to use credit cards after being buffeted by crises and saddled with more student loans than prior generations. BNPL appears poised to grow even more, with retailers and payment firms viewing it as a key component to surviving and thriving in a post-pandemic, inflationary, and possibly recessionary environment.

From U.S. To Europe, Regulators Crack Down: Newly invigorated under the Biden Administration, the Consumer Financial Protection Bureau (CFPB) is taking aim at fintech companies offering these new forms of credit to consumers. In December 2021, the CFPB opened an inquiry, issuing a request to five companies – Affirm, Afterpay, Klarna, PayPal, and Zip – for information on the risks and benefits of BNPL loans. CFPB expressed concerns regarding the ease of consumer accumulation of debt, regulatory arbitrage, and data harvesting in a consumer credit market that is quickly changing as technology advances. It is not just CFPB putting the industry under a microscope either. As noted in its inquiry, the Bureau is working with regulators in Australia, Germany, Sweden, and the United Kingdom, who have all launched their own investigations.

What Is Driving the Biden Administration’s Interest In BNPL? Many of President Biden’s financial regulatory appointments have advanced the interests of ascendant progressives in his party, including CFPB Director Rohit Chopra, a protégé of Senator Elizabeth Warren (D-MA). Even before Biden took office, Warren and other progressives were preparing to take on fintechs and traditional lenders, seeking to constrain how they provide access to financing even if it undermines investment and innovation in the sector and restricts opportunities for consumers. Apple’s entrance may bring scrutiny from a different Warren acolyte, Federal Trade Commission Chair Lina Khan, who The Information notes “wrote a 2019 paper arguing for the separation of platforms and commerce.”

Consumer Advocates and Industry Analysts Sharpen Their Knives

Progressive Groups Crank Up Pressure On CFPB: In March, more than 75 consumer advocacy groups and their progressive allies submitted a joint letter to Chopra, urging him to take a more aggressive approach in regulating BNPL products to, in their view, safeguard consumers. The letter leveled allegations notably similar to those in the CFPB’s inquiry: the potential for unmanageable consumer debt, deceptive hidden fees, and an absence of transparent disclosures.

Industry Analysts Worry About the Bubble: The spike in BNPL usage has some industry analysts worrying the new trend is a bubble that will soon burst. Marshall Lux, who was Chief Risk Officer for Chase during the 2008 financial crisis, told CNBC, “When people start buying household goods on credit, that signals a problem.” NYU Stern School of Business professor Scott Galloway argues that because BNPL’s rapid growth is primarily fueled by younger consumers, a looming recession could spell disaster for the sector’s subprime-heavy target demographic. While retailers may view as their next best hope at keeping consumers spending amidst inflation, some worry whether BNPL can survive a possible recession.

To Protect Their Growth, BNPL Firms Must Anticipate More Scrutiny

As BNPL continues its rapid rise in popularity and usage, fintech public affairs professionals will need to address this growing scrutiny with careful consideration. Even though there their firms are already subject to various laws and regulations, there is a growing push for greater regulation. Nor will the sector’s potential reputational challenges just impact the fintech firms themselves. Retailers capitalizing on their payment services to win over inflation-laden consumers must also pay heed. To navigate their firms through these complex political and reputational risks, public affairs professionals will need to understand which policymakers and stakeholders are driving concerns and shaping new regulations so they can anticipate what comes next.

The Roe Dilemma

Here’s What You Need to Know

Amidst the uproar over the leaked U.S. Supreme Court draft opinion in Dobbs v. Jackson that could determine the fate of Roe v. Wade, companies face pressure from competing stakeholders to take a public stand. Whatever position they take—or even if they stay silent—is bound to alienate one or even both sides of this charged debate. Yet, news of the draft decision is just the latest social issue flashpoint in which companies are caught in the crosshairs, with questions, concerns, and demands coming from employees, consumers, investors, elected officials, and beyond.

Public affairs professionals know threading this needle will be difficult. As we’ve warned before, “Especially in this hyperpolarized political environment, it is important for CEOs and companies to remember that while they may believe they are signaling the right thing, they very well may be widening the divide instead of closing it.” Here’s what you need to know to navigate this ongoing challenge smartly…

The Demand to Take a Stand

The leaked draft caused a wave of activism demanding and expecting companies to act. Some companies, including Amazon, Apple, Citigroup, Levi Strauss & Co., Lyft, Salesforce, Uber, and Yelp, swiftly adopted new employee benefit packages covering the travel costs of employees seeking abortion procedures. The moves come in response to pressure from not just outside activists but also employees within companies. The pressure, though, is not one-sided. Congressional Republicans, for example, were already pursuing cancellation of Citigroup’s contract to provide payment services for House offices over the bank’s plans to cover abortion travel for workers.

Companies must also contend with the fact that younger consumers—an influential demographic sought by many companies—expect companies to speak out on important social issues, including abortion access. Those consumers claim to be more likely to patronize businesses that openly share their values. Investors are likewise seeking companies committed to social impact, including pledges on abortion rights and similar social issues. In February, a group of 36 investors managing $236 billion in holdings sent a letter to CEOs of more than thirty companies requesting they disclose their stances and employee benefits related to reproductive healthcare.

Every Action Has a Reaction

The desire to respond quickly to the leaked draft may be driven in part by corporate executives who just watched The Disney Company’s CEO forced by employees and activists to belatedly speak out regarding a Florida sex education measure. Yet, the second half of that all-too-true fable is just as important a lesson. In response to Disney’s opposition to the measure, the Florida legislature empowered Governor Ron DeSantis to revoke Disney’s special operating privileges in the Sunshine State. Similarly, when Delta spoke out against a Georgia election law, state House Republicans passed a bill stripping Delta of a jet fuel tax break.

As we noted after Texas passed a contentious abortion law last year, this “new reality means trying to get along with the leaders who enact policies that are good for business while placating the activists whose agitation isn’t, or finding ways to speak up for important values without blowback from elected officials.” Indeed, as we saw with Disney, such blowback is no longer just coming from politicians, but also from consumers who do not share the more vocal protestors’ views. After all, Americans remains split 50-50 on whether firms should address this issue.

This Isn’t Going to End Any Time Soon

Last week, the U.S. Department of Homeland Security circulated warnings to corporate leaders “flagging the potential for civil unrest” once a ruling in Dobbs becomes official. The potential for extreme rhetoric, violence, and destruction means companies will have to be careful in how they respond to the ruling, and if or how they associate with various advocacy groups that could be implicated—fairly or unfairly—to disruptions.

In the longer term, companies’ response to this anticipated decision are likely to be scrutinized to see if their practices match their proclamations. For example, how many companies will now cover employees’ travel for an abortion but not for critical cancer care or other complex health issues? The potential for such questions regarding companies’ real commitment to women’s health is a future viral moment waiting to happen. In addition, a decision dismantling Roe in whole or part will lead to a lengthy state-by-state battle, with Republican-led states emboldened to restrict abortion and Democratic-led states encouraged to protect and expand access. This widening legal divergence will undoubtedly foster tensions between companies and state governments. Even at the federal level, firms have to consider that Democrats’ current hold of the reins of power may end in November, and Republicans are already planning their investigations.

Abortion laws also are not the only social issue companies will face pressure to address. From voting laws and sex education to transgender rights and critical race theory in public schools to issues not yet ripe for politicization, stakeholders and policymakers will crank up the heat on firms to take a stand even as they remain divided over what that stand should be.

Conclusion

While the Dobbs leak provided little time for companies to react, public affairs professionals must anticipate the pressure campaigns to come. As crisis communication guru Richard Levick warned last week, “Taking sides on the most problematic issues of the day may not be advisable, but it may also be unavoidable.” At Delve, we recommend firms “take a cohesive approach that aligns their brand strategy and policy stances … assess[ing] risk from both a global and local perspective so that you can better understand and address key vulnerabilities—before they are pointed out in the public arena, and before you lose control of the narrative.”

Blame Game Bingo

Here’s What You Need to Know
As oil majors reported a “big jump” in profits amidst record-breaking gas prices in the U.S.—where the average price for a gallon of regular unleaded gasoline hit its highest ever last month—the finger-pointing has reached a fever pitch over who bears responsibility for the pain at the pump, and not surprisingly, energy firms are caught in the partisan crossfire.

While President Biden and Congressional Democrats have dubbed it the “Putin price hike,” the truth is that gas prices have been escalating since the onset of the Biden presidency, a full year before the Russian invasion of Ukraine. Indeed, last year, the Biden Administration was demanding a Federal Trade Commission investigation of oil companies over price hikes and even now, Democrats in Washington are blaming oil company “price gouging” for the hikes.

Republicans, of course, lay the blame on Biden’s anti-fossil fuel policies, though factcheckers are quick to insist Biden’s steps since taking office “have had little [direct] impact on prices.” The reality, as is often the case, is more complex. While factors outside the control of either industry or elected officials are the main drivers of gas prices, the tone set by the Biden Administration has sent clear market signals that made it more difficult for producers to boost domestic energy production just as demand was swiftly recovering from the pandemic. As public affairs professionals in the energy sector navigate through this blame game, here’s what you need to know.

What Is Really Causing the Price Hikes? 

While Russia plays a significant role in global energy markets, and the country’s invasion of Ukraine certainly impacted gas prices, growing demand post pandemic, and a lag in energy production due to difficulties faced by oil producers in ramping up output, had been contributing to an upsurge that long preceded the incursion and remains a major contributor to higher gas prices. A review of average retail gas prices show they began an upward advance following Biden’s election, which coincided with the distribution of vaccines that signaled a reopening of the economy. More recently, a tight labor market is causing a shortage of crews, which has yielded a stock pile of drilled, but uncompleted wells (DUCs).

Presidential Policies Don’t Set Prices, But They Can Prevent Investment.

While the Biden Administration and Congressional Democrats insist federal policies are not responsible for limiting oil and gas development, the Administration’s rhetoric – even today as they seek increased oil supply to reduce pain at the pump – has made clear fossil fuels’ days are numbered, and investment in oil and gas production would be disfavored.

Before taking office, Biden pledged to “take a whole-of-government approach to the climate crisis,” and within hours of taking office, Biden cancelled the Keystone XL pipeline. While the long delayed pipeline’s cancellation had little impact on short term supply, the decision sent a message that the new administration was not interested in new fossil fuel projects, even though the Administration now finds itself scrambling for another solution to increase oil imports from our neighbor to the north. Upon taking office, Biden also quickly moved to pause leasing on federal lands, another decision that may have marginal impact on overall supply, but made the Administration’s policy direction clear.

If it was not clear enough, though, Administration officials have put a fine point on matters. Biden’s climate envoy John Kerry earlier this year sentenced the natural gas industry to death in 10 years, regardless of whether renewable energy sources will be able to sufficiently replace natural gas a reliable resource by that date. More recently, White House National Climate Advisor Gina McCarthy insisted Biden is “absolutely committed to not moving forward with additional drilling.”

Meanwhile, the Federal Energy Regulatory Commission, now led by Biden-appointed Chair Richard Glick, issued a major overhaul of pipeline approvals and adopted sweeping new guidelines for natural gas ventures, including a first-ever new framework for evaluating projects’ greenhouse gas emissions. While FERC backtracked, the message to infrastructure developers was clear: new fossil fuel infrastructure is only going to get harder to build. At the Securities and Exchange Commission, Biden-appointed Chair Gary Gensler has been aggressively advancing new, far-reaching rules on climate disclosure requirements for companies both within and outside of the energy industry.

Investors Can Read The Signals, And Send Their Own.

It is not just the Administration’s rhetoric or even the new SEC rules shifting investment dollars away from the oil and gas sector. Many investors have made commitments to reduce CO2 emissions—often as part of corporate ESG policies—on their own as well, even before President Biden took office. For years there has been a demand from investors for more clarity in how companies disclose their environmental impacts, and  at the start of the new year, KPMG noted investors are “increasingly seeking greater transparency” in climate related disclosures. Further, while major Wall Street firms like Blackrock and Citi have rejected calls to divest from fossil fuels, it is only so they can continue to apply ESG pressures to such firms within their portfolios. In 2022 alone, Axios reports, “Investors have filed a record 215 climate-related shareholder resolutions.”

Not surprisingly, oil firms are quick to point to such investor concerns when asked why they aren’t increasing production. While these concerns are often framed as a need for more capital discipline, last year saw such financial concerns marry with environmental activism to upend Exxon’s board and shift its fossil fuel production strategy. This trend is not new. As we noted in early 2020, “Financial institutions have given into these growing social pressures and have adapted to avoid this risk … by planning to reduce the amount of capital available for … investments in fossil fuels.” More recently, a January BCG survey of 250 institutional investors found 57% felt pressured to divest from fossil fuels and 75% felt pressured to go “green” in their portfolios.

Where Do We Go from Here?

While the Biden Administration and Congressional Democrats point fingers at Putin and oil companies for rising gas prices, the reality is that policies adopted by the Administration—driven by commitments they made to activists in their political base— have led to higher energy prices and constrained supply. Now, as Democrats fear voters’ pain at the pump will lead to their pain at the poll, public affairs professionals in the energy sector will have to marshal the facts into a clear narrative about how we really got here, all while avoiding the ire of the administration, activists, and a wide range of other stakeholders that can impact the industry’s future.

The Future Is In WTO Hands

Here’s What You Need to Know…
Negotiators from the United States, European Union, India, and South Africa are “iron[ing] out” what the World Trade Organization (WTO) head calls “the last few tweaks” in a proposed compromise to allow countries to waive intellectual property rights for COVID-19 vaccines. Public affairs professionals both in – and outside – the life sciences sector should pay close attention. Last year, President Biden reversed the U.S.’ long-standing opposition to an IP waiver at the WTO due to pressure from activists and access to medicines groups, who argued that an IP waiver on COVID-19 technologies would solve the problem of global vaccine inequity. We warned at the time, “While this may seem like an arcane debate over trade rules … there is far more at stake for the pharmaceutical industry and its ability to develop future health technologies.”

Fast forward to 2022, about two-thirds of the world has been vaccinated against coronavirus and “2.3 billion vaccine doses” currently sit unused, according to a recent market analysis. Moreover, the U.S. alone has already delivered hundreds of millions of vaccines to countries around the world, and several vaccine manufacturers have pledged not to enforce their patents on COVID-19-related technologies in low-income countries. Yet despite the wide availability of COVID-19 vaccines, South Africa, India, and a global campaign of activists continue to seek a COVID-19 IP waiver at the WTO, hoping to set a precedent that they can ultimately use to unwind IP protections on drugs for a range of other diseases, such as HIV/AIDS, cancer, and tuberculosis, among others. The waiver’s implications could also reach far beyond the drug industry and pave the way for activists to fight patents on any technologies they believe should be a global public good. That is why public affairs professionals operating in any IP-heavy sector ought to pay close attention. To do so, here is what you need to know.

 

PATENTS WERE NEVER THE CAUSE OF VACCINE INEQUITY

While activists and supporters of the waiver push have been quick to blame patents for hindering access to COVID-19 vaccines in low-and-middle-income countries (LMICs), many global health experts paint a very different picture. Rutgers Global Health Institute director Dr. Richard Marlink, MD, for example, blames vaccine inequity on the lack of health infrastructure in LMICs, noting, “The majority of the world’s countries lack the capacity,” including “funding, manufacturing facilities, raw materials, and laboratory staff,” needed “to produce and distribute COVID-19 vaccines, and especially at the scale required to get this pandemic under control.” Pfizer’s vaccine alone requires 280 components from 86 suppliers in 19 countries as well as complex and sensitive equipment and highly skilled personnel. Even with a COVID-19 IP waiver, these LMICs would still not have the capacity to navigate complicated technology transfers between collaborators or build the global supply and manufacturing networks necessary to this task.

Even if countries could overcome the manufacturing complexities, many LMICs lack the necessary infrastructure to facilitate distribution and administration to populations. India, for example, is one of the main forces behind the waiver push. Yet it is struggling to distribute its own surplus of COVID-19 vaccines due to various logistical barriers. Serum Institute of India Chief Executive Adar Poonawalla acknowledged, “All over the world, there is enough supply, but it is getting the jabs in arms which will take some time.”

SO WHO DOES THE WAIVER REALLY BENEFIT?

Though China would technically be excluded from the proposed agreement due to the large amount of vaccines it exported during the pandemic, U.S. Trade Representative Katherine Tai has acknowledged the real and significant concern about China gaining from a waiver of intellectual property rights at the WTO. Removing IP protections on COVID-19 vaccines would be open season for China to manipulate platforms like mRNA, an innovative technology that may prove valuable in treating everything from the flu to cancer. Given free access to the mRNA recipes used for COVID-19 vaccines, China could reverse engineer the technology and potentially beat U.S. companies to market with its own vaccines and therapeutics.

The other primary benefactor of any patent waiver would be India, both the largest manufacturer of generic prescription drugs and the largest vaccine distributor in the world. “The World’s Pharmacy,” as one analysis called India, would be positioned to access key technologies without needing to pay for licensing or acting as a producer of other companies’ products. In addition, the waiver would advance anti-patent activists’ true agenda: upending the system that protects intellectual property rights to spur innovation with one that relies upon government-led research to bring to market public goods.

THE FUTURE OF INTELLECTUAL PROPERTY RIGHTS IS AT STAKE

Both lawmakers and those in the pharmaceutical industry see the push for an IP waiver at the WTO as a slippery slope that could lead to an eventual overhaul of the current research and development system and undercut long-standing patent and intellectual property protections, disincentivizing future innovation and development. Through a COVID-19 IP waiver, activists are hoping to “set a powerful precedent” for expanding access to medicines for other diseases, such as HIV/AIDS, cancer, and tuberculosis, among others. In fact, they are already pointing to other health crises they claim necessitate IP sharing; for example, activists are warning of a “cancer crisis” in South Africa and demanding expanded access to certain treatments. Likewise, Dr. Anthony Fauci urged the world to apply the lessons of the COVID-19 pandemic to the global tuberculosis crisis, arguing “all countries need to realize that they have ‘a moral responsibility’ to see infectious diseases, even if not affecting their own citizens, as their problem.”

Beyond the pharmaceutical sector, the WTO’s decision could impact intellectual property rights for other industries. Any global crisis could open the door for activists to argue that innovative, proprietary technology be made a global public good. Environmental activists are already lobbying the Biden Administration to rescind the intellectual property rights of companies working on technologies that curb CO2 emissions, citing the global climate crisis. The Paris Climate Agreement itself addresses the desire for such technology in LMICs and encourages participants in the treaty to enable technology transfer to these countries. Many of those same activists argue the climate crisis will increase global hunger and malnutrition, which could lead to challenges of IP protections for biotechnological and agricultural sector innovations as activists argue such patent protections limit the opportunities of farmers around the world to grow certain crops and feed those in need. If the global pandemic necessitates compulsory licensing, surely the global climate crisis or a global hunger crisis would too.

PULLING BACK THE CURTAIN

If ratified by the WTO, a COVID-19 IP waiver could set a dangerous precedent that threatens our ability to address future health challenges at home and around the world. Public affairs professionals in any industry governed by trade rules shaped by the WTO should be aware of the long-term consequences. Understanding who is shaping the debate, what their real agenda is, and how it will impact your interests will ensure your industry can stay ahead of the curve.

Is Geopolitics Back?

Here’s what you need to know…

Over 500 companies have withdrawn from or otherwise reduced their business relations with Russia since the invasion of Ukraine began, but, as a “hall of shame” being compiled by Yale University researchers notes, dozens more are “continuing business-as-usual in Russia.” The list and the accompanying news and social media coverage it has garnered are a clear indication that alongside the world’s rightful uproar at Russian President Vladimir Putin is a rising expectation that companies will cut ties with Russia in a similar fashion that we have seen in recent charged social issue debates here at home.

The scrutiny means at least for the moment, geopolitics is back as a central consideration to companies’ and industries’ political and reputational risks. For public affairs professionals helping navigate these risks, questions abound. Does the Russian divestment push signify a new norm forcing businesses to bring great consideration to where in the world they operate? Will demands to leave the Russian market last, or will the scrutiny fade as the blue and yellow flags on social media profiles do? Even if the public attention wanes, to what extent will new legal and regulatory requirements and policymaker interest remain?

For many industries, exiting the Russian market is not a simple task or as ethically and morally clear as social media may presume. Even for businesses that do not operate internationally, these questions bear consideration, as governments at every level – multilateral, federal, and even states and local – take action. As what could be a new era of geopolitics unfolds, here’s what you need to know.

Are You Now or Have You Ever Done Business in Russia?

A GLOBAL PUSH TO DIVEST FROM RUSSIA: European Union countries have made clear they intend to wage “total economic and financial war” to “cause the Russian economy to collapse,” according to French economy minister Bruno Le Maire. Norway’s largest pension fund, KLP Group, and Denmark’s AkademikerPension, for example, have announced plans to dump their holdings in Russia. The push is coming from beyond government, as well. Last week just outside of Paris environmental activists spray-painted the headquarters of major oil producer TotalEnergies in protest over the company’s lack of a plan to divest from its significant holdings in Russia. Beyond Europe, major Japanese-based automotive manufacturers Mitsubishi and Toyota, as well as UAE-based Dubai Aerospace Enterprise (DAE), have divested from their operations in Russia.

A BROAD WASHINGTON CONSENSUS IS PUSHING COMPANIES TO DIVEST: Few things today unite Republicans and Democrats, but the current situation with Russia and Ukraine has done it. The U.S. House of Representatives voted near-unanimously to revert U.S.-Russia trade relations back to what they were during the Cold War. This vote came on the heels of another House vote last week banning the importation of Russian fossil fuels, a move also ordered by the Biden Administration. Additionally, the U.S. House Financial Services Committee is now asking U.S.-based banks and other firms to give the panel detailed information regarding the steps they have taken to cease their business activities with Russia. Companies in a wide range of industries should expect similar questions from policymakers.

STATE PUBLIC PENSION FUNDS WIELD THEIR OWN POWER TO PRESSURE COMPANIES: While more symbolic actions by state governments – like dumping out Russian-sounding vodka brands – may have been swift, in the long term, it is the political power of state pension funds that could impact companies and investors the most. At least a dozen states and some cities have either implemented or are considering implementing their own measures against Russia. Most notably, California governor Gavin Newsom and Golden State legislators are taking steps to divest three major state pension funds – CalPERS, CalSTRS, and the University of California – from their collective $1.5 billion invested in Russian entities. Not all states are doing so, however. Florida Governor Ron DeSantis has remained quiet in response to pressure from both Republicans and Democrats in Florida’s congressional delegation pushing the state to divest.

Will Divestment Pressures Spread to Other Bad Actors? 

AMERICANS WANT COMPANIES OUT OF RUSSIA – BUT FOR HOW LONG? The rising pressure on companies to exit Russia is not surprising. Polling shows an overwhelming majority of Americans want American companies out of Russia, but remain “split on how long companies’ severed business ties with Russia should last.” That split expectation complicates businesses’ response, given the complexity of exiting a large economic market and the precedent it could set. That precedent comes as the world, geopolitically-speaking, is potentially at its most unstable and least peaceful state since the Cold War ended while the ease of scrutinizing both companies and the countries they operate in has grown exponentially.

IF COMPANIES SHOULD LEAVE RUSSIA, WHAT ABOUT OTHER COUNTRIES FACING WORLD OPPROBRIUM? Many analysts worry the Russian invasion of Ukraine could embolden China to increase its aggression against Taiwan. Such an invasion would complicate matters for U.S. companies that have already looked the other way as China faces sanctions over its treatment of the Uighurs and its suppression of Hong Kong. Furthermore, the Biden Administration’s pursuit of a renewed nuclear deal with Iran could reignite scrutiny of and divestment from companies doing business with that repressive regime. The potential reopening of Venezuela to calm oil markets could open a similar dilemma.

COMPANIES’ RUSSIA RESPONSE COULD SHAPE EXPECTATIONS FOR THEIR ACTIONS ELSEWHERE. As our firm’s founder and CEO Jeff Berkowitz discussed last fall on a podcast for the Global Business Alliance, companies were already facing pressure from activists and policymakers to divest from or remain committed to various countries and regions. The heightened scrutiny following Russia’s invasion will only make those pressures a larger concern, particularly as the growing number of ESG commitments made by companies meet this new geopolitical era and companies’ actions in response to Russia are likely to inform expectations for their actions regarding other geopolitical conflicts.

Amidst the Clamor, Breaking Up Is Hard to Do

For many businesses, exiting Russia is easier tweeted than done. Beyond the logistical and contractual complexities of exiting the world’s 11th largest economy, there are a number of legal, logistical, and moral challenges companies must consider. For pharmaceutical companies and agricultural suppliers, cutting off the Russian people from lifesaving and life-sustaining goods is an ethical quandary. Even less essential businesses “face a duty of caretoward their workers” that would be left behind, Politico notes. Indeed, many of those workers could face repercussions from Putin if their multinational employers leave Russia. In addition, as some firms such as Koch Industries have noted, Russia bankruptcy laws could enable Russia’s government or favored corporate proxies to seize their assets, literally enriching the government divestment is intended to impoverish.

Geopolitics Is Back, So Prepare for It to Stay for a While

Public affairs professionals will need to help their organizations determine if we are in a new normal where geopolitics is back, and whether such pressures will apply beyond the Russian invasion of Ukraine to other countries facing international censure. Those pros will also need to help their organizations determine if such scrutiny is ephemeral, a social action moment that will be surpassed by the next outrage, or a real moment when a long-term shift takes place.

Leaving a large economic market is a complex business decision not easily resolved in a tweet. Harmonizing that reality with the very real current scrutiny from consumers, advocates, and policymakers will be the challenging task ahead, not just on Russia but potentially in future geopolitical developments. To make the most informed and sound decision on whether to take a stand – or what stand should be taken – public affairs professionals will need the correct insights to identify who all their stakeholders are and how to understand their expectations and weigh the costs of associated with divestment.

Forbes Column: Are You Ready To Launch Your Brand’s Social Impact Initiative?

Social impact is more than a buzz word. For growing numbers of organizations, it’s an operational principle. Yet the public remains skeptical that businesses mean what they say on such issues. In his latest Forbes column, Delve CEO Jeff Berkowitz outlines how organizations can make a real commitment to social impact without any surprises, and what a failure to fully consider such initiatives through can mean for an organization. Read the except below, or head to Forbes.com to read the full article.


With brands taking greater leadership roles in society, they’re now expected to engage on a wider range of issues, including those not directly related to their business. A variety of stakeholders will encourage an organization to lead with social impact as much as they do the products they make or the services they provide. Employees, investors, advisers, community activists, policymakers and even executives see how critical dedication to shared social values can be not only to a company’s corporate culture but also to its bottom line.

In a deeply divided nation, such corporate activism can present challenges to organizations once reticent to take public stands on contentious issues but now thrust into today’s political and social debates. As Axios reported, a recent survey warned about “the danger of speaking out impulsively on issues that aren’t core to the business.” According to Fox Business, the survey found that while 63% of corporate executives think “companies should speak out on social issues,” just 36% of voters agree. Even worse, only 39% of voters think corporate communications of social issues is effective.

Here are three practices executives must adopt to shape their organization’s social impact in a thoughtful and authentic way that minimizes risks and increases the likelihood their efforts will be well-received: (1) Know your history before you engage. (2) Don’t sign up for principles before you understand their implications. (3) Actions speak louder and longer than words.

Continue reading at Forbes.com and learn why these three practices are crucial to social impact success.