CLOs

A survey of major palm oil buyers' progress on their pledges to help curb deforestation shows that a quarter, mostly based in Asia, have yet to make commitments to purchase sustainable supplies, according to the green group WWF. The organization has tracked palm oil buyers' sustainability practices for a decade, analyzing 173 buyers across the United States, Canada, Australia, Europe, Singapore, Indonesia, and Malaysia. Each company was assessed according to their pledges to source sustainable palm oil and deforestation polices in their supply chains, among other things, notes Reuters (17 January, Taylor). The Italian chocolate maker Ferrero received the best ranking from WWF, while Asian brands lagged behind and at times refused to give facts and figures to WWF. Elizabeth Clarke, palm oil lead at WWF in Singapore, said it was "disturbing" that so many companies refused to "mak[e] a commitment of the most basic kind." Palm oil is the world’s most widely used edible oil, found in everything from margarine to soap, but it has faced scrutiny from green activists and consumers, who have blamed its production for forest loss, fires, and worker exploitation.

From "Asian Palm Oil Buyers Lag Behind in Global Green Push: Survey"
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Shares in two of France's biggest retailers fell sharply on Friday, as public sector strikes that have caused gridlock in Paris and other major cities weighed on earnings over the holiday season, reports the Financial Times (17 January, Georgiadis, Smith). The supermarket group Casino fell more than 10 percent for its worst day since 2015, while the electronics dealer Fnac Darty fell 11 percent. Trade unions have carried out strikes in protest of President Emmanuel Macron's pension reforms. In particular, transportation strikes weighed heavily on the markets. Retailers suffered as a result of the decreased foot traffic brought on by the transport strikes. But analysts at Bernstein said Friday that Casino's drop should not be totally attributed to the strikes, writing that they "struggle to understand" how protests alone would cause such a drastic drop.

From "French Retailers Blame Wave of Strikes for Expected Hit to Earnings"
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The International Monetary Fund (IMF) has become less optimistic about global growth, according to CNBC (20 January, Amaro), warning that the outlook remains sluggish and there are no clear signs of a turning point. The IMF forecast in October a global growth rate of 3 percent for 2019 and of 3.4 percent for 2020. The IMF has now revised down those forecasts to 2.9 percent and 3.3 percent, respectively. The downward revision was mostly due to lower growth in India. For 2021, the IMF has forecast a growth rate of 3.4 percent. “The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels,” Gita Gopinath, the IMF’s chief economist, said in a written statement. IMF noted that some of the biggest economic uncertainties, highlighted in October, have dissipated. “Some risks have partially receded with the announcement of a US-China Phase I trade deal and lower likelihood of a no-deal Brexit,” Gopinath said.

From "IMF Says the Outlook for the Global Economy ‘Remains Sluggish’ as it Cuts Growth Forecasts"
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Tesla Inc. on Monday said there was no unintended acceleration in its vehicles, as it responded to a petition to a US safety regulator to investigate and recall around 500,000 of the company’s electric cars over the alleged defect, reports Reuters (20 January). On Friday, the US National Highway Traffic Safety Administration (NHTSA) said it would review the petition and released a redacted version that said “Tesla vehicles experience unintended acceleration at rates far exceeding other cars on the roads.” The petition urged the agency to recall all Tesla vehicles, the Model S, Model X and Model 3, produced beginning in 2013. It cited media reports of crashes attributed to unintended acceleration and complaints filed with NHTSA. Tesla said the petition was “completely false” and noted was brought forward by a short-seller, Brian Sparks. "Over the past several years, we discussed with NHTSA the majority of the complaints alleged in the petition. In every case we reviewed with them, the data proved the vehicle functioned properly," Tesla said.

From "Tesla Rebuffs US Safety Recall Petition, Says No Unintended Acceleration in Vehicles"
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India is open to hearing wireless carriers’ suggestions to help ease payment of US$13 billion in overdue fees, reports Bloomberg (17 January, Saxena). A government official with knowledge of the matter said the government would be willing to discuss stripping interest from the dues or paying the amount in tranches. An independent panel can examine such requests provided the companies commit to pay some amount immediately, the official said. The government is looking to collect on telecommunication dues to help boost revenue in the midst of an economic slowdown, but debt-ridden companies view the collections as a potentially deadly blow to their business.

From "India Open to Telcos' Plea for Relief on US$13 Billion Dues"
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Top executives at China’s leading energy companies are set for a power shake-up as the nation takes steps to reorganize and revamp its leadership and energy infrastructure, reports Bloomberg (17 January, Cang). The energy sector is under pressure to increase competition and domestic output as China increasingly comes to rely on imports. Beijing this week opened its upstream sector to foreign drillers and last month rolled out plans to spin off the nation’s pipelines into a new firm to allow more companies access to energy infrastructure. There is expected to be a change at the executive level of China National Petroleum Corp. (CNPC), the country's biggest oil firm. People familiar with the situation said Wang Yilin, the current CNPC chairman, is set to retire, with Dai Houliang expected to replace him. In taking the CNPC job, Dai is vacating the top position at Sinopec Group, with that gap expected to be plugged by Zhang Yuzhuo. CNPC is the nation’s largest driller and natural gas importer, and is the parent of PetroChina Co., while Sinopec Group is the world’s largest oil refiner by capacity and parent of China Petroleum & Chemical Corp. China’s dependence on overseas oil has grown from less than 50 percent in 2005 to nearly 75 percent by the end of last year as more than two decades of super-charged growth have made it the world’s biggest importer.

From "China Energy Leaders Set for Shake-up Amid Sector Revamp"
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Oil prices rallied Monday as a rebel group in Libya blocked a significant portion of the North African country’s crude exports, forcing production cuts, the Wall Street Journal (20 January, Hodari, Hirtenstein) reports. Brent crude, the global benchmark for oil, advanced as much at 1.3 percent to US$65.72 a barrel, the highest since mid-December, before giving up some gains and trading up 0.4 percent. The state-run National Oil Corp. said over the weekend that the Libyan National Army, a militia led by renegade general Khalifa Haftar, had shut an export pipeline linked to two key oil fields, which normally pump 400,000 barrels a day. Fresh anxieties about civil unrest affecting Iraqi supply also had an impact on oil markets after the country’s 70,000-barrel-a-day al-Ahdab facility was forced to shut over the weekend. Security guards blocked access to the fields in an attempt to win permanent employment contracts. The latest incident in Libya came a day after several ports were shut by the same militia, cutting production by 700,000 barrels. The country, a key supplier to Europe, usually produces 1.3 million barrels a day, according to officials.

From "Oil Rises on Libyan, Iraqi Supply Disruption"
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UBS Group AG missed key targets for 2019 as investors pulled money late in the year, underscoring the challenge for new wealth management co-head Iqbal Khan as he seeks to turn around its most important business. Bloomberg (21 January, Halftermeyer, Winters) reports that the Swiss bank failed to meet several metrics set during a revamp of its goals just over a year ago, highlighting mounting headwinds for European lenders while US rivals post record profits. UBS saw declines in profit, cost efficiency, and dividend growth, and recorded US$4.7 billion in outflows last quarter. UBS CEO Sergio Ermotti set new goals for the bank one year ago and brought in Credit Suisse's Iqbal Khan to oversee the overhaul. Khan has cut some jobs, sped up decision making, and allowed more autonomy to regions in an attempt to revive the wealth business.

From "UBS Misses Key Targets in Challenge to Iqbal Khan Overhaul"
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Google and Alphabet CEO Sundar Pichai has called for new regulations in the world of artificial intelligence (AI), highlighting the dangers posed by technology like facial recognition and deepfakes, while stressing that any legislation must balance “potential harms ... with social opportunities,” reports The Verge (20 January, Vincent). “[T]here is no question in my mind that artificial intelligence needs to be regulated. It is too important not to,” says Pichai. “The only question is how to approach it.” Pichai says that for some products like self-driving cars, “appropriate new rules” should be introduced. But in other areas, like health care, existing frameworks can be extended to cover AI-assisted products. The Alphabet CEO, who heads perhaps the most prominent AI company in the world, also stresses that “international alignment will be critical to making global standards work,” highlighting a potential area of difficulty for tech companies when it comes to AI regulation.

From "Alphabet CEO Sundar Pichai Says There Is ‘No Question’ That AI Needs to be Regulated"
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The UK Information Commissioner's Office (ICO) is preparing for a battle with the country's online advertising industry after announcing that it will start investigating individual companies suspected to be flouting European data protection laws, reports the Financial Times (17 January, Murgia). The ICO said in June that it had reason to believe there was widespread disregard for the General Data Protection Regulation (GDPR) among online advertising companies, and gave the industry until the end of the year to straighten out. The regulator said Friday that in spite of the six-month transition period, deep-rooted disregard for the GDPR remained prevalent. Simon McDougall, the ICO executive director of technology and innovation, said it was time to take "formal regulatory action" against companies that "appear to have their heads firmly in the sand." The warning came as the online advertising industry faces increasing scrutiny around the world.

From "UK Regulator Braced to Do Battle with Adtech Industry"
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The Supreme Court of Canada has unanimously rejected British Columbia’s move to regulate the flow of heavy oil across its borders, reports the Financial Post (17 January, Morgan), resolving one of the last challenges to the Trans Mountain pipeline project. After all-day hearings Thursday, Supreme Court justices dismissed British Columbia's appeal of a lower court decision, which found that interprovincial trade is federal jurisdiction and the flow of commodities such as heavy oil and bitumen should be overseen by federal regulators. Chief Justice of Canada Richard Wagner said from the bench that the decision was unanimous. The British Columbia Court of Appeals said in March that the province could not block the Trans Mountain project because it was not just a British Columbia initiative. Although construction on the pipeline is now underway, there remain other barriers to its completion, including a legal challenge by Indigenous communities affected by the construction.

From "Supreme Court of Canada Dismisses BC Case Against Trans Mountain Pipeline"
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Monday marked the first hearing about a possible extradition for Huawei executive Meng Wanzhou, reports the Wall Street Journal (21 January, McNish), with Meng's attorneys arguing she should not be extradited to the United States because the sanctions against Iran she is accused of violating are not enforced in Canada. In a crowded Vancouver courtroom, Meng's attorneys pointed out that "it is no crime in Canada" to do business with Iran, and said that as a "sovereign nation," Canada should not bow to US pressure by extraditing Meng. Canadian courts typically don’t approve extradition requests unless the accused is alleged to have engaged in conduct that is also illegal in Canada. Meng was arrested at Vancouver's airport in late 2018 at the request of the United States. US officials have alleged that Meng was part of a Huawei conspiracy to defraud banks by misrepresenting its ties to Skycom Tech, which did business in Iran in violation of US sanctions. Lawyers for Canada’s Justice Department have argued in favor of the US extradition request, citing US allegations that she misled some the Chinese company’s banks, including HSBC, about its business ties in Iran. The hearing, expected to be the first of many legal challenges relating to Meng's status, was conducted in a high-security courtroom.

From "Huawei Executive's Extradition Hearing in Canada Begins"
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Microsoft has announced that it plans to be carbon negative by 2030, promising to eventually offset all the carbon emissions it has made since it was founded in 1975. The software company, which is worth US$1.2 trillion, also pledged to launch a US$1 billion innovation fund to tackle the climate crisis with new carbon reduction, removal, and storage technology. Microsoft President Brad Smith said in a blog post that the company essentially had a duty to step up. "Those of us who can afford to move faster and go further should do so," Smith wrote. Over the next decade, Microsoft plans to halve emissions from its entire business and supply chain, reports the Financial Times (16 January, Hodgson, Thornhill). By 2050, Microsoft hopes to have offset all of its emissions since 1975. Microsoft included in its pledge emissions ranging from employee travel to building materials and more. A number of tech companies have in recent months promised to become more environmentally friendly.

From "Microsoft Pledges to Be 'Carbon Negative' by 2030"
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Roughly seven years after Beijing launched a high-profile transcontinental infrastructure program aimed at building goodwill abroad and boosting economic cooperation with the rest of the world, some foreign companies say they are being left out of those projects. China's Belt and Road initiative is a trillion-dollar attempt to show the world that Beijing "is open for business," but the European Union Chamber of Commerce in China said many foreign firms were kept from the project at an arm's length. The Wall Street Journal (16 January, Wernau) reports that China's initial description of the project earned it comparisons to the Marshall Plan, but the Belt and Road effort has since earned criticism for a lack of transparency. President Xi Jinping has responded in part by recalibrating his signature program, pledging more transparency and financial sustainability. But according to the European Chamber, many of the projects tied to the Belt and Road effort have been propped up by Chinese subsidies. A Chinese Foreign Ministry spokesman dismissed the claims as biased.

From "China Touts Its Belt-and-Road Effort as Collaborative, but Foreign Companies Feel Left Out"
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A trade pact opening up China’s insurance sector to US firms has caused confusion among lawyers in the Asian nation. China pledged to remove the foreign-equity cap for the life, pension and health-coverage sectors no later than 1 April, according to the text of a broad trade agreement announced Wednesday. However, lawyers in China say they thought the limit had already been lifted on 1 January. The confusion stems from life insurance in China being colloquially used to cover a host of areas including health and disability, distinct only from non-life coverage of things such as property and automobiles. Local companies offer specialized cover for life, health, and pension through separate units. China has said it lifted foreign ownership restrictions on “life insurers” at the beginning of the year, which was understood by many to indicate it was removing limits for all three sectors. It's unclear why health insurance and pensions were introduced separately in the trade deal, according to lawyers who spoke with Bloomberg (16 January).

From "US-China Deal Text Creates Confusion on Insurance Opening"
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The US Senate overwhelmingly approved a new North American trade agreement Thursday that rewrites the rules of trade with Canada and Mexico, reports the Associated Press (16 January, Freking). The trade agreement passed the Senate 89-10 and now goes to US President Donald Trump for his signature. The new agreement is set to replace the North American Free Trade Agreement (NAFTA), which broke down barriers to trade and triggered a surge in trade. But Trump and other critics blamed that pact for encouraging US companies to move their manufacturing plants south of the border to take advantage of low-wage Mexican laborers. Mexico has already approved the agreement. Canada is expected to do so in coming months, with Prime Minister Justin Trudeau’s government long insisting it would wait for US approval before proceeding. The Senate's approval of the new agreement came just one day after Trump signed a new trade agreement with China, easing trade tensions between the economic powers.

From "Senate Passes US-Canada-Mexico Trade Deal"
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Representatives of two top business groups warned Mexican President Andres Manuel Lopez Obrador’s government to stop issuing messages that hinder investment, pointing out that it is becoming harder for foreign companies to put their money in Mexico, according to Bloomberg (16 January, Barrera Diaz, Navarro). In a rare critique of the current administration, Carlos Salazar, head of one of the largest Mexican business groups, CCE, said at an event that companies need a message of certainty from the Lopez Obrador administration to move away from conflicts. Speaking at the same event, Claudia Janez, the head of a group representing global businesses, claimed that government interference in investment is the main cause of economic stagnation in Mexico. Janez added that constant changes from Lopez Obrador's government directly led to the Mexican GDP remaining stagnant in 2019. In recent months, Lopez Obrador has been trying to win over private sector skeptics, but hasn’t delivered what they want, which is mainly a return to business-friendly policies. Janez also said that security issues in Mexico were driving foreign companies away, and advised Lopez Obrador to address the security issues promptly in order to retain companies.

From "Big Companies to Mexico’s President: Stop Changing Rules"
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Indiana Resources Ltd. said in a statement that it has notified the Tanzanian government of its intentions to sue for alleged breach of contract after the East African nation amended its mining law, reports Bloomberg (16 January, Karuri). Indiana, which has a majority shareholding in Ntaka Nickel Holdings Ltd., delivered notices to Tanzanian authorities over the amendments that effectively canceled retention licenses issued prior to January 2018. Indiana said that when Tanzania invited joint-development tenders for tenements including those previously covered by the retention license, it excluded a requirement for the successful bidder to compensate previous holders for exploration costs incurred. Last week, Winshear Gold Corp. delivered similar notices over four retention licenses for its SMP Gold project, according to a separate statement.

From "Mining Companies Threaten Action Against Tanzania Over New Law"
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Germany is set to become the first country to drop both nuclear and coal power under a landmark agreement to compensate workers, companies, and regional governments as it switches off brown coal-fired plants by 2038, reports Reuters (16 January, Nienaber, Hansen). Germany's government reached a €40 billion deal with the premiers of Germany’s coal-mining regions on Thursday. The coal regions of North-Rhine Westphalia, once the heartland of the German economy, have lagged in recent times alongside other traditional heavy industries, while the coal regions in the eastern side of the country never totally recovered from four decades of Communist rule. Germany's departure from brown coal is part of its campaign to cut greenhouse gas emissions to a certain level by 2030. Chancellor Angela Merkel's government was initially reluctant to latch onto ambitious emissions goals, but a combination of a surging Green Party in Germany, a series of unusually hot summers, and the high-profile Fridays for the Future movement forced Berlin to introduce a major new climate package last year.

From "Germany Adds Brown Coal to Energy Exit Under Landmark Deal"
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California is mulling higher taxes on some of the country's largest companies, with tax increases set to be bigger for companies with bigger gaps between employees and top-paid executives, reports CBS News (16 January). The bill by Democratic state Sen. Nancy Skinner passed out of its first committee hearing on Wednesday, keeping it alive ahead of a 31 January deadline to pass the Senate. State officials have said the bill, if passed, could bring in an extra US$4.1 billion to the state. Proponents have said those funds could be put towards improving public assistance to the state's lowest-paid workers. The proposal would only apply to companies that post at least US$10 million of taxable income from business conducted in California. There are roughly 2,000 such companies nationwide, including the Walt Disney Co. The bill has gained support from Disney heiress Abigail Disney, who has previously called on the company to pay its workers more. Disney CEO Bob Iger made US$65 million in 2018, more than 1,400 times the median pay of a Disney employee. Many business groups in California have opposed the bill, saying it would turn companies away from the state.

From "California Bill Targets Companies with Highly Paid Executives"
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