Aurelia Butler

LONDON (Reuters) – Three competing plans to curb companies from exaggerating their green credentials could lead to more frustration and costs for businesses, especially starting next year.Over $3 trillion has flowed into investments specifically touting their environmental, social and governance (ESG) credentials reported under scores of voluntary disclosures, stoking regulatory concerns about greenwashing.While investors and companies want a single set of mandatory disclosures to aid comparison between firms and keep down reporting costs, three draft sets of disclosure rules are currently out for public consultation from the European Union, the U.S. Securities and Exchange Commission, and a new G20-backed International Sustainability Standards Board (ISSB).Companies will likely apply them in annual reports for 2023 or shortly thereafter, but the speed of rulemaking, differences between the standards, and political aims to break new ground are raising concerns among those tasked with using them.The We Mean Business coalition of 7,000 global companies is calling on the regulators to converge their definitions, terminology and concepts before finalising the rules later this year, and not in the months and years following that.”It’s uncertainty over what will be the outcome of it, and we can see that especially if companies are dual-listed in the United States and EU, they will have an issue,” said Jane Thostrup Jagd, deputy director for net zero finance at We Mean Business.”We will end up in a situation which is potentially even worse than what we have financially,” she added, referring to failed attempts at deeper convergence between accounting rules in the United States and those from a sister body of the ISSB.As it stands, the EU rules are the most comprehensive, covering the full range of ESG risks to a company, as well as its impact on both the environment and society.The ISSB aims to be a global “baseline”, focusing on risks to companies from climate, with some consideration of wider factors, while the SEC rules also look at climate risks to firms. Daniel Klier, chief executive of data company ESG Book, whose clients manage $120 trillion in assets, said the lack of comparability between the three standards would weaken the ability of markets to direct capital to green investments.”If you believe in the capability of a financial market to take information as a signal to allocate capital effectively, getting inconsistent signals just weakens the system.”The second problem is that you frustrate companies because, if you’re an international firm, you need to do slightly different disclosures in different jurisdictions, which goes against the entire notion of easing the reporting burden to allow more information into the public domain.”Mark Spiers, partner at regulatory consultants Bovill, said the different speeds at which the three standards are being written creates challenges for international companies.”There are so many jurisdictional specific regimes and trying to satisfy all of them will be a Herculean task,” Spiers said.”It means firms operating (in) many jurisdictions have to continually adjust their systems. And there is a big question as to whether they will start to converge to a common set of standards.”INTEROPERABLEThe ISSB and EU say their officials and those from the SEC are talking regularly.”The key point here is that we will not get perfect harmonisations,” Ashley Alder, chair of IOSCO, the global forum for securities regulators like the SEC and a driving force behind the ISSB, told a conference this month.”Nevertheless we should not have an outcome where you have three competing major standards. They need to be sufficiently interoperable,” Alder said, adding that coordination should mean investors having meaningful comparisons between companies.ISSB Chair Emmanuel Faber said the board has set up a working group to aid dialogue with China, the EU, Japan, Britain and the United States on disclosures.”Continued engagement by jurisdictions and market participants across the world will be critical,” Faber said.Saskia Slomp, chief executive of EFRAG, the body drafting EU disclosures, said everyone was working towards a common goal.”There is a willingness to cooperate and move all together ahead, but we have to realise that there are different speeds and different topics,” Slomp told a conference last month.”The ISSB has now published general principles and a climate change one. We have to do the whole scope, the environment, social, and governance. It’s a much wider thing,” Slomp said.The SEC has left the door open to recognising international disclosure standards, but the EU has only said it will review compatibility international norms after three years.”These EU standards will build on and will be compatible with global standards,” the EU’s financial services chief Mairead McGuinness said last month.Marie-Laure Delarue, EY’s global vice chair of assurance, said three standards is still an improvement on the scores of private sector sustainability frameworks seen until now. “I do believe that we have less confusion now than before, because before it was only the private sector, and it was voluntary,” Delarue said. More

Finance Minister Choo Kyung-ho told reporters emergency measures could include bond buy-backs, while Bank of Korea Governor Rhee Chang-yong said a big-step rate increase could be considered after reviewing incoming data.”Should there be any excessive movements in the bond market, (the authorities) will undertake measures such as emergency bond buy-backs at an appropriate time,” said Choo, adding the authorities will continue to closely monitor the foreign exchange market in order to prevent any excessive movements.When asked about a possibility of ‘big step’ rate increase, Rhee said “there are three to four weeks left until the next rate decision meeting, so it is a matter to decide after seeing how markets move until then.” The Bank of Korea is not considering holding any emergency policy review meeting for now, Rhee said. More

China is moving to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year, as Xi Jinping’s administration seeks to increase Beijing’s pricing power over the industry.The initiative, led by the China Iron and Steel Association and the planning ministry, involves large state-owned mining and steel groups such as Baowu, China Minmetals Corp and Aluminium Corporation of China, according to people familiar with the effort. China is the world’s biggest consumer of iron ore with its 1bn tonne a year steel industry absorbing about 70 per cent of global production, most of it supplied by Australia. Any move to gain control over prices will probably alarm Canberra given iron ore’s status as the country’s top export.Beijing hopes the new entity can secure lower prices through larger bulk purchases made on companies’ behalf.The project will also seek to boost domestic iron ore output and organise bigger investments in overseas mines.Government officials and policy advisers told the Financial Times that Xi’s administration had grown frustrated by large price swings over recent years in an industry dominated by Australian producers such as Fortescue Metals Group and BHP, which are likely to be highly concerned by the move.When Beijing sought to punish Australia after Canberra called for an international investigation into the origins of the Covid-19 pandemic, Chinese buyers boycotted Australian goods ranging from coal and rock oysters to wine. But they could not find enough alternative sources for iron ore, the key raw material needed to make steel. “The [world’s biggest] iron ore suppliers will have no one else to turn to when it comes to serving the world’s largest market,” said a Beijing-based policy adviser, who asked not to be named. “That would force them to give us a discount.”China could in theory reduce its dependency on Australian iron ore by increasing purchases from big Brazilian producers, such as Vale.

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It is also backing a consortium developing the large Simandou deposit in Guinea, which could produce 200mn tonnes if all of its blocks are mined. The project, however, will require at least $15bn in related infrastructure costs, according to analysts, including a 650km railway across the African nation with 169 bridges and four tunnels that will take years to build. A formal development agreement with the Guinean government is expected soon. Chinese industry executives and officials have been frustrated by the volatility of the benchmark Platts Iron Ore Index, which hit a record high above $230 a tonne a year ago before plunging more than 50 per cent in the second half of 2021 and then rebounding by two-thirds. It is currently trading at $134 a tonne.Sharp price rises, including a doubling in the cost of iron ore in 2020-2021, have reduced Chinese steel mills’ margins to the low single digits over recent years.“We are having trouble planning production because iron ore prices change so quickly,” said an official at Nanjing Iron and Steel, a state-owned producer based in the eastern Jiangsu province. Some analysts, however, are sceptical that Beijing can impose discipline on the hundreds of smaller mills scattered across the country.“Even if a price agreement is secured, smaller mills and traders may go and do deals with iron ore mines on the side,” said Tom Price, an analyst at Liberum, a London-based brokerage. “Then the whole thing breaks down.”

Under the centralised purchasing plan, Chinese steel mills would be told to report their consumption plans for consolidation into a combined figure for negotiation with big overseas suppliers.Yet Chinese demand projections are often wrong because domestic market conditions can shift rapidly. Since April, sentiment has deteriorated rapidly in the world’s second-largest economy because of the impact of rolling lockdowns on big economic centres such as Shanghai that were imposed to enforce Xi’s zero-Covid policy.In such circumstances many mills could be forced to scale back iron ore imports even if doing so violated bulk buying agreements. “We are going to do what’s in our best interests,” said an official at Delong Steel, a small mill in central Hebei province.Additional reporting by Tom Mitchell in Singapore More

GENEVA (Reuters) – The World Trade Organization negotiations on food, fisheries and vaccines stretched into the early hours on Thursday amid growing doubts that tough bargaining could deliver deals in the face of Indian intransigence. During the WTO’s ministerial conference this week, its first major meeting in over four years, the 164-member body is seeking to agree a response to the COVID-19 pandemic, a reduction of fishing subsidies, food security pledges and the launch of internal reform in a package of deals badly needed to prove the body’s relevance.”There’s not a single outcome yet,” said a source involved with the talks that are ongoing in the ‘Green Room’ of the WTO’s Geneva headquarters. Pakistan Commerce Minister Syed Naveed Qamar earlier told Reuters he thought the WTO was heading towards a “no-result ministerial”.A WTO spokesperson was more upbeat, saying there had been significant progress and that it was not far from agreements.WTO Director-General Ngozi Okonjo-Iweala told the more than 100 ministers present that time was running out and that they should “go the extra mile”. The June 12-15 conference has already been extended by an extra day into Thursday. The U.S. trade representative Katherine Tai leaves in the morning, a U.S. official confirmed, adding pressure to strike deals in the coming hours.The WTO takes decisions by consensus, so just one objection can sink a deal. Delegates said India, which has a history of blocking multilateral trade deals, appeared far from ready to compromise. That view was supported by comments Indian Commerce Minister Shri Piyush Goyal made in closed sessions and which New Delhi chose to publish. India and South Africa and other developing countries have sought a waiver of intellectual property rights for vaccines, treatments and diagnostics for over a year, but faced opposition from several developed nations with major pharmaceutical producers.A provisional deal between major parties – India, South Africa, the United States and the European Union – emerged in May, but drew criticism from campaign groups that it fell short of what is needed. Activists staged a “die-in” protest at the WTO building on Wednesday, coughing and pretending to drop dead to the floor to highlight the deaths they say are caused by the absence of a broad intellectual property waiver.Goyal echoed that view. “My own sense is that what we are getting is completely half baked and it will not allow us to make any vaccines,” he said.The WTO has also pushed hard for a global deal to cut fishing subsidies, which would be only the second multilateral agreement since its creation 27 years ago and a demonstration of its relevance in an era of growing trade tensions.Goyal, in comments to delegates, said India was a strong advocate of sustainability, but its fishing industry did not operate huge fleets and relied on small-scale and often poor fishers.The minister said India and similar countries should be granted a 25-year transition period to phase out fishing subsidies, far longer than what most other WTO members have suggested.”It’s not yet clear though that there is a deal to be had…. with the Indians throwing in even more objections to texts,” one diplomat close to the talks said.However, civil society groups said it was rich nations, with inflexibility towards the needs of the developing world, that were responsible for the impasse. More

WASHINGTON (Reuters) -The Federal Reserve on Wednesday approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation that U.S. central bank officials acknowledged may be eroding public trust in their power, and being driven by events seen increasingly out of their hands.The widely expected move raised the target federal funds rate by three-quarters of a percentage point to a range of between 1.5% and 1.75%, still comparatively low by historic standards.But the Fed’s hawkish commitment to controlling inflation has already touched off a broad tightening of credit conditions being felt in U.S. housing and stock markets, and likely to slow demand throughout the economy – the Fed’s intent.Officials also envision steady rate increases through the rest of this year, perhaps including additional 75-basis-point hikes, with a federal funds rate at 3.4% at year’s end. That would be the highest level since January 2008 and enough, Fed projections show, to slow the economy markedly in coming months and lead to a rise in unemployment. “We don’t seek to put people out of work,” Fed Chair Jerome Powell said at a news conference after the end of the Fed’s latest two-day policy meeting, adding that the central bank was “not trying to induce a recession.”Yet the Fed chief’s remarks were among his most sobering yet about the challenge he and his fellow policymakers face in lowering inflation from its current 40-year high, to a level closer to its 2% target, without a sharp slowdown in economic growth or a steep rise in unemployment.”Our objective really is to bring inflation down to 2% while the labor market remains strong … What’s becoming more clear is that many factors that we don’t control are going to play a very significant role in deciding whether that’s possible or not” Powell said, citing the war in Ukraine and global supply concerns.”There is a path for us to get there … It is not getting easier. It is getting more challenging,” he told reporters, noting that the rate hikes announced last month and in March so far had not only failed to slow inflation, but allowed it to continue accelerating to a level that recent data indicates have begun to influence public attitudes in a way that could make the Fed’s job even harder.’EYE-CATCHING’A survey released on Friday showed consumer inflation expectations jumped sharply in June, a result Powell called “quite eye-catching,” and enough to tilt policymakers towards a larger 75-basis-point hike in hopes of making faster progress on the inflation front and retaining public trust that price increases will slow.”This is something we need to take seriously,” Powell said of the change in consumer inflation expectations. “We’re absolutely determined to keep them anchored.”The faster pace of rate hikes outlined by officials on Wednesday more closely aligns monetary policy with the rapid shift that took place this week in financial market views of what it will take to bring price pressures under control.Bond yields fell after the release of Fed projections on Wednesday that showed economic growth slowing to a below-trend rate of 1.7%, and policymakers expecting to cut interest rates in 2024. Stocks on Wall Street ended the day higher. Interest rate futures markets also reflected about an 85% probability that the Fed will raise rates by 75 basis points at its next policy meeting in July. For September’s meeting, however, the greater probability – at more than 50% – was for a 50-basis-point increase. Powell, departing from the firmer guidance he has previously given about future rate increases, made no promises on Wednesday. Given an unexpected jump in a monthly inflation report on Friday and the jump as well in expectations, “75 basis points seemed like the right thing to do at this meeting, and that’s what we did,” he said.But he said rate hikes of that size were not likely to “be common,” and that when Fed policymakers gather in July an increase of either half a percentage point or three-quarters of a point would be “most likely.”NOT A ‘VOLCKER MOMENT’The tightening of monetary policy was accompanied by a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year, and continuing to rise to 4.1% through 2024.While no Fed policymaker projected an outright recession, the range of economic growth forecasts edged toward zero in 2023 – with an index of Fed opinion showing officials almost unanimous in thinking risks were for growth to be slower, and inflation and unemployment higher, than expected.Analysts, many of them critical of Fed projections in March that saw inflation easing with modest rate hikes and no increase in the unemployment rate, said the new outlook was more realistic.”The Fed is willing to let the unemployment rate rise and risk a recession as collateral damage to get inflation back down. This isn’t a Volcker moment for Powell given the magnitude of the hike, but he is like a Mini-Me version of Volcker with this move,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments, referring to former Fed Chair Paul Volcker, whose battle with inflation in the early 1980s involved sharp and unexpected rate increases of as much as four percentage points at a time.Even with the more aggressive interest rate measures taken on Wednesday, policymakers nevertheless see inflation as measured by the personal consumption expenditures price index at 5.2% through this year and slowing only gradually to 2.2% in 2024.Inflation has become the most pressing economic issue for the Fed and begun to shape the political landscape as well, with household sentiment worsening amid rising food and gasoline prices.Kansas City Fed President Esther George was the only policymaker to dissent in Wednesday’s decision, preferring a half-percentage-point rate hike. More