Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

A politically hot topic

Written by Laura Sweeting, researcher
Edited by David Gaffney, associate partner
6 July 2021

Good morning,

The climate crisis is practically a standing item on evening TV news bulletins, which may ironically make us more immune to images of melting icecaps or seas swimming with plastic. However, two stories cut through in the past week, each illustrating the ecological crisis and the toll human actions are taking on the planet.  

A shocking video showed a bubbling, molten lava like fire in the Gulf of Mexico, apparently started by a leak from an underwater gas pipeline. A few days earlier, Canada logged record-high temperatures which led to fatalities and the melting of power and rail lines. 

The US president, Joe Biden, was quick to join scientists and global leaders in attributing Canada’s heat wave to the consequences of climate change. The climate crisis has become so deeply politicised that modern political figures have no choice but to comment and engage with climate legislation. 

But is the politicisation of the issue slowing us down? Do layers of bureaucracy and political alliances stagnate progress? The recent video of an ExxonMobil lobbyist claiming that the firm actively cast doubt on climate science and tried to influence Biden’s climate policies would suggest so.  

Released by Greenpeace UK, the footage shows senior ExxonMobil lobbyist Keith McCoy admitting that the American multinational oil and gas company joined shadow groups to undermine climate science and targeted centrist lawmakers to influence policy and political consensus. McCoy described Exxon’s public support of the carbon tax as an “effective advocacy tool” and said attempts were made to influence Biden’s infrastructure plan, which would see corporate taxes raised to fund billions of dollars of investment in renewable energy and electric vehicles.  

Arguably McCoy’s most telling revelation was his assertion that “We were looking out for our investments. We were looking out for our shareholders”. For many companies, involvement in climate legislation is still driven by self-interest and an attempt to balance policy with profitability.  

Royal Dutch Shell’s chief executive, Ben van Beurden, warned yesterday that switching to a greener business model too quickly would leave the oil company in a financial “valley of death”. Van Beurden intends to appeal the Dutch court ruling requiring the oil major to cut emissions faster than planned, but insists he is prepared to take “more risk than our investors traditionally like to see us take” to accelerate the transition to clean energy sources. 

It’s clear that climate is now a permanent part of the political and business agenda. However, achieving profitability and shareholder returns while managing the transition to new business models remains an existential challenge. 

News

The prime minister, Boris Johnson, has outlined the final stage of England’s COVID roadmap, confirming that most rules would be lifted entirely on 19 July. The rules regarding social distancing and mask wearing will be removed and there will no capacity limit on public events. Johnson has said that the easing of restrictions will be reviewed formally on 12 July, in accordance with the latest data.  

Germany has confirmed that the travel ban on tourists from the UK, Portugal, India, Russia and Nepal will be lifted on Wednesday. Non-vaccinated individuals will be required to quarantine for 10 days, however fully vaccinated individuals will be free to travel on entering the country.  

Tropical storm Elba continues to cause devastation across the Caribbean as it heads towards Florida Keys. More than 100,000 people were evacuated in Cuba before the storm hit on Monday, bringing winds of up to 100km per hour.  

Business and economy

The FT reports that UK hospital group Spire Healthcare has accepted an improved £1.4bn bid for the company from Australian operator Ramsay Health Care. Ramsay’s previous approaches were opposed by major Spire shareholders, including Toscafund Asset Management, which said the Australian group undervalued Spire.  opposition from the target’s shareholders Ramsay proposes to combine its 37 UK clinics and hospitals with Spire’s 47 locations, which would make it the largest hospital group in the UK.  

The American global investment company, KKR, is set to expand its operations to take over more UK companies. KKR has announced that a team of five dealmakers will focus solely on buying British companies. The continued effects of the Covid pandemic and Brexit have resulted in depressed valuations for British companies, making the market here extremely attractive to private equity firms. (£) 

Auto manufacturer Vauxhall is expected today to reveal plans to build electric vans at its Ellesmere Port plant in Cheshire, safeguarding more than 1,000 jobs at a facility that was under threat of being scrapped entirely. The news comes as the Society of Motor Manufacturers and Traders reported near record levels of new van sales during the first half of 2021.

Columns of note

Ed Couchman, UK general manager of Snapchat, writes for City AM on social mobility in the technology sector. Couchman argues that social mobility will stem from changing workplace culture in addition to diverse hiring. The UK technology sector has the highest turnover rates of any sector and Couchman suggests this is indicative of a narrow-minded, non-inclusive working culture.  

In The Guardian, Musa Okwonga applauds the England football team for championing inclusion and standing against racism throughout the Euro championships. Okwonga reflects on the unifying power of sport to rally us around collective causes and the compassion which appears to be driving this England squad through the Euros.  

Cartoon source: The Guardian

Markets

What happened yesterday?

Monday saw European stocks close higher for the third consecutive session as business activity continues to expand.  

The FTSE 100 ended the session up 0.58% at 7,164.91 as oil prices continue to rise, and the FTSE 250 was up 1.21% at 23,022.40. The pound gained 0.36% on the euro, trading at €1.16663.  

In company news:

On Monday, Big Four advisory firm EY announced the creation of an independent auditor pay committee. The announcement follows the regulatory reforms which have challenged the UK’s largest accounting firms over the past month. The creation of the independent committee is part of a larger split between EY’s audit and non-audit business which will be complete by 2024.  

Electric hyper car group, Rimac, has bought Bugatti in a joint venture with Porsche. The deal marks the end of a 23-year partnership between Bugatti and Volkswagen Group.  

Following the Financial Conduct Authority’s announcement, which stated it did not authorise digital assets from Binance, Barclays has prohibited UK customers from transferring funds to Binance. Barclay’s decision marks an important development as the global finance community continues to question how to regulate cryptocurrencies.  

What’s happening today?

Finals

Kinovo Plc 

Mercia Asset 

Purplebricks 

Totally 

Interims

Rm 

AGMs

Assura 

Billington 

Brown Group 

Brown Group 

Calculus Vct 

Jz Capital 

Marks & Spencer 

Predator Oil 

UK economic annoucements

(09:30) PMI Construction 

Int. economic announcements

(07:00) Factory Orders (GER) 

(10:00) ZEW Survey (GER) – Current Situation 

(10:00) ZEW Survey (GER) – Economic Sentiment 

(10:00) Retail Sales (EU) 

(10:00) ZEW Survey (EU) – Economic Sentiment 

(14:45) PMI Composite (US) 

(14:45) PMI Services (US) 

(15:00) ISM Prices Paid (US) 

(15:00) ISM Services (US) 

Source: Financial Times

did you know

                                    The first Polish language dictionary (published 1746) included definitions such as: “Horse:                                                                                        Everyone knows what a horse is.”  (source: QI Twitter).

Parliamentary highlights

House of Commons

Oral Questions 

Business, Energy and Industrial Strategy  

Ministerial Statement 

COVID-19 update  

COVID-19 update: easing restrictions in schools  

Ten Minute Rule Motion  

Fire and building safety  

Legislation  

Dissolution and calling of Parliament Bill: second reading  

Adjournment 

COVID-19 vaccines and Nepal 

Westminster Hall 

There are no Westminster Hall debates  

House of Lords 

Oral Questions 

Establishment of the Royal Commission on the Criminal Justice System 

Benefits of implementing a tax strategy that aligns with the UK’s net zero greenhouse gas emissions target 

Applications for relocation to the UK from the 15 Afghan interpreters who have fled to a third country 

EU’s expected reintroduction of processed animal protein into livestock feed from August 

Statement 

COVID-19 update  

Debate  

Conduct Committee report ‘Further amendments to the Code of Conduct 

Legislation  

Skills and Post-16 Education Bill [HL] – committee stage (day 1) 

Grand Committee 

Animal Welfare (Sentience) Bill [HL] – committee stage 

Scottish parliament 

Holyrood is in recess until 30 August 

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