Sustainability

Suez public sector blowback makes for sorry trend

24 Jan 2018

Shares in the French water group fell 16 percent after a profit warning. Utility-like groups with long-term public contracts typically enjoy a low cost of capital. But having governments as clients is no safeguard, as Veolia and Carillion have already shown.

Cold snap chills prospects of U.S. coal subsidies

9 Jan 2018

The federal energy regulator nixed Energy Secretary Rick Perry’s proposal to prop up nuclear and coal power. Instead grid operators will be asked how to improve energy reliability. That’s more logical, especially after bad weather showed no fuel source is immune from disruption.

Capital glut will overwhelm rising disaster losses

21 Dec 2017

Hurricanes and wildfires doubled estimated catastrophe-related insurance claims to $136 bln in 2017. Reinsurers and cat-bond holders have had a bad year. A hotter planet suggests more pain. But a surfeit of investors chasing uncorrelated returns will keep the cash flooding in.

China pulls disappearing debt trick

20 Dec 2017

Beijing talked up better-quality growth and risk management in its latest annual economic preview. But reducing the country’s $30 trln debt load, last year’s “top priority,” was barely mentioned. It’s a worrying sign if China’s leaders can’t kick the country’s credit addiction.

Bank rules wrong way to fill EU green finance gap

13 Dec 2017

The European Commission wants lenders to help plug the 177 bln euro annual funding shortfall for low-carbon projects. Lower bank capital charges for "green loans" is a mistake, though. Fuzzy definitions will lead to loose lending, and capital ratios will become even more opaque.

Exxon climate U-turn deserves wary investor cheers

12 Dec 2017

The $350 bln oil firm is finally planning to comply with shareholder demands – approved months ago - to disclose how global warming will affect its business. That’s welcome. But Exxon’s reputation for fobbing off such concerns means investors need to not just trust, but verify.

Australian waste deal may scrap shareholder value

11 Dec 2017

Trash hauler Cleanaway is buying rival Tox Free for about $625 mln, including debt. The deal is prudently funded with equity, and promises sufficient synergies to cover the premium being paid. Unless more savings can be found, though, the high price implies a rubbish return.

Mastering effluent can make a financial splash

20 Nov 2017

Some 80 pct of global wastewater goes untreated, causing health and other societal problems. That leaves untouched 1 trln gallons of sludge that could be harnessed for energy, fertilizers and reusable water. With a potential fivefold return, investors need not hold their noses.

Tesla takes crowdfunding to 250 mph

17 Nov 2017

Elon Musk’s money-losing $53 bln electric-car maker unveiled a surprise new Roadster model while showing off a battery-powered truck. Pre-orders for the first-edition supercar, available in 2020, may raise $250 mln up front. It’s a reminder of Tesla’s constant thirst for capital.

Norway’s oil exit is a wake-up call for industry

16 Nov 2017

The country’s $1 trln sovereign fund wants to unload oil and gas stocks for diversification. It makes sense given the state’s dependence on fossil fuels, but the world’s biggest equities holder is sending a broader signal: petroleum majors need to prepare for a low-carbon future.

Trump’s coal push loses power as U.S. goes green

14 Nov 2017

An administration plan to subsidize solid fuels has stirred a backlash from industry, which fears distorted power prices. Meanwhile U.S. carbon emissions from coal fell at a record pace in 2015. Environmental and economic forces conspire against the president’s campaign pledge.

Shell and BP stuck incinerating shareholder value

2 Nov 2017

After years adjusting to cheap oil, Shell and BP are beating earnings estimates and throwing off enough cash to cover dividends. BP will soon be buying back shares, too. It’s a start. But even if prices hold up, it will be years before their returns top their cost of capital.

Booming metal markets test mettle of memories

2 Nov 2017

The frenzy over electric cars is helping push copper, nickel and cobalt prices to their highest in years. An expected supply squeeze is also a factor. After frolicking in London this week, global miners get a shot to prove they've learned from cycles past and can use cash wisely.

Dubai demonstrates the distance ahead of Saudi

1 Nov 2017

The UAE’s most populous emirate has become a global financial hub thanks to a diversified economy and tolerance of Western culture. Now Dubai is pushing a green agenda. The kingdom can learn much from its smaller neighbor, including its imperfections, as it tries to catch up.

Tesla could hit second gear with Shanghai factory

22 Oct 2017

Elon Musk may soon be able to build his electric cars in China. That's essential for catching up or keeping pace with rivals in the fast-growing market. It'll also take pressure off production trouble in the United States. A troubling tariff problem, however, is apt to remain.

Pharma firms gloss over hurricanes’ effects

11 Oct 2017

About 10 pct of drugs consumed by Americans are made in Puerto Rico. Companies from AbbVie to Zimmer state problems are manageable. Yet the FDA is warning of possible shortages - and intervening daily to ensure factories have fuel and oxygen to stay open. Earnings may be hit.

Trump “coal first” drive is blowing smoke

10 Oct 2017

His environment agency aims to reverse Obama-era pollution rules, while the energy department wants regulatory changes that favor nuclear and coal power generation. Even if both happen, the closure of a Texas power plant shows the economic and social forces pushing the other way.

China’s oil giants brace for electric car crash

9 Oct 2017

Beijing's move against gasoline means tough times ahead for the country's oil majors. The rapid push into new energy vehicles will curb demand for imported hydrocarbons, but at the expense of state giants like Sinopec and PetroChina. It might also pressure crude prices.

German scrap metal IPO hinges on green alchemy

6 Oct 2017

Befesa, which turns waste steel dust into more expensive zinc, could be valued at up to 1.6 billion euros in a Frankfurt listing. Buyout groups offered less earlier this year. Hope that emerging economies will tighten up environmental rules may justify the rich price.

Ford’s clever electric van plan in China

4 Oct 2017

The U.S. carmaker is changing course in China, insiders told Reuters, as sales slow. New state policies open an opportunity for Ford to build electric commercial vehicles. That could help meet quotas - and electrify Ford SUVs. Much depends on the partner, and battery supply.