Measure me this

Written by Katie Stanton, Senior Associate

Edited by Sabina Kadic-Mackenzie, Associate Partner

Good morning, To a maths noob like me, measuring something seems like an easy endeavour. Grab yourself an old piece of string and a pencil, and you’re golden. Turns out, once you move beyond the ruler, tape measure, estimating-with-your-strides method, things can get a bit hairy. But, needs must. More companies than ever are turning their attention to the climate emergency, adopting sustainability policies and vast ESG commitments in order to stem their contribution to the growing problem. This is great. It marks a clear shift in sentiment; away from traditional, grab-what-you-can-get capitalism to more stakeholder-centric models. But is the proclaimed impact demonstrable? You see – and sorry to put a cynical puss amongst the pigeons – some companies simply aren’t altruistic do-gooders looking to save the world and grab their slice of peace and love, baby. Some talk the talk, more than they… you get it. I’m talking about “greenwashing”, the practice of making a company appear to be more environmentally friendly than it really is to suit shareholder sentiment. And this is why measuring impact is so important. Let’s take BlackRock. Now, I’m not saying that CEO Larry Fink’s letter decreeing a fundamental reshaping of finance is not a massive step forward for the market-leading investor. It is. The language alone used marks a huge shift for the industry. What I will say, though, is that it fails to account for all the bad stuff. Fink promised, amongst other things, to divest its active funds of some holdings in coal-related businesses. Sounds good, until you learn that its active funds account for around $2 trillion – nothing in comparison to the $5 trillion of passive money that won’t be affected. And with assets increasingly flowing into passive, computer-driven funds, Fink’s pledge seems increasingly paper thin. More recently, oil giant BP announced that it intends to cut its greenhouse gas emissions to net zero by 2050. A positive step, if an over-ambitious one. BP's net emissions total more than 400 million tonnes of carbon dioxide every year, so reaching net zero will take an awful lot of “off-setting”. Moreover, the statement was generally quite vague and, hello, 2050 is impossibly far away. However well-intentioned, companies cannot help but paint over setbacks with glossy green. The key to this issue then is twofold. Stakeholders want honesty and accountability, they want to see a journey, and don’t expect to wake up one day and find that the problem insofar as a company is concerned, has been solved. So, sticking to clear and realistic language free of jargon is imperative. Still, we live in the real world, and honesty isn’t always common policy. What we need is a compulsory, standardised system of measurement to cut through the rhetoric – let’s pick and agree on just a few from the proverbial “alphabet soup” of standards that already exist. With COP26 set to bring increased scrutiny to British shores this November, companies need to start getting this right. And soon.

News

Communities across Britain are facing another day of flooding and travel chaos, following torrential rain brought by Storm Dennis. More than 300 flood warnings are still in place across the UK, including five severe warnings in England, indicating a danger to life. The reality show Love Island will return this evening after being taken off-air for two days following the death of its former presenter Caroline Flack. The ITV2 dating show will feature a tribute to the late presenter, who was found dead on Saturday after taking her own life. France’s foreign minister has warned Britain that the two nations will “rip each other apart” in post-Brexit trade negotiations and warned that the European Union will vigorously defend its interests. Speaking at a conference in Munich on Sunday, Jean-Yves Le Drian argued that Brussels will be a tough negotiator when talks begin next month on a trade deal. (£)

Business and economy

General Motors has said it will retire the iconic Australian car brand Holden as it leaves more markets. The American car giant said it will reduce Holden sales, design and engineering operations in Australia and New Zealand by next year. The head of Softbank’s $100 billion Vision Fund has lined up billions of dollars of outside investment for a new hedge fund-style vehicle. Rajeev Mistra, who oversees the Vision Fund, has been pushing to build a multibillion-dollar fund to pursue complex bets on publicly traded companies, in a stark deviation from the investment arm’s initial purpose: to take stakes in private, technology-focused start-ups. (£) Companies paid out a record $1.43 trillion (£1.10 trillion) in dividends to shareholders around the world last year, 3.5% higher than in 2018. The record-breaking payout from listed companies was driven by strong performances in stock markets in North America and emerging economies.

Columns of note

Polly Vernon depicts in stark detail the complex woman that was Caroline Flack in this morning’s Times. A genuinely emotional read, Vernon notes the proliferation of doubts and insecurities in the years and months leading up to her tragic death on Saturday. (£) Writing in The Guardian, Laura Spinney argues that giving DNA to testing companies is like giving away a valuable asset for free. Companies are beginning to profit from selling our data on to big pharma; perhaps they should be paying us for the privilege. At the very least, let’s start reading the fine print

Source: The Times

Markets

The week ahead

Following Sajid Javid’s abrupt resignation from cabinet last week, all eyes are on his replacement Rishi Sunak to deliver Boris Johnson’s first budget in three weeks’ time. Analysts and politicians in London are recalibrating spending expectations now that Javid – who was seen as something of a brake on Johnson’s expenditure tap – is gone. Iranians will go to the polls in their general election on Friday to elect 290 members of parliament for four years. The vote is widely expected to herald the return of conservatives and heap pressure on beleaguered President Hassan Rouhani. It comes after months of steeply escalating tensions between Iran and the US. With general public disillusion fuelled by the economic hardship, voter turnout is set to be one of the country’s lowest. Walmart reports fourth quarter results this week, and the spotlight will be on the retailer to offer insight into US consumer spending. The company has long coped better than other retailers, fighting off relentless competition from Amazon. Analysts expect like-to-like sales to be up 2.5% on last year, but investments in the e-commerce business are expected to once again put pressure on gross margins. Finally, G20 finance ministers and central bank governors are set meet in Saudi Arabia this weekend to talk about empowerment, safeguarding the planet against the climate emergency and how innovation and technology advancements can be shared between nations. Three human rights groups are boycotting the event.

What's happening today?

Interims Petra Diamonds

Int. Economic Announcements (07:00) Producer Price Index (GER)

Did you know?

Saverland v. Newton (1837) is a British court case in which a man who attempted to kiss a woman without consent had half his nose bitten off. The judge ruled that "when a man kisses a woman against her will, she is fully entitled to bite his nose off, if she so pleases."

Parliamentary highlights

House of Commons State Opening of Parliament Speaker’s Statement Duties and responsibilities of Members Debate on the Address 1st day of debate on the Queen’s Speech Adjournment 75th Anniversary of the Battle of Arnhem – Dan Jarvis House of Lords State Opening of Parliament Motion for Humble Address Scottish Parliament No business scheduled.