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Goldman's investment bank to increase Black staff hiring, recruitment – Financial Post

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NEW YORK — Goldman Sachs Group Inc’s investment bank formed a new group to increase its recruitment and hiring of Black employees and improve career development and retention among existing Black employees, according to a memo sent on Tuesday that was seen by Reuters.

A Goldman spokeswoman, Nicole Sharp, verified the contents of the memo and said the new group will work on honing and improving diversity targets set in 2019 specifically for the investment bank.

The newly formed Council for Advancement of Racial Equity will also develop better division-wide education and training on avoiding bias and improving management to promote wider racial inclusion in the bank’s leadership.

The investment banking division co-heads Gregg Lemkau and Dan Dees will meet with the group bi-weekly and aim to have “specific recommendations for tangible actions ready by this fall,” according to the memo, signed by Lemkau and Dees.

“Our divisional efforts are focused on increasing the representation of Black talent and training programs around people management and avoiding bias,” the two wrote.

The group was launched in response to the spotlight put on systemic racism in the U.S. after the killing of George Floyd in May.

In 2019, Goldman set a goal that 11% of all new analysts and entry-level associates hired in the U.S. and 9% hired in the U.K. be Black professionals. The bank said it also aimed for 14% to be Latino professionals and half to be women.

It also began requiring that at least two diverse candidates be interviewed for any job opening for more senior positions. Management’s pay decisions would include scrutiny of whether these targets were met, the bank said at the time.

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Ireland sees 'very challenging' 24 months for foreign direct investment – The Guardian

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By Padraic Halpin

DUBLIN (Reuters) – The coronavirus pandemic is likely to significantly reduce global foreign direct investment flows into 2021, creating a “very challenging” 24 months for a key part of Ireland’s economy, the state foreign investment agency said on Wednesday.

IDA Ireland said it had secured 132 investments with the potential to create 9,600 jobs so far this year, down from 140 investments and a record 13,500 potential jobs in the same period last year.

Foreign companies directly account for around one in 10 jobs in Ireland, where large technology groups such as Facebook , Google and Apple have based their European headquarters, benefiting from a low corporate tax rate of 12.5%.

Foreign companies already based in Ireland are for the most part looking resilient but not immune to the impact of the crisis that has left 22% of workers temporarily or permanently unemployed as the economy reopens more gradually than much of Europe, IDA boss Martin Shanahan said.

“A prolonged battle against the virus where sectors remain closed here or elsewhere could change this situation,” Shanahan said.

Shanahan said the pandemic would undoubtedly exert downward pressure on job creation and increase job losses and that if Ireland had the same number of FDI jobs at the end of this year as it did at the end of 2019 “it will be a really strong year.”

The agency, which was unable to host any site visits from April to June for companies looking to invest, expects to see an increase in remote working among existing companies but not a move entirely to such a model. Some larger companies already had 10-20% of staff working from home before the pandemic, Shanahan said.

With competition for FDI increasing, he also warned that other challenges such as Brexit, increased trade tensions, automation of work and new global rules being discussed on how and where big internet companies pay tax “have not gone away.”

(Additional reporting by Conor Humphries; Editing by Alison Williams and Jane Merriman)

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VW's SEAT boosts investment, urges Spain to help with electric shift – Financial Post

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BARCELONA — Volkswagen’s Spanish brand SEAT plans to invest 5 billion euros ($5.6 billion) from 2020-2025 and is committed to making electric cars in Spain with the right government support, it said on Wednesday.

Carmakers are ramping up production of electric vehicles to try to meet tough European emissions regulations, but the hefty costs involved have come just as demand for cars has been hammered by the coronavirus crisis.

SEAT’s planned investments in research and development, equipment and electric cars is higher than the 3.3 billion euros for 2016-2020.

The carmaker is willing to make electric models at its main Martorell plan, outside Barcelona, starting in 2025, but this will depend on a step up in renewable energy and charging infrastructure in Spain, among other factors, SEAT’s interim chairman Carsten Isensee told a news conference.

Isensee said the Spanish government’s recent plan to support the automobile sector was a step in the right direction, but there was also a need to stimulate demand for electric cars.

SEAT reported a 48 million euro loss in the first quarter of 2020 due to the health crisis and Isensee warned the second quarter would be worse.

“We are confident we will recover,” he added, noting production at SEAT’s main plant was currently almost the same as before the pandemic.

SEAT has had a turbulent start to the year after record sales in 2019, when it delivered 574,078 vehicles – 10.9% more than in 2018 and the third year in a row of double-digit growth.

Luca de Meo stepped down as chairman in January to later become Renault’s chief executive.

SEAT also closed its Barcelona factory for around six weeks due to the pandemic and temporarily laid off thousands of workers.

The brand launched its first fully electric vehicle last year and plans to have six electric and plug-in hybrid models by 2021.

($1 = 0.8872 euros) (Reporting by Joan Faus, Editing by Inti Landauro and Mark Potter)

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Big Oil's Investment Risk Is Spiking – OilPrice.com

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Big Oil’s Investment Risk Is Spiking | OilPrice.com

David Messler

Mr. Messler is an oilfield veteran, recently retired from a major service company. During his thirty-eight year career he worked on six-continents in field and…

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    The major integrated oil companies: Shell,(NYSE:RDS.A, RDS.B); ExxonMobil, (NYSE:XOM); BP, (NYSE:BP); Chevron, (NYSE:CVX), and a few others, so named for their vertical stewardship of the hydrocarbon molecule from initial extraction to final refining, have come under increasingly accurate fire from climate change advocates. In the past organizations like Greenpeace and a host of other conservation organizations, have used direct measures to interdict oil company operations. Measures that were flashy, as they drew a lot of attention from the global press, but over the long haul did little to achieve their goals of stopping oil and gas exploration. 

    Source

    The companies themselves have had considerable success in pushing back these operations through the courts. As an example a Scottish court has fined Greenpeace £80K for its boarding of a Transocean rig, enroute to a BP North Sea location, in 2019. A boarding the court held to be in direct violation of an earlier edict prohibiting this type of activity.

    “She said its breaches of the injunction were so serious she would be justified in jailing John Sauven, Greenpeace UK’s executive director, for up to two years or imposing a suspended sentence. He orchestrated the action from the start, knowing he was breaching a court order.”

    Source

    Now these activist organizations are increasingly turning to courts around the world, and with particular focus on U.S. courts, to further their aims. Filings in U.S. courts avail the claimants of the extensive body of American environmental law, and consumer protection legislation. A recent article in Reuters noted that this strategy held out new concerns for the big oils as activists became increasingly shrewd in their approach.

    “Cases now are being fought on arguments such as consumer protections and human rights. This shift has been especially pronounced in the United States, where more than a dozen cases filed by states, cities and other parties are challenging the fossil fuel industry for its role in causing climate change and not informing the public of its harms.”

    Source

    Related: Apple’s “Holy Grail Of Data” Leaves Oil Traders Disappointed

    State and Local governments are also jumping into the fray as costs mount to comply with air and water quality federal mandates. Using tactics that had proved so successful twenty years ago with cigarette manufacturers, the State of Minnesota and the District of Columbia filed suit against ExxonMobil last month. Among the allegations are that the company had misled the public on the adverse environmental impact of its products, and accusing it specifically of engaging in deceptive practices and false advertising. Reuters in an interview with Kate Konapka, Deputy Attorney General for Washington, D.C., noted-

    “As awareness of climate change grew in the general public to the extent that their disinformation campaigns were no longer acceptable, there was a pivot to greenwashing,” 

    Source

    It remains to be seen how this approach will play out for the companies affected as it is early innings and the companies have had some success in pushing back. ExxonMobil in December of last year prevailed in a 4-year court battle with the State of New York, where it had been alleged that the company had failed to disclose what it knew about the effect its products were having on climate change.

    The big funds are decarbonizing their portfolios

    Pressure on the big oil companies also comes from the investment community, as major funds have begun limiting carbon based investing, or engaging in outright divestiture in legacy oil companies. As an example Norway’s $1 trillion dollar national wealth fund, rocked the energy world in 2019 by declaring it would no longer invest in companies primarily in the hydrocarbon energy business. They were followed in early 2020 by Blackrock’s similar decision to decarbonize its lending portfolio. In his annual letter to corporate executives, Larry Fink, CEO of Blackrock, put forth a sustainability rallying cry- “Climate change has become a defining factor in companies’ long-term prospects. Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

    A capital intensive business from the outset, hydrocarbon energy development has always depended on outside capital fund expansion. Those days could be coming to an end if this practice becomes widespread.

    The big oil companies are taking note

    Net Zero 2050 has become a catchphrase in recent times, as big oil companies led by BP have pledged to reduce their net emissions to zero by mid-century. Other major international and national oil companies such as Shell, Total, (NYSE:TOT), Equinor, (EQNR), Eni, (NYSE:E) and others have followed suit with similar pledges. This marks a shift in policy from these organizations from their past stance of not being able to control what became of their products after they were produced and sold. A recent article in Reuters noted this shift-

    “Many oil and gas chiefs remain reluctant to commit to reduce emissions from the use of the oil they extract, arguing that they cannot control whether the cars Ford builds or planes Boeing designs run on oil. Commitments like BP’s move beyond that debate over responsibility for so-called Scope 3 emissions, which are indirect emissions in a company’s value chain including from use of products sold, by signaling a fundamental shift in corporate strategy toward new and cleaner energy businesses”

    Source

    In the case of BP what this means is likely to be a fundamental shift in the products that make up the company’s value chain. A shift that is noteworthy to investors as it signals a fairly abrupt about-face on major investments to achieve the goal of net zero carbon by 2050.

    As a sign that they are intent on taking affirmative steps toward this goal major impairments have been announced in recent months by BP and Shell. In the case of BP specific aspects of its up to $17.5 bn impairment charge to be reported on second quarter earnings haven’t been disclosed as yet, but perhaps their announcement last week of the sale of their petrochemicals business is instructive in that area. BP’s CEO, Bernard Looney noted in a press release-

    “This is another significant step as we steadily work to reinvent bp. Strategically the overlap with the rest of bp is limited and it would take considerable capital for us to grow these businesses. As we work to build a more focused, more integrated bp, we have other opportunities that are more aligned with our future direction. Today’s agreement is another deliberate step in building a bp that can compete and succeed through the energy transition.”

    For its part Shell has been a little more specific with its comparable $22 bn asset write-down for Q2. Approximately $9 bn of that charge will be allocated to the company’s Western Australia LNG business, including their marquee Prelude Floating LNG ship. A bitter pill for a project that only came on line in 2018.

    Source Next to the Prelude FLNG vessel a full-sized LNG tanker appears miniaturized.

    In summary, while fighting these court cases one-by one on their merits companies like Shell and BP seem only to be resigned to, but rather are embracing these decarbonization initiatives. Investors may have cause to worry over the short haul as companies go about the task of “Reinventing” themselves. 

    Stranded Assets

    This brings us to one of the most troubling aspects of these companies for investors. The prospects of key assets carried on the books for billions being written-down (their market value reduced due to circumstances) is jolting. For example both Shell and BP have said that natural gas, a lower carbon intensive energy play than crude oil, will be a central element in their long-term energy mix. Whether that will prove a success remains to be seen as one of the key final forms natural gas often takes is as Liquefied Natural Gas, or LNG. Overbuilding in this space is causing project delays as companies deal with pandemic reduced demand. The unusual step of LNG exporters or importers cancelling LNG cargoes has been on the rise in 2020. This has led to a number of major LNG project cancellations or deferrals have been announced globally, as producers attempt to rein in oversupply.

    Related: The Death Of The $2 Trillion Auto Industry Will Come Sooner Than Expected

    Another example of a shift away from a previously orderly Final Investment Decision- FID, approval process for its GoM projects, Shell announced in April it would defer a decision on its massive Whale prospect. Previously anticipated by the EOY 2020, Shell slashed pre-FID spending and deferred the FID to 2021. With billions already sunk in seismic, leasing, and drilling and appraisal costs, a thumbs down on Whale development would be the very definition of a stranded asset. In that case, hundreds of millions of barrels worth as much as $20 bn in today’s market, would be left untapped.

    What other forms these stranded assets may take, remains to be seen as the companies involved fine tune their product mix strategies going forward.

    Your takeaway

    The “Investability” of these oil giants is being increasingly called into question as they face battles on so many fronts around the world. Be it in U.S. or European courts, they are going to be confronted with thousands of climate change lawsuits with the advantage moving in the claimants direction. A single adverse decision could run into the billions. In spite of there being a clear need for hydrocarbon forms of energy well into the latter part of this century, increasingly the companies that produce it are being forced to alter their business practices to meet non-market, stakeholder demands.

    Whether this will create or destroy value in these companies long term is yet to be determined. In some senses however, the market may have already spoken devaluing shares of Shell and BP by about 50% over the last six months.

    Investors considering initiating new positions in these companies might take pause, as a single adverse court ruling could have long term consequences for the stock’s valuation. As we have noted in this article the environmental adversaries of the legacy oil companies have become increasingly cagey in their plans of attack.

    By David Messler for Oilprice.com 

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