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New Screening Tool Flags 27,000 U.S. Communities for Climate Investment

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A new screening tool that prioritizes 27,000 disadvantaged U.S. communities for billions of dollars in federal climate and energy investments is being criticized for leaving out racial makeup—one of the strongest predictors of environmental burden—as a criterion.

“The experiences of Indigenous, Black, Latinx, Asian-American and Pacific Islander, and People of Color in this nation have been predicated along systemic and institutional racism that permeates every aspect of where we live, where we work, where we go to school, and how we experience our daily lives,” wrote the Strong, Prosperous and Resilient Communities Challenge, an environmental justice initiative.

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“Any tool that seeks to reverse and address injustices and deliver benefits to address environmental harms including to public health must account for these truths.”

Environmental justice was first brought to federal attention in the U.S. by President Bill Clinton in 1994, with an executive order directing agencies to identify and address the disproportionately high and adverse human health or environmental effects of their actions on minority and low-income populations. Federal and state agencies have developed a number of environmental justice mapping tools in the years since [pdf].

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The Climate and Economic Justice Screening Tool (CEJST), announced by the White House Council on Environmental Quality (CEQ), will be used to identify “communities that have faced historic injustices” and ensure “they’re some of the first to see the benefits of climate action,” said CEQ Chair Brenda Mallory. It was developed to address a set of priorities laid out by President Joe Biden at the start of his term.

The CEJST differs from past mapping tools because it’s meant to provide a whole-of government, uniform definition of disadvantaged communities. Through CEJST, census tracts across the country are evaluated based on income, significant pollution exposures, climate risks from flooding and wildfires, lack of indoor plumbing, and lack of access to clean drinking water. Any tract that is above the threshold for three or more indicators is identified as “disadvantaged.”

The Biden administration anticipates using CEQ’s screening tool to advance its Justice40 effort by directing 40% of the funding for climate, clean energy, affordable housing, and other investments to benefit disadvantaged communities, says Bloomberg Law.

Although environmental justice advocates have welcomed the CEJST, they point to some important shortcomings, and the CEQ itself labeled the tool as “version 1.0″ that will be subject to changes and refinements.

“There is more work to do, but this is a positive step in the administration’s work to advance environmental justice for all,” said Richard Moore, co-coordinator of the Los Jardines Institute in Albuquerque, New Mexico, and a co-chair of the White House Environmental Justice Advisory Council.

CEQ also cautioned that not all disadvantaged communities can be easily identified in the map, citing migrant workers—who are geographically dispersed—as an example. The CEJST also fails to centre racial demographics in its evaluation of communities, despite the country’s long history of discrimination and redlining that have directly contributed to many of the environmental justice issues the Justice40 program aims to address.

An earlier analysis by Grist found such a strong correlation between race and factors that disadvantage communities that, even without including racial demographics, a beta version of the screening tool could still effectively direct Justice40 funds to communities of colour

That meant the tool’s criteria “are effectively functioning as proxies for race,” Grist wrote. “Race is one of the most potent predictors of pollution burdens,” and “by prioritizing communities with the greatest pollution burdens, it has automatically prioritized communities of colour, as well.”

Administration officials make this same point, adding that a race-neutral approach can sidestep legal challenges. The latest edition of CEJST also includes a methodology update from the beta version that uses redlining data to account for historic underinvestment.

But the changes don’t address concerns raised by critics earlier this summer, who cautioned that failing to include racial demographics neglects legacies of environmental racism and ignores the many communities that are disproportionately polluted, not because they are poor, but because they are non-white, says E&E News.

“Race is the primary predictor of where polluting facilities are sited,” said Peggy Shepard, executive director of New York-based WE ACT for Environmental Justice and co-chair of WHEJAC. “It doesn’t matter what the income of that community is.”

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Forget ChatGPT — an AI-driven investment fund powered by IBM's Watson supercomputer is quietly beating the market by nearly 100% – Yahoo Canada Finance

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The Watson-powered ETF is beating a total market fund by nearly 100%.PhonlamaiPhoto/Getty Images

  • While the language bot ChatGPT has gone viral, a Watson-powered ETF is making nearly double the returns of the broader market.

  • The AI Powered Equity ETF is up 10.4% in 2023, whereas the Vanguard Total Stock Market Index is up 5.67%.

  • IBM’s Watson supercomputer helps balance the fund’s portfolio holdings.

The popular language bot ChatGPT has shown a humanlike ability to render articles, emails, and even dating-app messages. But if you ask it to generate a portfolio that can beat the market, it spits out boilerplate information and reminds you it doesn’t have access to live stock data.

Yet, the $102 million AI Powered Equity ETF (AIEQ), which launched in 2017, has been quietly fulfilling that request so far this year. Issued by ETF Managers Group in partnership with the fintech firm Equbot, the fund leans on IBM’s Watson supercomputer to balance its portfolio.

That 114-holding portfolio is up 10.4% so far in 2023, while the Vanguard Total Stock Market ETF is up 5% over the same stretch.

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Still, as ETF.com highlighted, the former is actively managed, and thus more expensive than the benchmark fund, cutting into actual returns to investors. The AI-powered ETF charges 0.75%, whereas Vanguard’s costs 0.03%. Both funds include JPMorgan and UnitedHealth Group in their top-10 holdings.

Chris Natividad, the chief investment officer of Equbot, said the Watson-powered fund can look beyond standard market data and cull information from tweets and earnings calls, according to ETF.com.

“We’re focused on investment related data, looking at how these different types of signals impact security practices across different time horizons,” Natividad said, per ETF.com.

“The best days of the fund are still ahead of it,” he added. “And just as you’ll see ChatGPT’s responses change and evolve with time and data, so will our fund.”

Meanwhile, ChatGPT’s parent company, OpenAI, this month secured a $10 billion investment from Microsoft this month, and the technology continues to make waves across sectors.

Online media outlet BuzzFeed announced last week it plans to leverage the technology to create content, educators are warning about the bot’s repercussions in schools, and chipmakers are poised to cash in.

Read the original article on Business Insider

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Pension funds suffer largest investment losses since 2008 financial crisis

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Canadian defined-benefit pension plans collectively suffered their largest losses since the 2008 financial crisis in 2022, recording a median decline in assets of 10.3 per cent despite a partial recovery in the final months of the year, according to a survey from Royal Bank of Canada RY-T.

Pension assets suffered heavy losses in the first two quarters of 2022 before starting to recover in the back half of the year. In the final quarter, pension assets returned 3.8 per cent, as measured by the RBC Investor and Treasury Services All Plan Universe, which serves as a benchmark for performance.

Pension plan investors were battered by unusually volatile markets driven by high inflation and rapidly rising interest rates, as both stocks and bonds returned losses, instead of helping offset each other as has often been the case in past market downturns. And although plans earned positive returns to finish the year, they are facing many of the same pressures in 2023.

“In the next few months, plan sponsors will need to be attentive to risk factors such as the economic impact of the central banks’ actions, ongoing geopolitical tensions and ongoing efforts to contain the COVID virus outbreak in certain emerging markets,” Niki Zaphiratos, managing director for asset owners at RBC I&TS, said in a news release.

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Canadian pension plans’ bond portfolios had median losses of 16.8 per cent in 2022 – the largest annual decline in more than 30 years – and also trailed the benchmark FTSE Canada Bond Index. The losses were driven by the drastic action central banks took to tame inflation by raising interest rates, with longer-duration bonds that are most sensitive to inflation accounting for some of the largest declines.

Yet for pension plans, there was a silver lining to rapid interest-rate increases, which caused future liabilities to fall. As a result, more pension plans finished 2022 in surplus, meaning their assets were greater than their liabilities. And higher yields from fixed-income securities could also give pension plan investment managers more options to reduce risk-taking in their portfolios over the coming year.

Stocks also suffered, rather than acting as a counterweight to falling bond prices. Foreign equities returned 9.7 per cent in the fourth quarter, but closed the year down 11.3 per cent, according to RBC I&TS. And Canadian equities returned 6.3 per cent in the final quarter of the year, bringing their annual loss to a comparatively modest 3.6 per cent. In general, value stocks performed better than higher-risk growth stocks in the quarter.

The last time pension assets declined so sharply was in 2008, when Canadian defined-benefit pension assets posted a median loss of 15.9 per cent.

Defined-benefit pension plans pay fixed benefits for as long as a beneficiary lives based on their contributions and years of service.

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Intel Cuts Pay Across Company to Preserve Cash for Investment

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(Bloomberg) — Intel Corp., struggling with a rapid drop in revenue and earnings, is cutting management pay across the company to cope with a shaky economy and preserve cash for an ambitious turnaround plan.

Chief Executive Officer Pat Gelsinger is taking a 25% cut to his base salary, the chipmaker said Tuesday. His executive leadership team will see their pay packets decreased by 15%. Senior managers will take a 10% reduction, and the compensation for mid-level managers will be cut by 5%.

“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs,” Intel said in a statement. “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy.”

The move follows a gloomy outlook from Intel last week, when the company predicted one of the worst quarters in its more than 50-year history. Stiffer competition and a sharp slowdown in personal-computer demand has wiped out profits and eaten into Intel’s cash reserves. At the same time, Gelsinger wants to invest in the company’s future. He’s two years into a turnaround effort aimed at restoring Intel’s technological leadership in the $580 billion chip industry.

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Gelsinger will keep using cash to reward shareholders, meanwhile. Intel said last week that it remains committed to offering a competitive dividend. Analysts have speculated that the company may lower its payout to cope with the slowdown.

Under Gelsinger’s plan, the company is looking to introduce new production technology at an unprecedented pace. It will also build new plants in Europe and the US and try to win orders from other chipmakers as an outsourced manufacturer. That move will put Intel in direct competition with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., two Asian companies that have passed it in the rankings of chipmakers by size and capabilities.

Intel isn’t the only big company trimming executive pay. Apple Inc., one of the few tech giants to forgo major layoffs, is cutting the pay of CEO Tim Cook by more than 40% to $49 million for 2023. Some high-profile finance firms have made similar moves, with Goldman Sachs Group Inc. CEO David Solomon seeing his 2022 compensation trimmed by about 30% to $25 million.

Intel is taking other steps to rein in expenses. That includes headcount reductions and slower spending on new plants — part of an effort to save $3 billion annually. That figure will swell to much as $10 billion a year by the end of 2025, the company has said.

Intel, which informed staff of the latest cutbacks earlier Tuesday, is also reducing the match it offers to pension contributions. The Santa Clara, California-based company thanked employees for their patience and commitment.

Hourly workers and employees below the seventh tier in the company’s system won’t be affected.

(Updates with spending plans and earnings report starting in fourth paragraph.)

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