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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Widespread untracked fishing is hindering global efforts to protect depleted fish stocks and marine environments, according to a study that maps undisclosed activities at sea for the first time.About 75 per cent of the world’s industrial fishing vessels are not publicly tracked, according to research by conservation organisation Global Fishing Watch (GFW), threatening food security, livelihoods and marine ecosystems.While the footprint of land-based extractive industries such as agriculture is plotted almost down to the last square metre, oceans were “still the wild west”, said David Kroodsma, one of the study’s lead authors and GFW’s director of research and innovation.This discrepancy leaves governments and organisations operating in the dark, hindering efforts to achieve a global commitment made at the 2022 COP15 biodiversity summit to protect at least 30 per cent of land and sea by 2030, he said.GFW’s study, published in the journal Nature on Wednesday, used GPS positions from hundreds of thousands of ocean-going vessels as well as satellite radar imagery and artificial intelligence to track activity in the sea between 2017 and 2021. It found that on average 63,000 vessels were detected at any given time. About half were industrial fishing vessels, three-quarters of which were off-radar, including many around Africa and south Asia. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Of the remainder, including container ships and fuel tankers as well as passenger and supply vessels, a quarter were untracked.Kroodsma said some of these so-called ghost ships lacked automatic identification system (AIS) transponders, which broadcast their location and identity to coastal authorities and other vessels. Others turned off the devices, often because they were engaged in illicit activities such as unregulated or illegal fishing or forced labour, he added.As much as 20 per cent of fishing was potentially unregulated or conducted illegally, he estimated, “but the truth is, we don’t actually know because the data is so poor”.The study also found that the global distribution of industrial fishing differs from the generally understood pattern. According to AIS data, Europe and Asia have similar levels of activity in terms of fishing hours. But with non-broadcasting ships factored in, Asia accounted for 70 per cent of global fishing activity, compared with 12 per cent for Europe. North America and Africa’s total tracked and untracked fishing was 7 per cent of the global total each, while in South America and Australia it was 4 and 2 per cent respectively.Another key finding was that untracked fishing vessels routinely entered marine protected areas, with an average of five operating in the Galápagos Marine Reserve and 20 in the Great Barrier Reef each week.To protect such areas and safeguard fish stocks, governments should mandate that all vessels are publicly trackable, according to campaign group Oceana. “If you’re fishing on the ocean, you’re fishing on a public resource and you should be required to prove that you are doing so legally,” said chief executive Andrew Sharpless.According to UN Food and Agriculture Organization estimates, a third of the world’s fish stocks are overexploited, meaning fish are being caught faster than they can reproduce. Critical marine habitats are also being depleted, with between 30 and 50 per cent lost because of human activity.Fishing activity decreased globally by 12 per cent during the Covid-19 pandemic and has not yet fully recovered, but previous overfishing meant many stocks were nonetheless at their limit, according to GFW. “We are already catching all the fish we can possibly catch,” Kroodsma said.Overfishing represents a risk not only for marine ecosystems but also for the 500mn people around the world who rely on the fishing sector for their livelihoods, he warned. Fish stocks are also crucial for global food security.The oceans face further pressure as other industrial activities in the sea increase, according to the study. The number of container ships, fuel tankers and offshore energy installations rose during the research period, with offshore wind turbines surpassing oil platforms for the first time, excluding infrastructure in Venezuela’s Lake Maracaibo.GFW predicts that as demand for renewable energy grows, the seas will see more development. This could create conflict over space, which would need to be managed, Kroodsma said.“The bigger picture here is that the ocean economy is growing faster than the global economy,” he said, adding that the study would help prevent this happening “entirely unmapped”.Cartography by Steven Bernard More

This article is an on-site version of our Moral Money newsletter. Sign up here to get the newsletter sent straight to your inbox.Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT Happy new year to all our readers. Still stuffed with festive chocolate, we’re gearing up for what looks set to be a hugely busy year for anyone tracking environmental and social issues in business and finance. For much of the past few years, the agenda on this front has been driven by voluntary action from companies. Now, regulation and government policy are starting to kick into gear, moving this story into a pivotal new chapter.Here are five key themes that we think you need to be on the lookout for in 2024. Are there other stories that you think deserve close attention? Let us know at [email protected], or just reply to this email. — Simon Mundy1. A scramble for supply chain disclosuresThis will be the year when companies get serious about assessing environmental and social risks in their supply chains.A number of looming regulations over scope 3 emissions — those linked to a company’s suppliers or the use of its products — have sent companies scrambling to respond.From 2025, larger companies operating in the EU will be required to disclose their scope 3 emissions. California recently announced that large companies operating in the biggest US state economy will need to do the same from 2027. The International Sustainability Standards Board, whose standards are set to be used or referenced by regulators around the world, includes a clear requirement for scope 3 disclosures. Authorities in the US and UK are also considering introducing national scope 3 reporting rules.It’s not just carbon emissions that companies will need to track more closely. Last month, EU officials reached an agreement on the bloc’s new Corporate Sustainability Due Diligence Directive, which requires companies to report on global supply chain risks related to human rights and the environment. The full details of the CSDDD are to be agreed this year.Financial companies have been excluded — for now — from the full scope of the CSDDD’s requirements, after an intense lobbying campaign. Various companies have also been pushing to dilute or kill off scope 3 requirements in California and elsewhere. But the trend towards much more rigorous supply chain disclosure requirements seems clear. (Simon Mundy)2. Carbon pricing set to gather momentumEconomists have been saying for decades that an international carbon pricing regime is vital to tackle climate change — and it was eight years ago that Nobel laureate William Nordhaus offered the “climate club” model, in which countries would agree to apply a minimum carbon price and tax imports from nations that didn’t do so.This year, we’ll see whether a global climate club is finally taking shape. The EU has been the first mover here. Since 2005, it has been selling carbon permits to companies in high-emitting sectors such as steelmaking and cement production. In October, it began the first stage of introducing a “carbon border adjustment mechanism”, under which the EU will charge a corresponding levy on imports of those products from countries without an equivalent carbon price.Nordhaus hypothesised that once the climate club was up and running, countries would be incentivised to join by introducing their own carbon pricing systems. That dynamic is starting to play out. Last year, Turkey announced plans to create an emissions trading scheme for heavy industry, similar to the one operating in the EU. The UK, which already has a trading scheme, last month announced plans for a CBAM of its own.The EU’s move has also sparked discussions among US politicians on how to respond. While some have urged retaliatory trade measures against imports from the EU, others — such as former Republican congressman Francis Rooney — argue that a new national carbon fee and CBAM would help both US industry and the federal budget. The bipartisan “Prove It” bill, which will be discussed by legislators this year, would lay the groundwork for such a policy.But the EU’s policy has sparked strong pushback in developing nations such as India, which have relatively carbon-intensive energy systems. Critics say the policy’s impact on these countries will run counter to principles of climate justice.If rich nations’ carbon pricing policies are not accompanied by more ambitious measures on international climate finance, this could become an increasingly serious source of tension. (Simon Mundy)3. ESG backlash evolves into DEI attacks In the US, most state legislatures convene for only a few months of the year, and fresh lawmaking sessions typically begin in January. For the past two years, Republican-led states have attacked environmental, social and governance investing to protect local oil and gas businesses, or simply to spite green-minded Democrats.Some of these ESG attacks are expected to continue. On December 18, Tennessee’s attorney-general sued BlackRock for alleged ESG malfeasance. But there is evidence that Republicans will shift their attacks from environmental “E” concerns to the “S” part of the acronym. This week a Texas law went into effect that bans state universities from maintaining diversity, equity and inclusion (DEI) departments. Among other things, the law halts programmes and activities to promote issues around race, ethnicity or gender identity.It is unclear how powerful the law will be and how it will be enforced. For example, the University of Texas in Dallas renamed its DEI office the “office of campus resources and support”.Other states are making plans for anti-DEI bills. The governor of Utah said on December 20 that he wanted to pass legislation that would stop universities from requiring “diversity statements” as part of the hiring process. Oklahoma’s governor in December issued an order to stop DEI efforts at state agencies.How these DEI attacks will affect companies remains an open question. A handful of asset managers and banks have been boycotted in Republican states owing to ESG allegations. But if these DEI attacks accelerate, companies could soon find themselves in trouble in the “S” category as well as the “E”. (Patrick Temple-West)4. A crunch year for climate financeAt last month’s COP28 climate summit in Dubai, the push for an agreement to move away from fossil fuels dominated the headlines. At this year’s COP29 in Azerbaijan, international climate finance will take centre stage. The burning question here is how to mobilise capital for green investment in the developing world — both to deal with the effects of climate change, and for low-carbon development. There is a colossal amount of work to do. For green energy finance, watch to see what comes from the World Bank and other big multilateral lenders such as the Asian Development Bank, which are working to make more aggressive use of their balance sheets, show a clearer focus on climate-related projects, and do a better job of “crowding in” private-sector investment. Multilateral lenders such as the World Bank and its president Ajay Banga, right, are working show a clearer focus on climate-related projects More

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NEW YORK (Reuters) – Loretta Day was facing a financial emergency.The Delta Air Lines (NYSE:DAL) flight attendant’s daughter was moving apartments and needed quick cash for a deposit – but did not have enough in savings.In the old days, the Atlanta resident might have put it all on credit cards at high interest rates. But this time, Day had an emergency savings plan set up at her workplace by money managers Fidelity Investments.Day transferred $850, her daughter moved into her new apartment – and she immediately started building those emergency savings back up, with $50 from each paycheck, along with some additional matching funds from Delta.“I didn’t have to worry about how I was going to do this,” says Day, who originally started out at the airline as a baggage handler. “When my daughter needed me financially, I was there for her.”The Fidelity initiative, called “Goal Booster,” is part of a wider and growing trend of workplace emergency savings programs – which can be used not only for unexpected expenses like medical bills or car repairs – but potentially for other near-term goals like saving up for a vacation or a down payment on a home.Many of us, left to our own devices, do not have enough savings to cover times of crisis. Almost four in 10 Americans would not be able to come up with $400, according to the Federal Reserve’s Economic Well-Being of U.S. Households report.But when emergency savings are addressed through the workplace – such as through small, regular paycheck deductions, and perhaps boosted with employer contributions – it is more likely that we will be successful.“A few years ago, the idea of offering emergency savings through the workplace was not widespread at all,” says Jason Ewas, a policy manager for the Aspen Institute’s Financial Security Program. “But now there is definitely increased adoption, and momentum is building.”Sometimes these emergency savings programs are tied to a company’s 401(k), so-called ‘in-plan’ accounts, such as that offered by delivery giant UPS. Or sometimes they are ‘out-of-plan’ savings accounts, increasingly offered as part of companies’ employee benefits menus, from providers like SecureSave or Sunny Day Fund.Major employers who have rolled out the Fidelity program include Starbucks (NASDAQ:SBUX), with Whole Foods launching its own soon. Since integrating payroll deductions in September, Fidelity has signed up 10 large employers to roll out that option by the beginning of 2024, with another 20 projected by the end of the year.“We start with a default goal of $1,000, which translates to around $20 a week,” says Emily Kolle, vice president of Fidelity’s Goal Booster program. “Employees can take the number down or take it up, but it’s an easy place to begin, since the idea of saving three to six months’ worth of expenses can seem daunting.”The average account on the platform has about $1,000 in savings, Kolle says.Meanwhile, SecureSave, co-founded by famed personal finance guru Suze Orman, has also made major strides. Currently, it works with 60 employers and 38,000 employees, at organizations like Humana (NYSE:HUM) and the San Antonio Spurs.Around 90% of its companies offer financial incentives to their employees for participating – such as signup bonuses, per-paycheck matches, or milestone awards for reaching certain savings thresholds.WHY IT MAKES SENSEThe advantages of employee emergency savings are multiple: First, that they will not raid their own retirement accounts in times of crisis. As it stands, 2.4% of employees took hardship withdrawals from their 401(k)s in 2022, according to Fidelity – a record high, which could set back your retirement goals by years.Another advantage of having emergency cash on hand is financial and emotional well-being. An employee who is overwhelmed with sudden expenses is stressed-out, distracted, less productive, and more prone to absenteeism – which harms not only the individual and their families, but the company as well.One new factor that could supercharge emergency savings: The federal SECURE 2.0 Act. Beginning this year, it allows for automatic enrollment for in-plan programs (albeit with a cap of $2,500), which makes the process frictionless and could massively boost the number of savers out there. Currently out-of-plan programs are more widely available, since they do not require any link to an employer 401(k).As for Delta’s Loretta Day, she has already been able to replace the money she took out for her daughter, and then some.“I feel proud of myself, because in the event another emergency happens, guess what? I have money,” Day says. More

WASHINGTON (Reuters) – Precisely when the Federal Reserve will start cutting interest rates stands as the big unknown for markets and economists as 2024 kicks off, and fresh details about its pivot in that direction may emerge from Wednesday’s readout of the last policy meeting of 2023. Fed officials at their meeting in mid-December held the policy interest rate steady in the range of 5.25% to 5.5%, but issued projections showing most officials expect it would need to fall over the year by at least three quarters of a percentage point as inflation steadily declined to the Fed’s 2% target.But the year-end projections leave the timing about any initial rate cut in doubt, and Fed Chair Jerome Powell at his press conference following the meeting insisted that was not yet a live topic of discussion. Investors eager to see the Fed move swiftly to bring down borrowing costs now broadly expect a first rate cut in March, market pricing of contracts tied to the Fed policy rate shows. Economists on balance see the Fed holding off until closer to mid-year.Minutes of the Dec. 12-13 meeting, scheduled for release at 2 p.m. EST (1900 GMT), may give insight on just how close officials feel they are to the point where monetary policy needs to be less restrictive in order to keep a hoped-for “soft landing” on track, with inflation continuing to fall without a major blow to the job market.”The directionality for the Fed is clear as falling inflation is pushing it toward a rate cut,” wrote SGH Macro Advisors Chief U.S. Economist Tim Duy, who noted that the combination of slowing inflation and a steady federal funds rate means that monetary policy is in effect becoming more restrictive even as inflation eases and employment growth is expected to slow.Though he said the minutes are “unlikely to directly point” to the March rate cut currently expected by investors, “I suspect they will reveal the Fed becoming increasingly confident that inflation is on a path to price stability.”In fact data issued since the Fed’s meeting, and effectively anticipated by policymakers at their Dec. 12-13 session, took a strong turn in that direction.The headline personal consumption expenditures price index for November fell; excluding volatile food and energy costs the “core” rate of inflation rose less than 1% on an annualized basis. Over the six months from June through November, a time frame Fed officials have pointed to as helpful in shaping their policy debate, core PCE inflation has been slightly below the 2% target – a fact some analysts note may push the Fed towards rate reductions sooner than later.Powell noted at his last press conference that rates would need to fall before inflation returns to the 2% target because otherwise “it’d be too late,” and policy would be more restrictive – and the risks to the job market greater – than necessary.In an analysis of Fed policy scenarios for the year, Deutsche Bank economists said they felt as a baseline the Fed would begin reducing rates in June, but that if inflation data is weaker than expected “a first rate cut as early as March would be reasonable.”Investors in contracts tied to the Fed’s policy rate currently put about an 80% probability on a March cut, according to data from the CME Group’s (NASDAQ:CME) FedWatch tool, with the Fed ultimately cutting the rate 1.5 percentage points by the end of the year – twice what Fed policymakers anticipate.Upcoming jobs and inflation data will shape the eventual outcome, with new job openings data also released Wednesday, a December employment report due Friday, and December consumer inflation data out next week.The Fed next meets on Jan. 30-31. More

One of the biggest economic surprises of 2023 was how quickly inflation faded. A dig into the details offers hints at whether it will last into 2024.Prices climbed rapidly in 2021 and 2022, straining American household budgets and chipping away at President Biden’s approval rating. But inflation cooled in late 2023, a spurt of progress that happened more quickly than economists had expected and that stoked hopes of a gentle economic landing.Now, the question is whether the good news can persist into 2024.As forecasters try to guess what will happen next, many are looking closely at where the recent slowdown has come from. The details suggest that a combination of weaker goods prices — things like apparel and used cars — and moderating costs for services including travel has helped to drive the cooldown, even as rent increases take time to fade.Taken together, the trends suggest that more disinflation could be in store, but they also hint that a few lingering risks loom. Below is a rundown of the big changes to watch.What we’re talking about when we talk about disinflation.What’s happening in America right now is what economists call “disinflation”: When you compare prices today with prices a year ago, the pace of increase has slowed notably. At their peak in the summer of 2022, consumer prices were increasing at a 9.1 percent yearly pace. As of November, it was just 3.1 percent.Still, disinflation does not mean that prices are falling outright. Price levels have generally not reversed the big run-up that happened just after the pandemic. That means things like rent, car repairs and groceries remain more expensive on paper than they were in 2019. (Wages have also been climbing, and have picked up more quickly than prices in recent months.) In short, prices are still climbing, just not as quickly.What inflation rate are officials aiming for?The Federal Reserve, which is responsible for trying to restore price stability, wants to return price increases to a slow and steady pace that is consistent with a sustainable economy over time. Like other central banks around the world, the Fed defines that as a 2 percent annual inflation rate. What caused the 2023 disinflation surprise?Inflation shocked economists in 2021 and 2022 by first shooting up sharply and then remaining elevated. But starting in mid-2023, it began to swing in the opposite direction, falling faster than widely predicted.As of the middle of last year, Fed officials expected a key measure of inflation — the Personal Consumption Expenditures measure — to end the year at 3.2 percent. As of the latest data released in November, it had instead faded to a more modest 2.6 percent. The more timely Consumer Price Index measure has also been coming down swiftly.The surprisingly quick cooldown started as travel prices began to decelerate, said Omair Sharif, founder of Inflation Insights. When it came to airfares in particular, the story was supply.Demand was still strong, but after years of limited capacity, available flights and seats had finally caught up. That combined with cheaper jet fuel to send fares lower. And while other travel-related service prices like hotel room rates jumped rapidly in 2022, they were increasing much more slowly by mid-2023.Travel inflation is returning to normalHotel price increases look much as they did before the pandemic, while airfares have recently fallen.

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Year-over-year percentage change in Consumer Price Index categories
Source: Bureau of Labor StatisticsBy The New York TimesThe next change that lowered inflation came from goods prices. After jumping for two years, prices for products like furniture, apparel and used cars began to climb much more slowly — or even to fall.The amount of disinflation coming from goods was surprising, said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. And, encouragingly, “it was reasonably broad-based.”Used car deflation is backUsed vehicle prices fell in 2023. New car prices have been climbing, but more slowly than in 2022.

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Year-over-year percentage change in Consumer Price Index categories
Source: Bureau of Labor StatisticsBy The New York TimesThe inflation relief came partly from supply improvements. For years, snarled transit routes, expensive shipping fares and a limited supply of workers had limited how many products and services companies could offer. But by late last year, shipping routes were operating normally, pilots and flight crews were in the skies, and car companies were churning out new vehicles.“The supply side is at work,” said Skanda Amarnath, executive director at the worker-focused research group Employ America.What could be the next shoe to drop?In fact, one source of long-awaited disinflation has yet to show up fully: a slowdown in rental inflation.Private-sector data tracking new rents soared early in the pandemic but then slowed sharply. Many economists think that pullback will eventually feed into official inflation data as renters renew their leases or start new ones — but the process is taking time.Housing inflation remains faster than normalRent increases and a measure that approximates the cost of owned housing are both slowing only gradually.

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Year-over-year percentage change in Consumer Price Index categories
Source: Bureau of Labor StatisticsBy The New York Times“We’re likely to see more moderation in rent,” said Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives. Because a bigger rent cooldown remains possible and goods price increases could keep slowing, many economists expect overall consumer price inflation to fall closer to the Fed’s goal by the end of 2024. There is even a risk that it could slip below 2 percent, some think.“It’s a scenario that deserves some discussion,” Ms. Rosner-Warburton said. “I don’t think it’s the most likely scenario, but the risks are more balanced.”What could go wrong?Of course, that does not mean Fed officials and the American economy are entirely out of the woods. Falling gas prices have been helping to pull inflation lower both overall and by feeding into other prices, like airfares. But fuel prices are notoriously fickle. If unrest in gas-producing regions causes energy costs to jump unexpectedly, stamping inflation out will become more difficult.Geopolitics also carry another inflation risk: Attacks against merchant ships in the Red Sea are messing with a key transit route for global commerce, for instance. If such problems last and worsen, they could eventually feed into higher prices for goods.And perhaps the most immediate risk is that the big inflation slowdown toward the end of 2023 could have been overstated. In recent years, end-of-year price figures have been revised up and January inflation data have come in on the warm side, partly because some companies raise prices at the beginning of the new year.“There is a bunch of choppiness coming,” Mr. Sharif said. He said he’ll closely watch a set of inflation recalculations slated for release on Feb. 9, which should give policymakers a clearer view of whether the recent slowdown has been as notable as it looks.But Mr. Sharif said the overall takeaway was that inflation looked poised to continue its moderation.That could help to pave the path for lower interest rates from the Fed, which has projected that it could lower borrowing costs several times in 2024 after raising them to the highest level in more than 22 years in a bid to cool the economy and wrestle inflation under control.“There’s not a lot of upside risk left, in my mind,” Mr. Sharif said. More

The Saudi fund boosted its deal activities from a total $20.7 billion in 2022 to $31.6 billion in 2023, the research said.
Notable overseas investments in 2023, alongside golf and soccer, included Nintendo in Japan and Vale Basic Materials in Brazil. 

Skyline of Riyadh in Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Saudi Arabia’s Public Investment Fund (PIF) was the top spender among global sovereign wealth funds last year, accounting for about a quarter of the $124 billion splashed by state-owned investors, according to a preliminary report by research consultancy Global SWF.
The Saudi fund boosted its deal activities from a total $20.7 billion in 2022 to $31.6 billion in 2023, the research said, even as most other counterparts tapered down their spending. Overall, global sovereign wealth funds deployed 20% fewer funds compared to 2022, despite most major stock markets seeing a rally last year.

“This may signal an overly cautious approach, as there is no shortage of capital to put to work among these institutions,” the report, which tracks activities across the world’s sovereign funds, noted. 
“The clear winner was Saudi’s PIF, which has become a heavy-hitter both at home and overseas,” the analysts wrote. The PIF, controlled by Saudi Crown Prince Mohammed bin Salman, has total estimated assets of $776 billion. The Saudi fund has pursued frequent deals and joint ventures in its pursuit toward Vision 2030 — a plan originally launched back in 2016 which aims to increase economic diversification away from oil. Notable overseas investments in 2023, alongside golf and soccer, included Nintendo in Japan and Vale Basic Materials in Brazil. 

Asides from PIF, four other funds from the GCC (Gulf Corporation Council) made it into the top 10 — Mubadala, the Qatar Investment Authority, ADQ and the Abu Dhabi Investment Authority.
The PIF even surpassed Singapore’s GIC, which had led spending by wealth funds for the past six years. The Singaporean fund slashed its investment activity by 37%, in terms of volume, despite receiving one of its largest inflows from the central bank.
The report also noted the attention given to emerging markets among several sovereign investors. 

“In 2023 we can observe a renewed interest in emerging markets, including Saudi, Türkiye, and the UAE (with the help of domestic SWFs), and India, Brazil, China, and Indonesia,” it stated. 
Global economies will see more sovereign wealth funds coming online in 2024, such as Hong Kong’s HKIC, Philippines’ Maharlika and Pakistan’s PSWF.
“The formation of Dubai’s new SWF, DIF, will send shock waves and will surely attract personnel from other SWFs,” the research said. More