We are subject to evolving and increasingly complex laws and regulations from various authorities and regulatory bodies. These regulatory requirements and expectations—often inconsistent across jurisdictions—can increase compliance uncertainty and administrative costs, as well as operational and financial risks. For example, implementing responsible business initiatives and reporting progress can be costly, complex, and subject to evolving standards, assumptions, and governance and regulatory requirements and expectations. Compliance with evolving regulatory requirements, such as the EU’s Corporate Sustainability Reporting Directive, or the product packaging regulations adopted or contemplated by several states and numerous international jurisdictions has become increasingly complex. At the same time, certain regulators and lawmakers in the U.S. have scrutinized and may continue to scrutinize our responsible business initiatives and related disclosures. The evolving and diverging regulatory obligations and expectations have and may continue to increase compliance complexity, costs and the risk of actual or perceived noncompliance, especially where regulations vary by jurisdiction.
We are also subject to evolving and diverging regulations and voluntary disclosure frameworks from various stakeholders. Public disclosures may be criticized for accuracy or completeness, and previously reported data may require future adjustments. Actual or perceived failure to meet targets or goals adopted in connection with our responsible business initiatives (including updates, adjustments or retirement of such targets or goals), actual or perceived changes to the scope or extent of such initiatives (or any discontinuation thereof), or actual or perceived inadequate progress on such initiatives, or other actual or perceived failure to respond to stakeholder expectations on these topics (including the perception that our initiatives are inappropriate because they are insufficient or because they are too extensive) could harm our reputation, reduce customer loyalty, and adversely affect our business performance. Such developments may also erode trust, trigger negative publicity, litigation, or boycotts, and expose us to civil or criminal liability. Objections from third parties or governments may result in reputational harm, administrative, or public backlash, or other adverse action, and could negatively impact our financial results or business performance. Given the increasing intensity of, and divergence in, expectations on many responsible business topics from regulators, customers, partners, investors, and other stakeholders, the risk that we will fail to meet at least some stakeholder expectations increases, and the risks described in this section may increase as a result.
We regularly engage with shareholders to strengthen the Company and enhance long-term value. However, activist campaigns can result in significant costs, including legal expenses and diversion of management and Board attention. Public activism may also create uncertainty about our strategic direction, strain relationships with stakeholders, hinder talent recruitment, and cause stock price volatility unrelated to business fundamentals. Shareholders with substantial holdings may influence key decisions, including director elections, mergers, and amendments to governing documents. These risks could materially affect our business and operating results.