2024 Champions of the Earth Honored, Corporate Transparency Act Halted in the U.S., and AI Emerges as a Key Risk for U.S. Corporations

In a week marked by transformative developments, six visionary environmental leaders were honored as the 2024 Champions of the Earth for their groundbreaking contributions to sustainability and conservation.

Meanwhile, in the United States, a nationwide preliminary injunction has temporarily halted enforcement of the Corporate Transparency Act, sparking debates on compliance and privacy.

At the same time, a new wave of corporate disclosures has revealed that the largest U.S. companies now recognize artificial intelligence (AI) as a material risk, accentuating the growing impact of technology on business and governance.

These milestones reflect the interconnected challenges and opportunities shaping the future of our planet, policy, and innovation.

Six Bold Environmental Leaders Named 2024 Champions Of The Earth

The UN Environment Programme (UNEP) has announced the six recipients of the prestigious 2024 Champions of the Earth award, celebrating their exceptional contributions to combating land degradation, drought, and desertification. These bold leaders, representing diverse backgrounds and disciplines, were honored on December 10 during the Resilience Day at the 16th Session of the Conference of the Parties (COP16) of the UN Convention to Combat Desertification (UNCCD) in Riyadh, Saudi Arabia.

Protecting People and the Planet

As the UN’s highest environmental accolade, the Champions of the Earth award recognizes individuals and organizations from the public and private sectors, civil society, and academia. Since its inception in 2005, the program has celebrated 122 laureates who exemplify innovative and impactful environmental leadership.

This year’s awards spotlight efforts to restore degraded lands, enhance drought resilience, and prevent desertification—issues that threaten approximately 3.2 billion people worldwide and are expected to impact over three-quarters of the global population by 2050.

UNEP Executive Director Inger Andersen emphasized the importance of the laureates’ efforts in the global fight against environmental degradation. “The efforts of the 2024 Champions of the Earth stand tall as a reminder that the fight to protect our land, our rivers, and our oceans is a fight we can win,” she said. “With the right policies, scientific breakthroughs, system reforms, activism, and the wisdom of Indigenous Peoples, we can restore our ecosystems.”

Meet the 2024 Champions

Sonia Guajajara – Policy Leadership

Brazil’s first Minister of Indigenous Peoples, Sonia Guajajara, was recognized for her decades-long advocacy for Indigenous rights and environmental protection. Under her leadership, Brazil has designated 10 territories as Indigenous lands, a vital step toward combating deforestation, illegal logging, and trafficking. Her work underscores the critical role of Indigenous wisdom in ecosystem restoration.

Amy Bowers Cordalis – Inspiration and Action

Amy Bowers Cordalis, an Indigenous rights advocate from the United States, received accolades for her dedication to restoring the Klamath River and promoting sustainable fishing practices for the Yurok tribe. Her legal expertise and advocacy demonstrate how environmental action can positively impact both ecosystems and Indigenous livelihoods.

Gabriel Paun – Inspiration and Action

Romanian environmentalist Gabriel Paun (Gabriel Paun) founder of the NGO Agent Green, was honored for his courageous efforts to preserve Europe’s last old-growth forests in the Carpathian region. Despite facing physical attacks and threats, Paun’s work has protected thousands of hectares of biodiversity-critical land.

Lu Qi – Science and Innovation

Chinese scientist Lu Qi was recognized for his pivotal role in reversing land degradation and combating desertification in China. As Chief Scientist of the Chinese Academy of Forestry and President of the Institute of Great Green Wall, Lu Qi has spearheaded the world’s largest afforestation project, fostering multilateral cooperation and advancing scientific research.

Madhav Gadgil – Lifetime Achievement

Indian ecologist madhav gadgil was celebrated for his decades-long contributions to environmental protection through research and grassroots engagement. His landmark studies in the Western Ghats, a global biodiversity hotspot, have shaped public opinion and policy, reinforcing the importance of sustainable resource management.

SEKEM Initiative – Entrepreneurial Vision

Egypt’s SEKEM initiative was recognized for its transformative work in sustainable agriculture. By promoting biodynamic farming practices and reforestation, SEKEM has turned large swathes of desert into productive agricultural land, setting an example for sustainable development in arid regions.

Restoring the World’s Ecosystems

The announcement of the 2024 Champions of the Earth coincides with the ongoing UN Decade on Ecosystem Restoration (2021–2030). Led by UNEP and the Food and agriculture organization (FAO), this global effort aims to prevent, halt, and reverse ecosystem degradation across billions of hectares of terrestrial and aquatic environments.

Through the inspiring actions of this year’s laureates, UNEP highlights the potential for collective action to address environmental challenges. These champions serve as a testament to the power of bold leadership, innovative solutions, and collaborative efforts in safeguarding the planet for future generations.

https://news.un.org/en/story/2024/12/1157991

Nationwide Injunction Halts Enforcement Of Corporate Transparency Act In The U.S.

The United States District Court for the Eastern District of Texas has issued a significant ruling in Top Cop Shop, Inc., et al. v. Garland, granting a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA) and its implementing regulations. The decision, announced on December 3, 2024, temporarily halts enforcement of CTA provisions, including the January 1, 2025, filing deadline for beneficial ownership information reports (BOIR).

Key Highlights of the Court Order

1. Stay of the January 1, 2025 Deadline: The filing deadline for BOIR required of domestic and foreign reporting companies formed or registered before 2024 has been stayed.
2. Enforcement Halted: The U.S. government has been enjoined from enforcing the CTA and the associated regulations issued by the Financial Crimes Enforcement Network, US Treasury (FinCEN).

FinCEN, in a subsequent alert posted on December 6, 2024, confirmed that reporting companies are not currently required to file BOIRs and will not face penalties for non-compliance while the Court Order is in effect.

Scope of the Ruling

The Court Order primarily applies to the January 1, 2025 deadline for entities formed or registered before 2024. The plain language of the ruling does not explicitly extend to:

• 90-day Filing Deadlines: Applicable to companies formed or registered in 2024.
• 30-day Correction Deadlines: For updating or correcting previously submitted BOIRs.

However, FinCEN’s alert suggests that no enforcement actions will be taken against any reporting companies, regardless of the original deadlines.

Background on the Corporate Transparency Act

The CTA, enacted in January 2021, mandates that reporting companies disclose beneficial ownership information to FinCEN. More than 32 million entities are expected to comply with these requirements. The regulations, effective January 1, 2024, require:

• Reporting companies formed before 2024 to submit initial BOIRs by January 1, 2025.
• Companies formed in 2024 to file BOIRs within 90 days of formation or registration.

Violations of the CTA can result in severe civil and criminal penalties, including fines up to $10,000 and imprisonment of up to two years for willfully providing false information or failing to report required details.

Constitutional Challenges

The court’s preliminary injunction is rooted in the determination that the CTA and its regulations are “likely unconstitutional.” This ruling aligns with a broader pattern of legal challenges:

• March 2024 Ruling: The U.S. District Court for the Northern District of Alabama found the CTA unconstitutional in another case, affecting specific plaintiffs including the National Small Business Association (NSBA).

The U.S. Department of Justice has filed appeals in both cases, and the ultimate constitutionality of the CTA remains unresolved.

Implications for Reporting Companies

While the preliminary injunction halts enforcement of the CTA, reporting companies are advised to:

1. Continue Gathering BOIR Data: Companies should prepare beneficial ownership information to ensure readiness if compliance is required in the future.
2. Monitor Legal Developments: Stay informed about updates from FinCEN and pending court decisions.
3. Evaluate Confidentiality Obligations: Foreign reporting companies should consider contractual confidentiality agreements and privacy laws before voluntarily filing BOIRs.

Next Steps for Compliance

FinCEN has confirmed that voluntary submission of BOIRs is still possible. Companies opting to file should:

• Ensure the accuracy of information submitted to qualify for safe harbor protections in the event of corrections.
• Stay vigilant about potential changes to filing requirements arising from court rulings or regulatory guidance.

Conclusion

The nationwide preliminary injunction represents a pivotal moment in the ongoing legal debate surrounding the Corporate Transparency Act. While reporting companies currently face no penalties for non-compliance, the broader legal and regulatory landscape remains fluid. Companies are encouraged to remain proactive in monitoring developments and preparing for potential compliance obligations.

Updates and resources: FinCEN’s website.

https://www.globalcompliancenews.com/2024/12/12/https-insightplus-bakermckenzie-com-bm-tax-united-states-nationwide-preliminary-injunction-on-corporate-transparency-act-enforcement_12062024/

Largest U.S. Companies Disclose AI As Material Risk

A significant 60% of companies in the S&P 500 now cite artificial intelligence (AI) as a material risk in their annual 10-K risk factor disclosures, according to an analysis conducted by Deloitte and the Peter Arkley Institute for Risk Management at the University of Southern California ’s USC Marshall School of Business. The study reinforces a growing recognition of AI’s transformative potential—and the associated challenges—across a range of industries.

Key Findings from the Analysis

The study examined 434 annual reports from S&P 500 companies to track trends in risk factor disclosures. Since the analysis began in 2021, companies have increasingly highlighted AI-related risks in areas such as cybersecurity, competition, regulatory compliance, intellectual property (IP), and ethics.

• Cybersecurity: More than 40% of companies identify AI as a factor that exacerbates cybersecurity risks, citing the potential misuse of advanced AI tools by cybercriminals. Cybersecurity is the most frequently mentioned AI-related risk factor.
• Failure to Innovate and Compete: Over 30% of companies express concern that failure to integrate AI into their operations could harm their competitive position, reputation, and financial outcomes. Similarly, companies worry about losing market share to competitors who excel in AI adoption.
• Regulatory, Data Protection, and IP Compliance: Nearly 30% of companies highlight challenges related to evolving AI regulations. More than 15% mention specific concerns about data protection and privacy laws, while over 17% focus on IP issues, including whether AI-generated creations can be copyrighted or patented.
• Responsible AI: Around 25% of companies disclose reputational risks tied to their use of AI. Ethical concerns, including potential bias or flaws in AI models, are mentioned by 15% of companies. One-fifth note that faulty AI systems could result in social harm or defective outputs.
• Talent Shortages: Few companies—only 12—mention risks related to the difficulty of attracting and retaining skilled AI professionals. This issue is most prevalent in the financial and information technology sectors.
• Risk Mitigation Gaps: Eleven companies, predominantly in the financial sector, disclose concerns that their current risk management programs may not adequately address AI-related risks.

Sector-Specific Insights

The prominence of AI-related risks varies widely among sectors:

• Over 90% of companies in the communication services sector include AI-related risks in their disclosures.
• Less than 40% of energy sector companies address AI-related risks.

Implications for Risk Disclosures

The growing prevalence of AI in risk factor disclosures reflects a broader shift toward acknowledging AI’s impact on business operations and strategy. This trend is occurring even as the U.S. Securities and Exchange Commission (SEC) has implemented reforms to simplify and streamline risk factor disclosures.

• The average number of risk factors per company has stabilized at 31.5, up from just under 31 prior to the 2020 SEC amendments.
• Companies are dedicating more attention to AI, with nearly 15% providing a standalone risk factor specifically for AI-related risks.

Recommendations for Improving Disclosures

Companies can enhance the quality and effectiveness of their AI-related risk disclosures by considering the following strategies:

1. Integrate Internal and External Risk Processes: Aligning external risk disclosures with internal enterprise risk management (ERM) processes can provide a more comprehensive and actionable view of material risks.
2. Focus on Specificity: The SEC encourages companies to avoid boilerplate language and instead provide detailed descriptions of material risks. Tailoring AI-related risk disclosures to reflect specific business contexts can improve clarity and relevance.
3. Leverage ERM Taxonomies: Using detailed, internally developed taxonomies for risk classification can make disclosures more precise and easier to understand.
4. Avoid Generic Headings: Replacing vague headings like “General Risks” with specific categories improves readability and aligns with SEC guidelines.
5. Enhance Readability: Shortening sentence length and simplifying language can make disclosures more accessible to a broader audience. Limiting subcaption word counts and adhering to Plain English standards are effective ways to achieve this.

The integration of AI into business operations offers tremendous opportunities but also presents significant risks. By recognizing and addressing these risks in their annual disclosures, companies demonstrate a commitment to transparency and preparedness in an era of rapid technological advancement. As regulatory expectations and AI capabilities continue to evolve, robust and specific risk disclosures will remain a critical component of corporate governance and strategy.

https://deloitte.wsj.com/riskandcompliance/largest-u-s-companies-disclose-ai-as-material-risk-5d8e337f?mod=Deloitte_riskcompliance_wsjsf_title&_gl=1*1heto83*_gcl_au*MTg0MzU3OTQyNi4xNzMyNjQyODA4*_ga*OTU2NDA5MjQ0LjE3MzI2NDI4MDc.*_ga_K2H7B9JRSS*MTczNDIwNjcwOC40LjEuMTczNDIwNzA2OC42MC4wLjA.

The Intersection of Policy and Progress

The combined themes from these articles highlight the critical role of policymaking in addressing global challenges—whether they pertain to environmental sustainability, corporate transparency, or the transformative yet complex realm of artificial intelligence (AI). Policymaking serves as a linchpin in navigating these diverse arenas, fostering accountability, innovation, and resilience in an increasingly interconnected world.

1. Environmental Leadership and Restoration The 2024 Champions of the Earth awardees underscore the power of policy-driven action to protect ecosystems, address desertification, and combat environmental degradation. From Sonia Guajajara’s advocacy for Indigenous rights to Lu Qi’s groundbreaking afforestation efforts, their achievements showcase the potential of bold policy frameworks to restore balance between human activity and natural ecosystems. These initiatives exemplify how inclusive policies rooted in science, activism, and Indigenous wisdom can drive transformative change for the planet and its people.
2. Corporate Transparency and Accountability The nationwide injunction in US halting the enforcement of the Corporate Transparency Act demonstrates the ongoing evolution of regulatory frameworks in fostering transparency and combating financial crimes. As legal and constitutional challenges unfold, policymakers are tasked with balancing the need for comprehensive oversight against concerns about privacy, practicality, and constitutionality. Proactive policymaking that engages stakeholders and aligns compliance mechanisms with operational realities will be pivotal in resolving these complexities.
3. AI Governance and Risk Management The rise of AI as a material risk in corporate disclosures reflects the pressing need for forward-thinking policies to regulate its impact. As companies grapple with risks spanning cybersecurity, ethics, intellectual property, and competition, policymakers must provide clear guidance and adaptive regulations to mitigate these threats. Encouraging responsible AI development through specific and actionable disclosures, as emphasized by the SEC, reinforces the importance of regulatory frameworks that align with technological innovation and public trust.

A Shared Imperative

Across these domains, the role of policymakers emerges as a unifying theme. Whether safeguarding ecosystems, ensuring corporate accountability, or addressing AI's multifaceted risks, the formulation of robust, inclusive, and forward-looking policies is essential. Such policies not only protect individuals and ecosystems but also pave the way for innovation, sustainability, and global resilience in an era defined by rapid change. As these case studies illustrate, thoughtful policymaking remains the cornerstone of building a future that prioritizes both people and the planet.

Sources: news.un.org Globalcompliancenews.com Deloitte.wsj.com

UN Environment Programme COP16 UNCCD UNEP SEKEM FAO United States District Court for the Eastern District of Texas Financial Crimes Enforcement Network, US Treasury U.S. District Court for the Northern District of Alabama National Small Business Association Deloitte Peter Arkley Institute for Risk Management University of Southern California USC Marshall School of Business S&P Global U.S. Securities and Exchange Commission U.S. Department of Justice

#Sustainability #Conservation #Environment #Leadership #ChampionsOfTheEarth #Desertification #EcosystemRestoration #IndigenousRights #ClimateAction #Biodiversity #SustainableAgriculture #Transparency #CorporateTransparencyAct #RegulatoryCompliance #PrivacyRights #BeneficialOwnership #AI #ArtificialIntelligence #AIRegulation #Cybersecurity #Innovation #RiskManagement #Governance #Ethics #SustainableDevelopment #Policymaking #ResponsibleAI #ESG #Afforestation #FinancialCrime #AILeadership #RiskDisclosure #CorporateGovernance #Accountability #Resilience #Climate #EthicalAI #Transformation #Technology

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