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Reactions to EU plan to reduce red tape and assist struggling industries
The European Commission published on Wednesday a three-pronged strategy to revive the European industries that are in trouble. This includes proposals to reduce green reporting requirements for companies, while also supporting clean industrial projects. It also includes a plan to lower energy prices. Industry groups have welcomed plans to encourage investment in Europe. Campaigners and investors have criticized the rescinding of Europe's sustainability standards, which are world-leading. * REACTIONS TO EU OMNIBUS TO CUT SUSTAINABILITY RESEARCH RULES The Institutional Investors Group on Climate Change The European Commission's proposal to roll back the tax will undermine investment and Europe's competitiveness in the long term. Reduced scope of CSRD would ultimately limit investors' access to credible and useful data on transition plans, and companies' ability secure financing for their transition. Investors will be forced to continue relying on estimates and direct engagements with investors, which increases costs. INDUSTRY GROUP BUSINESSEUROPE HEAD MARKUS BEYRER By reducing unnecessary reporting requirements and regulatory burdens the first Omnibus allows companies to contribute more efficiently to the EU sustainability goals while preserving the competitiveness of the EU economy. ALBAN GROSDIDIER, CAMPAIGNER FOR FRIENDS of the Earth The Commission has introduced a massive package of deregulation. It is destroying human rights protections as well as environmental and climatic action." Reactions to the EU Clean Industrial Deal: PAUL VOSS HEAD OF THE INDUSTRY GROUP EUROPEAN ALUMINAUM "While this is just a beginning, it is fair to acknowledge and applaud the Commission's sincere declaration of its political commitment to bringing European industry back to its feet. The hard part is now to sort out the details. DUTCH INDUSTRIAL GROUP VNO - NCW The Commission has set out clear deadlines for lower energy costs, the development and growth of the market for sustainable products and the circular economy. SWISS ENGINEERING GROUP AB "We were looking for three things, namely: to accelerate electrification and to leverage energy efficiency in order to decarbonize. We also wanted more investment incentives. And we are pleased that the European Clean Industrial Deal has committed to addressing these priorities. The Decarbonization Investment Bank represents a positive step in redirecting funds towards electrification and industrial technologies that reduce carbon emissions. AXEL EGGERT DIRECTOR OF EUROPEAN STAIN ASSOCIATION "Immediate action is needed to protect European steelmaking. This includes decisive measures in trade, CBAM, and energy prices. The Commission has identified the correct challenges, but does not provide concrete policy solutions to reverse the trend. JEFFERIES: The EU plan to mobilize 100 billion Euros to support the decarbonisation of industries: It is unclear how much of the EUR100bn pool represents new funding, as opposed to existing funds that have been repurposed. * REACTIONS to the EU AFFORDABLE Energy Plan: Analysts for Energy Aspects: The European Commission will advise member states to reduce taxation levels on electricity and eliminate levies. It is only a recommendation. We do not believe that CID will provide any significant relief for the high price of electricity in the short term. We believe that the biggest impact on the decarbonisation of the European energy sector could be a push for more member states adopting streamlined permit procedures. CHRIS ROSSLOWE SENIOR ANATOMIST AT THINK-TANK MEMBER The proposed measures strike a good compromise between providing short-term relief to consumers and fixing structural problems with Europe's dependence on fossil fuels. Positive to see concrete action that will accelerate the low-cost renewables... "Apart from concerns about gas investment support, this plan offers a viable route to lower energy costs." Reporting by Kate Abnett and Julia Payne; Editing by Ingrid Melander
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Climate finance will be a priority for South Africa's G20 presidency
South Africa will take the G20 presidency in 2018, and President Cyril Ramaphosa has said that efforts to assist developing countries to finance their transition to a low carbon economy would be a priority, even though the United States is reducing its support. The administration of President Donald Trump, whose officials skipped the two Group of 20 meetings held in South Africa last week and this week, has reduced overseas aid programs, raising fears of a possible clean energy funding shortage. Ramaphosa, speaking at the G20 meeting of finance ministers and central banks in Cape Town on Wednesday, said that "significantly more funding" was needed to limit the global temperature increase in accordance with the Paris Agreement. South Africa, despite being the first to sign a deal called the Just Energy Transition Partnership, (JETP), to help it move away from the burning of climate-damaging coke for energy more quickly, has struggled to raise the money needed. JETPs will be launched at the U.N. Climate Conference in 2021. They aim to gather money from government, multilateral lenders, and the private sector for renewable energy projects that benefit local communities. Indonesia and Vietnam have also struck similar deals. The U.S. decision to cut funding for development, as well as similar actions in Europe, where some governments, including the United Kingdom, are redirecting overseas-development cash to defence budgets has been on the minds of the gathering in Cape Town. The major energy companies have also reduced their investment in renewables and refocused on oil and natural gas. The annual global climate finance has increased since 2018, but it has not kept pace with the share that goes to the poorer nations, such as Africa, where officials estimate the continent's contribution at less than 5%. COP30: AMBITIOUS TARGETS Ramaphosa stated that South Africa would push G20 members in Brazil to lead the charge to set ambitious climate targets at the next U.N. Climate Talks later this year. He said: "We will continue to push for more grant and concessionary funding to help support energy transitions in developing economies." He called for increased funding to cushion less-polluting nations from the worst effects of climate change. Ramaphosa stated that South Africa would also seek an agreement on the exploitation of critical minerals, which are essential to the global energy transition. This will support economic growth and reduce carbon emissions. Africa, with 30% of critical mineral reserves in the world but only 3% of energy investments worldwide each year, is looking to use this wealth to fund climate change. Ramaphosa stated that "as mineral extraction accelerates in order to meet the needs of energy transition, countries and communities with these resources should be the ones who benefit most." (Reporting and editing by Karin Strohecker. Simon Jessop, Emelia Sithole Matarise, and Duncan Miriri)
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The potential US copper tariffs are seen to be very costly for the domestic industry
Analysts say that the U.S. Industrial sector is the one most likely to suffer from any potential U.S. copper tariffs. They expect costs to rise significantly as the process of reviving the domestic mining and refining would take a long time. On Tuesday, President Donald Trump launched an investigation into possible new tariffs on imports of copper. He said that they would help rebuild U.S. manufacturing. Analysts said that the U.S. price of the metal, which is used for power, construction, and electric vehicles, has already soared on the U.S. exchange COMEX. A sustained period of high prices could dampen industrial activities, reduce consumption, and force companies into using aluminium. According to the U.S. Geological Survey (USGS), nearly half of America's copper requirements are imported. The copper mine production has dropped 11% in the last decade as miners struggled to expand existing mines or develop new projects. Chile, Canada and Mexico are the largest suppliers. Ole Hansen is the head of commodity strategy for Saxo Bank, a Copenhagen-based bank. He said: "The U.S. will never be able to increase their own production or refining capacities anytime soon. This looks like an own goal." The premium on COMEX prices over the benchmark international copper price on the London Metal Exchange LME rose to $816 per ton from $580 on Tuesday, but this is still lower than a record high of $1,153 on February 13. Only two copper smelters are operating in the United States. Asarco, owned by the industrial conglomerate Grupo México, announced in May of last year that it planned to restart its mothballed U.S. copper smelter. Amy Gower, a Morgan Stanley analyst, wrote in a memo: "But there have been no recent news and there aren’t any other recently abandoned smelters. And constructing a brand new one would require more than two year." She added that "new copper mines will take much longer as many face challenges with permits." The massive Resolution Copper Mine in Arizona, owned by Rio Tinto and BHP, has been put on hold after Native Americans voiced their opposition. (Reporting and editing by Paul Simao; Eric Onstad)
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US Budweiser and Michelob prices are safe for now from tariff impact
Anheuser-Busch InBev's CEO Michel Doukeris stated on Wednesday that tariffs on aluminum should not have an impact on U.S. beer prices like Budweiser or Michelob Ultra by 2025. However, they could do so at a future date. AB InBev is the largest beer producer in the world. It produces both brands as well as Bud Light and Corona. This includes the United States, where can-making operations are located. Doukeris said that the company sources its raw aluminium from around the world, but mostly local U.S. firms. He said that tariffs could increase the price of aluminium AB InBev purchases. The brewer may also be affected by levies on other materials, such as chemicals. Some brewers have warned of the rising costs for their products due to these risks, particularly craft beer producers. Doukeris predicted that the impact of tariffs would be limited in 2020, due to factors such as hedging. However, he stated that it could become even more pronounced if tariffs are fully implemented in 2026. He said the company could use "different levers" to reduce the impact. This includes raising the price of their beers. Walmart currently charges $12.87 for a 12-pack of Budweiser beer cans. Doukeris stated that AB InBev may also offset tariffs by using productivity initiatives or alternative means. It has not yet made a decision about how it will respond.
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Putin hosts Guinea Bissau leader in Russia's efforts to build Africa ties
On Wednesday, President Vladimir Putin met with Guinea-Bissau president Umaro Sissoco Embalo at the Kremlin for talks. This is the latest example of Moscow's efforts to develop economic and security ties with countries in West and Central Africa. State TV reported that Russian metals magnate Oleg Deripaska attended the meeting between the two leaders. Russian and Portuguese media outlets quoted a Guinea Bissau minister saying that Rusal, a Russian aluminium firm, is interested in exploring for bauxite and building a port and railway in the country. Embalo was elected in 2020, and his mandate expires in this year. However, there is disagreement with the opposition about the timing of the election. The opposition has promised to bring the nation to a halt on Thursday over the dispute about when Embalo’s mandate expires. Embalo said that there were two attempts made to topple him. The most recent was in December 2023. After that incident, which involved gunfire and clashes in the capital, he dissolved the opposition-controlled parliament, accusing it of passivity. In recent years, Russia has developed security ties with a number of African countries. It sent thousands of mercenaries in support of military leaders to help them combat insurgents. The agenda of Wednesday's meeting was not known. The assignments for Moscow are a means to earn money through government fees, and also economic opportunities, such as in energy or mining, while at the same time eroding influence of former colonial countries, notably France, in the region. Guinea-Bissau was a Portuguese colony until 1974 when it gained its independence. Reporting by Vladimir Soldatkin in Moscow, Gleb Bryanski at Dakar and Mark Trevelyan editing by Andrew Osborn
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The Russian central bank ties the rouble rally with geopolitics
The Russian central Bank said that Wednesday the rouble’s rally since the beginning of the year is linked in part to the geopolitical factor, but it is too early to assess the impact on the economic. This year, the Russian currency gained 24% against US dollars and 15% against China's Yuan. The gains were mainly due to expectations. Better relations With the United States The regulator stated that the strengthening of the rouble is linked to both the markets' reactions to geopolitical issues and the seasonal decline in demand for foreign currencies from importers. In the minutes of its February 14 rate-setting session, it stated that it was "currently difficult to estimate how sustainable the strengthening in the rouble in recent weeks is and how this will affect the prices." A stronger rouble could help lower the rate of inflation which is the main concern for Russian authorities. The central bank maintained its Key interest rate At its last meeting, it held the rate at 21%, the highest since the early 2000s. The regulator stated that they had considered raising the rate to 22% due to the continued inflationary pressures as well as the overheating economy. According to the baseline scenario, it expects that the annual inflation rate will climb to 10.6% by the first quarter 2025. It said that the Russian economic growth rate may fall to 2.9% by the first quarter 2025, compared to 3.3% in 2024's fourth quarter. Reporting by Elena Fabrichnaya; writing by Gleb Brianski; editing by Mark Trevelyan, Sharon Singleton
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Ukraine announces a mineral deal with the US
Ukraine announced on Wednesday that it had reached a preliminary agreement to transfer revenue from its mineral resources to United States before President Volodymyr Zelenskiy's expected visit to Washington on Friday. The agreement is crucial to Ukrainian efforts to secure strong support from U.S. president Donald Trump, who seeks to end Russia's war against Ukraine quickly. U.S. and Russian talks, which have excluded Kyiv so far, are set to continue Thursday. "The most important thing to me is that we are not in debt." Zelenskiy said that there is no debt of $500 billion, $350 billion, or $100 billion in the agreement because it would be unfair. Trump has framed the deal as repayment for the billions of dollars Kyiv received during the war. Zelenskiy asked for security guarantees as a trade-off for the minerals rights. However, it's unclear if his demands were met. This agreement is part our larger agreements with America. This agreement may be included in future security guarantees... An agreement is still an agreement, but it's important to see the bigger picture," Zelenskiy explained. This deal could be a huge success or pass quietly. The big success will depend on the conversation we have with President Trump. Denis Shmyhal, the Ukrainian Prime Minister, said that Washington would support Kyiv in its efforts to secure security guarantees as part of the finalized deal. However, the Americans made no similar security commitments. Washington and Moscow began bilateral talks while discussions were underway on the mineral deal. The Russian Foreign Minister Sergei Lavrov stated that the talks on Thursday in Istanbul will focus on the resolution of bilateral disputes as part of a larger dialogue both sides consider crucial to ending Ukraine's war. 'VERY BAD DEAL' Trump told reporters Tuesday that Zelenskiy was planning to visit Washington, D.C. on Friday in order to sign "a very big deal". Shmyhal stated that the Ukrainian government would authorize the wording agreed upon later on Wednesday, so that it could be signed. He called it a "preliminary agreement". He said that a representative from the Ukrainian government would sign the preliminary agreement in front of both presidents after the Ukrainian and U.S. presidents had agreed on security assurances. They also agreed on the way to tie the preliminary agreement with security guarantees for our country by the United States. The following was written on a copy of an agreement, dated 25 February: "The Government of United States of America Supports Ukraine's Efforts to Obtain Security Guarantees Needed to Establish a Lasting Peace." Shmyhal, describing the agreement in televised remarks, said Kyiv will contribute 50% of the "proceeds received from future monetisations of all relevant natural resources assets and relevant infrastructure." He said that the proceeds of these sales would be placed in a joint fund controlled by the United States of America and Ukraine. Kyiv must approve any decision regarding the governance of this fund. He added that "already existing deposits, services, licenses, and rents" are not included in the discussion of creating this fund.
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What is in the EU's "Simplification Omnibus" on sustainability rules?
The European Commission proposed Wednesday that environmental and corporate sustainability regulations be loosened for the majority of European businesses, in response to criticisms that EU redtape hinders competition with foreign competitors. Change has been demanded by businesses, Germany and France. The move has angered environmentalists and other EU governments, including Spain. Some investors have also urged Brussels to not weaken green rules. The European Parliament and EU member states could still block any changes. The Commission's proposal is: SUSTAINABILITY RESEARCH Corporate Sustainability Reporting Directive (CSRD), a directive of the EU, requires that companies disclose information on their environmental and social impacts to investors and customers to make it more transparent. The Commission's proposals would: - Only apply the rules to companies with over 1,000 employees, excluding an estimated 80%. The CSRD was designed to cover approximately 50,000 companies that have more than 250 workers. Apply the same exemption for the EU's taxonomy, which defines what investments can be considered as climate-friendly. Only companies with over 1,000 employees would be required to submit a report about their alignment with the taxonomy criteria. - Allow small and medium businesses to refuse to give certain data if a larger company requests it to help the larger company comply with CSRD. CSRD has already been implemented for the largest companies. Some of them have started publishing their first reports as early as 2025. Due Diligence The proposals would also reduce Europe's Corporate Sustainability Due Diligence Directive (CSDDD), that would begin imposing obligations from 2027 on companies to identify and fix issues related to human rights and the environment in their supply chain. The proposal would: - Move the reporting deadline for the initial companies from mid-2027 until mid-2028. - Companies must only apply the rules for their direct suppliers and not to subcontractors or suppliers in their supply chain. Companies will also be required to evaluate their supply chains every five years rather than annually. - Force a company, instead of being required to terminate a contract, to suspend it with a supplier who violates the rules. - Do not change the scope and application of the regulations, which covers more than 6,000 big firms with over 1,000 employees and turnovers exceeding 450 millions euros. CARBON BORDER LEVY In 2026, companies importing steel and cement into the EU, as well as other goods, will be required to pay a carbon border fee on imported emissions. The proposal would: Change rules to exclude 182,000 of the 200,000 currently covered importers, on the basis that they only produce 1% emissions under the scheme. This can be achieved by only imposing CBAM on companies that import goods weighing over 50 metric tonnes per year. All imports of CBAM covered goods above 150 euros are subject to the existing rules. Reduce red tape when claiming a CBAM reduction for goods imported from countries where manufacturers pay a CO2 tax. From 2027, the Commission will publish an annual average carbon price calculation for other countries. This way companies won't need to do it themselves. What's Next? The majority of changes must be agreed upon and approved by the European Parliament, as well as a reinforced majority among EU member states. (Reporting and editing by Richard Lough, Hugh Lawson, and Kate Abnett)
Vanguard's fund board votes are dominated by anti-ESG concerns
The Republican U.S. State Treasurers are withholding their votes from Vanguard's nominees for fund boards, due to concerns that the slate lacks "tone" in sustainability issues. This presents a major political obstacle for the top mutual funds manager who is trying to increase turnout at a rare trustee election scheduled for Wednesday.
The officials are responsible for a tiny fraction of Vanguard’s assets, which total $10.1 trillion. They're unlikely to affect the outcome of the vote that will elect Vanguard CEO Salim RAMJI and the 13 fund trustees.
Their objections to several prominent directors shows the difficult political calculus faced by asset managers who are under attack by Republican politicians, even as they drop priorities that were once considered mainstream.
Vanguard has, for example, rolled back its boardroom diversity guidelines, promised to take a less hands-on role with banks and left a zero-effort.
Vanguard representatives didn't respond to any questions.
Eight state finance officials, led by Missourian Vivek Malak, wrote a letter on February 24 to the Pennsylvania company, which was seen by. They called Vanguard's slate of products "tone deaf" to recent legal and legislative pushback, as well as regulatory pushback, against consideration of environmental and social factors.
Malek, in an interview, gave the example of Sarah Bloom Raskin. She is a director and former Fed official who was unable to be nominated for a high-ranking Federal Reserve position because her climate risk concerns were too great.
Malek also cited David Thomas as a strong advocate for diversity, equity, and inclusion initiatives. Thomas is a director at Vanguard since 2021, and president of Morehouse College in Georgia. Vanguard's proxy says Thomas's "research on diversity management and published works are nationally renowned."
Malek stated that the examples show the board is lacking in ideological balance despite recent changes to the firm's policies. Malek stated that he thought Vanguard's management should be heading in a new direction.
Malek manages an educational savings portfolio of $4.5 billion, with 90% invested at Vanguard. Glenn Hegar of Texas, who has $1.86 billion in Vanguard, as well as Pennsylvania Treasurer Stacy Garrity with $6.2 billion, were also signatories.
Raskin and Thomas didn't immediately respond to our questions.
Jeff DeMaso who edits a Vanguard newsletter said that the criticism shows just how difficult it is for investment managers to talk directly with portfolio companies or the public about ESG issues.
He said, "Right now there's a certain element of trying to determine what the rules are."
Vanguard funds are divided into 35 trusts that are overseen by the exact same trustees. For quorum to be achieved, a trust's net assets must equal a third.
Vanguard still sought participation as of February 19, according to an SEC filing. Vanguard urged clients to vote, saying that "every vote counts". This would allow Vanguard to avoid the extra costs and time of proxy solicitation. (Reporting and editing by Lincoln Feast; Reporting by Ross Kerber)
(source: Reuters)