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Gas and nuclear industries fight to the end for 'green' EU investment label – TheChronicleHerald.ca

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By Kate Abnett and Simon Jessop

BRUSSELS/LONDON (Reuters) – The gas and nuclear industries have ramped up lobbying to secure last-ditch changes to European rules defining which investments are sustainable, fearing that exclusion from a new “green” list could deprive them of billions of dollars of funding.

The climate section of the EU’s Sustainable Finance Taxonomy is due to be finalised this year and it could prove crucial as nuclear power and most natural gas plants and pipelines were excluded from a provisional list published in March.

By forcing providers of financial products to disclose which investments meet climate criteria from the end of 2021, the new EU green finance rules are designed to channel cash towards projects that support the bloc’s climate goals.

In the four months since the rules were published, gas and nuclear industry representatives held 52 meetings – in person or virtually – with EU officials, according to EU logs analysed by non-profit Reclaim Finance and shared exclusively with Reuters.

Overall, industry representatives have held a total of 310 meetings with EU policymakers since the start of 2018, according to the data based on transparency filings published by July 8.

Nuclear groups in particular have stepped up their lobbying, Of the 36 meetings they’ve held over the past two-and-a-half years, 10 have taken place since March.

Brussels is facing calls to use the rules to guarantee spending from its 750 billion euro ($888 billion) COVID-19 recovery fund goes to green projects. The money starts flowing in 2021, meaning any delay to the rules could thwart this plan.

‘NEED TO BREAK FREE’

Climate campaigners urged the EU not to bow to pressure from the oil and gas industry as the stakes were too high.

“If EU institutions and member states are serious about building a sustainable Europe that confronts the climate emergency, they need to break free from fossil-fuel lobbyists,” said Paul Schreiber, a campaigner at Reclaim Finance.

One of the main gripes of both energy industries is that they were locked out of the group of finance experts that came up with the proposals released in March.

A new EU sustainable finance platform will take over as the European Commission’s advisor on taxonomy next month – and both industries are jostling to be included on the panel.

Rebecca Vaughan, an analyst at InfluenceMap, a non-profit whose lobbying data is used by investors, said the platform was probably the gas industry’s “last shot” at changing the rules.

All four gas and nuclear lobby groups interviewed by Reuters have applied to be part of the sustainable finance platform, along with more than 500 other applicants.

The current expert group – whose 35 members include asset managers, non-governmental organisations, banks and two energy industry representatives – has said gas power plants should only be labeled “sustainable” if they meet strict emissions limits.

Experts say those limits would certainly be breached unless the industry captures the greenhouse gases it produces while “green” hydrogen could play a significant role.

Investments to expand gas pipelines would also not be labeled sustainable, though infrastructure earmarked for the use of hydrogen generated with renewable energy could be.

‘TRANSITIONAL ACTIVITIES’

The International Association of Oil & Gas Producers (IOGP), Eurogas and FuelsEurope lobby groups all told Reuters the sustainable finance rules should acknowledge more incremental cuts in emissions.

“The report was drafted, in a way, like we need to transition tomorrow,” said Kamila Piotrowska, IOGP senior manager for policy strategy. “This is a journey and we need these transitional activities.”

They want the taxonomy to include a list of so-called transitional activities, including gas power plants, which some EU member states are looking to use as they move away from a heavy dependence on more-polluting coal-fired power stations.

Lobby groups, including Eurogas, also want pipelines to be classed as sustainable, if they can be converted to low-carbon gas at some point in future.

“There’s a real danger that that means the existing (gas) plants in Europe could be deemed not sustainable and therefore unable to raise any finance for anything,” said John Cooper director general of refining industry association FuelsEurope.

FuelsEurope and IOGP have also asked the Commission to consider extending the deadline for companies to comply.

Asked whether transitional activities might be included, a European Commission spokeswoman said in an emailed statement to Reuters that it was exploring all the arguments on what should be included, based on the recommendations of its expert group and feedback from the industry.

‘IT’S TOO LATE’

The EU’s expert group says its criteria are science-based and designed to give incentives to bring about the rapid emissions cuts needed to give the world a chance of avoiding catastrophic climate change.

“A lot of people still think the transition is about incremental small steps, and it’s too late for that, unfortunately,” said Helena Vines Fiestas, global head of stewardship and policy at BNP Paribas Asset Management and a member of the expert group.

Nuclear industry groups say the energy deserves a sustainable label, based on its low carbon emissions and existing secure waste disposal sites.

They fear that if nuclear isn’t deemed sustainable, the cost of capital for power plants will rise – a concern for an industry where flagship projects, such as Britain’s Hinkley Point C reactor, are struggling with spiralling costs.

To help get the message across, several nuclear lobby groups enlisted the help of the public, tweeting to encourage responses to an EU consultation in April on the proposed rules – and suggesting what to write.

That helped generate 126 responses to the EU consultation from concerned citizens asking for nuclear power to be termed sustainable – nearly a third of all the responses received, according to InfluenceMap analysis.

The expert finance group was split on how to brand nuclear power and the Commission has now asked its scientific arm to report on the issue next year.

Lobby groups told Reuters they were confident nuclear power would ultimately be considered sustainable, but they want the energy section of the taxonomy delayed until the report is done.

The spokeswoman for the Commission said it was still planning to finish the sustainable finance rules this year, though they could be amended at a later date to accommodate nuclear, depending on the outcome of the scientific report.

(Reporting by Simon Jessop in London and Kate Abnett in Brussels; Editing by David Clarke)

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Hutchins Roundup: Small businesses, foreign investment, and more – Brookings Institution

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Studies in this week’s Hutchins Roundup find nearly 40% of small businesses reported access to capital a major COVID-19 challenge, foreign investment leads to technology spillovers in investors’ countries, and more.

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In an April survey of more than 66,000 small business owners and employees, conducted via Facebook, Georgij Alekseev of NYU’s Stern School and co-authors explore the impact of the COVID-19 shock on operations, employment, and financing. The biggest challenge—reported by nearly 40% of businesses—was access to capital. While 78% of businesses were concerned about their cash flows for the spring, only a quarter could access formal sources of financing, and most relied on informal or personal sources of saving. Access to loan and credit guarantees, alongside salary subsidies and tax deferrals, were the most popular policy proposals among respondents. The authors note pervasive gender disparities in the responses. Older and larger, but also majority-male, businesses were more likely to be open and more optimistic about their survival. Female employers and employees reported greater effects of the pandemic on their work, particularly with regards to balancing caretaking and household responsibilities, and women were more likely to quit their jobs in response to school closures.

Foreign venture capital investment can help otherwise unfunded domestic firms succeed—but when the technologies are in critical areas such as artificial intelligence, fintech, and robotics, foreign investment has the potential to launch the U.S. into economically and militarily detrimental arms races, says Ufuk Akcigit of the University of Chicago and co-authors. Using data from foreign investments in U.S. companies between 1976 and 2015, the authors find that when there is foreign investment in a U.S. company, the investor’s country sees an increase in patent applications in similar technology and in citations of the U.S. start-ups’ patents. These “knowledge flows” are larger in patents subject to government secrecy orders. Moreover, the larger the technology gap between the U.S. and a given country, the more that country invests in the technology. But foreign investment also is associated with more patents generated by the U.S. startup. The authors conclude that, when weighing the merits of foreign investment, the U.S. government should consider both the benefits to U.S. innovation and the potential economic and military consequences of technology spillovers to other countries.

Keith A. Bailey and James R. Spletzer of the Census Bureau use the Longitudinal Employer-Household Dynamics (LEHD) survey data to measure multiple jobholding and find that 7.8% of workers in the U.S. are multiple jobholders and this rate has been trending upward over the past 20 years. The estimate is about 2 percentage points higher than the widely cited Current Population Survey (CPS) measure. The new measure counts individuals as multiple jobholders if, based on unemployment insurance records in the LEHD, they held at least one job consistently over three quarters and held one or more additional jobs within the same period; the CPS relies on a combination of survey responses and    point in time evidence of wages. The authors note that while differences in definitions and reference periods (quarterly vs. monthly) explain the different levels of multiple jobholding, they do not explain the different trends. Moreover, the new measure is strongly cyclical, increasing during expansions and decreasing in contractions; the CPS-based measure is not cyclical.  Using the new data, the authors find women and younger people are more likely to hold multiple jobs. In addition, they find that multiple job holding occurs across income groups and second or third jobs account for 25% or more of multiple jobholders’ incomes.

Federal Debt Held by the Public as a Percentage of GDP

Source: Congressional Budget Office

“I think financial conditions are very accommodative, unless you’re a small business or mid-size business in a person-to-person contact industry. I think we could do more. I think we should continue to look at whether there’s more that can be done there. The challenge on that is, we’re lenders not spenders. If we’re going to do more on, say, Main Street to make that a more accessible program, that’s more of a decision for Treasury and Congress than the Fed, because it’s going to involve taking greater risk of losses. But I do think looking at that will be appropriate,” says Robert Kaplan, President of the Federal Reserve Bank of Dallas.

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Nova Scotia investment advisor not to blame for losses, says lawyer – Wealth Professional

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But Chris Robinson, the defence attorney to Saturley, said that the 37 investors who are suing his client were not blind to the risks of the strategies, reported the Chronicle Herald. Robinson pointed to the fact that the largest loss incurred by a single family among the investors was $8 million, suggesting the plaintiffs are not financially naïve people.

He added that fewer than 10 of the plaintiffs have been with Saturley for less than a decade; over half have been his clients for at least 15 years. Each client, Robinson said, signed an investment policy statement, a discretionary trading agreement, and a margin account agreement when they first started working with Saturley.

“Every single one of those clients had as their goal capital appreciation, income generation,” Robinson told the Herald, adding that they had on average specified their own risk tolerances to be above average. “You cannot achieve the first two goals with a low-risk profile … It just doesn’t work.”

He also said National Bank Independent Network should shoulder the blame for being quick to demand that the investors’ margin accounts be paid up.

In the second week of March when the COVID-19 pandemic sent markets plunging, the plaintiffs’ accounts became under-margined; on March 9, the plaintiffs’ accounts held $22 million in all, and were under-margined by $3 million.

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Entrepreneurship and investing as social good – TechCrunch

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2020 has been a year of social upheaval. Around the world, society is identifying different problems in our culture and pushing for widespread change. While there are notable steps we can all take, from altering exclusionary company policies to signing action-oriented petitions, the VC and investment world has another, often overlooked option: Investing in change-the-world startups.

Increasingly, angel investors and institutional funds have begun allocating a portion of their funds to startups focused on diversity and social good, whether focused on democratized access to healthcare and education, or larger scale issues like climate change.

Initially, shifting funds to empower social good may seem like a hefty feat, however investors can embrace this mindshift in three simple steps: (1) redistributing stagnant investments; (2) leveraging democratized access to change-making startups; and (3) identifying founders tracking toward success.

Allocating more investments to foster change

Most of the world’s money is tied up in stagnant places. Whether invested in real estate, bonds or other traditional vehicles, this capital typically often shows conservative returns to investors — and has negligible impact on society. The intent isn’t malicious.

Most family offices and private wealth managers strive to minimize losses and these sorts of uniformed portfolios are safe. Even the most seasoned investors should incorporate more variety into their portfolios, determining where they can make profitable investments that yield higher returns while advancing societal good. Investors can take small steps to get more confident in expanding their strategies.

To start, reframe your thinking into seeing the potential opportunity rather than the risk. A good way to do this: Look at how high-risk public equities performed over the last five years and compare it to ventures within tech. Investors will see a significant disparity and the opportunity to make different returns.

The idea is not to put an entire profile in a single venture. Rather, an investor should take a portion of their portfolio in a high-risk investment sector, like public equities or fund structures, and put it in a similar risk profile with a better return. Gradually increasing these increments, starting at 15% and slowly scaling up, can help investors to see outsized returns while making a difference in the process.

A world of passion at your fingertips

For startups of all sizes, democratized access to investors will accelerate the use of capital for social good. Until recently, only the world’s wealthiest people had exposure to premium capital, but crowdfunding and accelerator programs have ushered in new opportunities, forging connections that might not have otherwise been possible.

These avenues have opened new doors for investors and startups. Access to developed networks or innovation hubs like Silicon Valley are no longer make-or-breaks for those looking to raise capital. Extended global opportunity for startups also means investors have more options to find promising ventures that align with their values, regardless of their location.

But while crowdfunding and accelerators have made the world more accessible, they come with sizable challenges. Despite making early-stage investment more obtainable, crowdfunding often does not bring the most valuable investors to the table.

Crowdfunding also inundates platforms with poor-quality deal flow, making it more strenuous for investors to connect with fruitful opportunities. Meanwhile, various accelerators and incubation platforms have emerged, which have advanced global connection, but tend to be quite noisy.

To succeed, entrepreneurs need more than capital. Rather, they need strategic support from experienced investors who can help them make decisions and scale in an impactful way. With a world of ideas at their fingertips, investors should take time to sift through their options and find the ideas that move them the most, prioritizing quality deals and looking toward platforms that curate promising connections.

Empowering entrepreneurs poised for success

Now is the right time to invest in startups. People who innovate during the pandemic have triple the hustle of those who build in safer economies. But while the timing is right, it’s equally important that the fit is right. I’m a big believer in investing in potential: Ambition, unwavering tenacity and empathy are desirable qualities that can help bring game-changing ideas to fruition.

If an investor funds a passionate leader with a strong vision and ability to attract talent, then the groundwork is laid to build something meaningful. When considering the change-makers to invest in, ask: Is this the right person to be building this company? Do they have the ability to attract and lead talent? Is the market big enough, and is there a significant enough problem to build a company around?

If the answer isn’t yes to all of these questions, it’s important to gauge if you can see a theoretical exit, or if the company is pre-seed or Series A, if they have the ability to scale to a decent size.

Despite this, investing in startups, no matter how good their intentions, can scare investors. One way to overcome trepidation is to invest in larger-stage startups that seem less risky and then wade into earlier-stage startups at your own pace. Special purpose acquisition companies (SPACs) are also becoming an interesting investment option.

SPACs are corporations formed for the sole purpose of raising investment capital through an IPO. The proceeds are then used to buy one or more existing companies, an option that could decrease anxiety for risk-averse investors looking to expand their comfort zone.

Any strategy an investor chooses to embrace social good is a step in the right direction. Capital is a tangible way to fuel innovation and bring about impactful change.

Democratized access to startups yields more opportunity for investors to find ventures that align with their values while diversifying their profiles can provide tremendous results. And when that return means disrupting the status quo and empowering societal change? Everyone wins.

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