THE HOT STORY
Firms must report on climate change by 2022
Publicly listed companies and large asset owners will have to report on how climate change risk impacts on their activities by 2022, the City minister John Glen is set to announce. Speaking at a Green Finance Summit in London, Mr Glen will point out that the UK's financial services sector must be at the heart of the country's efforts to tackle climate change and meet a goal of net zero carbon emissions by 2050. Banks will be urged to play a bigger role to support the UK meeting its target by investing in sustainability and explaining their own exposure to the climate crisis while financial services firms will also be expected to disclose how climate change risk will hit their activities. Regulators welcomed the initiative. The FT notes that, in a joint statement, the BoE's Prudential Regulation Authority, the Financial Conduct Authority, the Financial Reporting Council and the Pensions Regulator described climate change as "a defining issue of our time". According to Nils Pratley in the Guardian, the FRC says it will "provide practical guidance later this year on how companies can best consider and report on climate-related risk and opportunities." Separately, insurer Chubb has joined a raft of other financial institutions, including Lloyds Banking Group, Hannover Re and Allianz Group, in scaling back its exposure to coal. It will not underwrite new risks for companies that generate more than 30% of their revenue from coal.
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THREATS & ATTACKS
New laws needed to protect elections from online interference
The Digital, Culture, Media and Sport Committee has warned that legislation is urgently needed to protect elections from outside interference. The committee says British authorities have failed to respond to the serious dangers posed by the internet, potentially allowing future elections and referendums to be compromised by foreign actors. Chair Damian Collins said: “We know that our electoral laws are not fit for purpose. Political campaigns are fought online, not through the letterbox, and our laws need to be brought up to date with the digital age. We've repeatedly highlighted threats to our electoral system and it's essential that public confidence is restored.” Daniel Dyball, executive director of the Internet Association, which represents some of the world’s biggest tech firms, said the Association supported “balanced, proportionate regulation,” and that it would work with Government “to ensure that the services that the public love and rely on can continue to operate while ensuring harms are tackled effectively.”
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Woodford fund stays shuttered
Neil Woodford’s flagship fund remains locked for investors, it has been confirmed. The extension, announced as the initial 28-day suspension expired, means investors in the Woodford Equity Income fund will have to wait at least another month to withdraw their money. "It remains in the best interests of all investors in the fund to continue the suspension," Link, the regulated manager of the fund, said in a letter to investors posted on its website. The next update on the fund will be before 29 July, the next formal deadline for a review.
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A Brexit storm has already hit and employers are paying
The FT's Pilita Clark considers LinkedIn data indicating a noticeable drop in the UK’s share of EU job searches since the Brexit vote, from 34.3% in Q1 2016 to 24.7% today.
Regulator cracks down on CFDs
The Financial Conduct Authority will introduce new rules restricting how "contracts for difference" (CFDs) are sold, marketed and distributed to retail investors from August. The new restrictions will significantly reduce the amount of leverage traders can take on and will guarantee an investor cannot lose more money than they have in their trading account.
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The stock market has turned into a 24-hour Speakers’ Corner
Today’s chief executives must be in constant conversation - if not direct collaboration - with their shareholders, writes Dennis K Berman, or risk their jobs and their companies.
Factory output at six-year low
Manufacturing output fell to a six-year low last month with the IHS Markit/Cips UK manufacturing purchasing managers' index (PMI) falling from 49.4 in May to 48 in June. The contraction was blamed on the eurozone's industrial slump, the US-China trade war and the after effects of the pre-Brexit stockpiling that took place earlier this year. Manufacturers in the eurozone fared even worse, clocking up a score of 47.6. Thomas Pugh, an economist at Capital Economics, said: “The sector is still suffering from a Brexit hangover. But it also seems unlikely that June's fall can be entirely blamed on Brexit and a weaker global economy should take some of the blame.”
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Deals for first-time landlords at record high
New figures from Moneyfacts reveal that the number of mortgage deals available to first-time landlords has reached a record high. The number of buy-to-let products on offer for landlords seeking to buy their first investment property has more than doubled deals in 2014 from 645 to 1,405 in 2019. Just in the past year, product numbers have increased by 137 and two-year fixed rates now start below 1.5%. “Entering the buy-to-let market has not been without its hurdles, and almost two years since the Prudential Regulation Authority introduced rules expected to tighten lending, the move doesn’t seem to have shaken up lenders attitudes to attract first-time landlords,” said Moneyfacts finance expert Rachel Springall.
Consumer credit growth grinds to five-year slump
Year-on-year unsecured consumer credit growth slowed to a five-year low in May, according to data from the Bank of England, which shows growth rose by 5.6% in the month, down from 5.9% in April to its lowest rate since April 2014. The data also showed net mortgage borrowing by households fell to £3.1bn in May - the smallest increase since April 2017.
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JPMorgan faced with 33% premium to control Chinese asset manager
JPMorgan’s asset management arm will have to pay a 33% premium to take control of its Chinese joint venture, China International Fund Management.
Glass Lewis unimpressed with Stobart incentive scheme
Glass Lewis has urged Stobart Group shareholders to vote against its pay report and to oppose the re-election of John Coombs, a director partly responsible for a controversial incentive scheme. The award scheme for CEO Warwick Brady was not put to shareholders for approval. A Stobart spokesman said Mr Coombs had been "instrumental in not only improving disclosure but has done so in consultation with many shareholders". He added that now "remuneration targets are even tougher than those agreed with the previous management".
The non-financial numbers all corporate boards should know
Corporate governance needs to go beyond accounting and structural issues and examine indicators including data about whistleblowing and staff turnover to better connect with employees, writes the FT's Michael Skapinker.
Worker punished for repeatedly leaving work five minutes early
A city government staffer in Japan has been disciplined for leaving work early on 147 occasions without permission. The employee works at a city sports centre and will have his pay cut by 10% for one month. He left his office five minutes earlier than the 5:15 p.m. shift end time on 147 occasions from January 10th 2018 to February 26th 2019, according to a Kawaguchi city official. The employee said: "I wanted to take the 5:20 p.m. bus."
US regulator is keen on BoE top job
Christopher Giancarlo, a former chairman of the US Commodity Futures Trading Commission, has expressed an interest in becoming governor of the Bank of England. Although he has not publicly declared his interest in the job, sources told the Financial News that he was “considering his prospects.”