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Grocer to spend $1.3 billion to lower carbon emissions to a net zero

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Dinendra Haria | SOPA Images | Getty Images

One of the U.K.’s biggest grocery chains plans to invest £1 billion ($1.3 billion) across 20 years to reduce its carbon emissions to a net zero by 2040.

In an announcement on Tuesday, Sainsbury’s said the money would focus on cutting carbon emissions, plastic packaging, food waste and water use. At the same time the business will look to increase sustainable practices such as recycling.

In order to lower its carbon emissions, Sainsbury’s said it would boost its renewable energy usage but cut down on overall energy use. The percentage of its fleet using “alternative zero and low carbon fuels” will be upped to 20% by the year 2025, while a greater use of natural refrigerants and “innovative technology” will make fridges more efficient.

To help achieve its aims, Sainsbury’s said it would work with the Carbon Trust – a not-for-profit focused on the transition to a low carbon, sustainable economy – to “assess emissions and set science-based targets for reduction,” with public progress reports issued every six months. More broadly, the company said its targets would align it with the Paris Agreement’s goal to restrict global warming to 1.5 degrees Celsius.

On the plastics front, Sainsbury’s said it would halve its use of plastic packaging by 2025. By the end of this year, it will replace polystyrene packaging and dark colored plastic — which is tough to recycle — with “recyclable alternatives.”

The business said it would recycle a larger amount of its own operational waste and “continue to expand and provide facilities to help customers recycle unwanted clothing, metal cans, glass, paper, batteries and other materials.”

The CEO of Sainsbury’s, Mike Coupe, said the company had “a duty to the communities we serve to continue to reduce the impact our business has on the environment.”

Commenting on Tuesday’s announcement, Mike Childs, head of policy at Friends of the Earth, said it was “encouraging” to see the supermarket “stepping up to the plate on the climate emergency — the rapid transition to a net zero economy is urgently required.”

“Supermarkets have a huge influence on our personal carbon footprints, so the more they can do to embrace and promote greener lifestyles the better for us all,” he added.

Sainsbury’s is the latest U.K. retailer to announce efforts to become more sustainable. Last week Tesco — the U.K.’s biggest grocer — said it would stop selling multipacks of tinned food wrapped in plastic.

Instead, it will sell the tins individually, with customers able to purchase plastic-free multibuy deals instead. This initiative will start being introduced to stores from March, with Tesco claiming it will help remove 67 million pieces of plastic.

Grand ambitions, but big challenges

While the ambition of these aims is laudable, there are undoubted challenges for big businesses looking to reduce their impact on the environment. The sheer scale of these operations means that sweeping changes can take years to come about.

Take energy consumption. Tesco, for example, purchased or generated more than 3 million megawatt hours of renewable energy in 2018/19. In the same period, non-renewable energy consumption amounted to more than 6.1 million megawatt hours. In its sustainability update for 2018, Sainsbury’s said that 17% of its electricity was derived from renewable power purchase agreements or onsite renewables generation.

In another sector, the Inter Ikea Group recently said it would invest 200 million euros to accelerate its transition into what it describes as a “climate positive business.”

The group, which among other things develops and supplies Ikea’s product range, said the money would focus on two areas: investing in schemes “aimed at removing and storing carbon through reforestation and responsible forest management”; and using renewable energy in its supply chain.

Again, there is work to be done if Ikea is to achieve its goals. In its sustainability report for the 2018 fiscal year, Ikea said its climate footprint was estimated to be 26.9 million tons of carbon dioxide equivalent. This is an increase of 2.8% compared to the 2016 fiscal year, a rise Ikea put down to “the growth of the Ikea business.”

In the report, Ikea also noted that “decoupling” its growth from greenhouse gas emissions would “take time,” adding that it expected emissions to “increase for a few years before decreasing.”

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Futures fall after debate as stocks head for first down month since March, Disney declines

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U.S. stock futures declined early Wednesday as a contentious U.S. presidential debate raised more uncertainty around the election. The market headed for its first negative month since March.

Disney added to the negative sentiment after saying it would lay off 28,000 people in its theme parks division. The shares lost more than 2% in premarket trading.

Dow Jones Industrial Average futures lost 200 points, or 0.7%. The move indicated a drop of about 130 points at the open. S&P 500 futures fell 0.6%. Nasdaq 100 futures lost about 0.7%. Futures were off their worst levels of the session.

The S&P 500 is down 4.7% in September, on pace for its first monthly losses since March. The Nasdaq Composite is down 5.9% in September, while the Dow is off by 3.4%.

Traders were hoping that the start of the debate process will lead to a clear winner on Election Day and not a drawn-out electoral process that could hit the market. The vicious first debate did little to ease those concerns.

“It was a long night and there’s a lot that needs to be sorted out,” said Daniel Deming, managing director at KKM Financial. “It became pretty apparent that this thing is not going to be over on Nov. 3 and I think the market is probably not too crazy about that.”

“The short-term volatility pressures probably won’t abate anytime soon after this debate. In a sense, it’s creating even more uncertainty,” Deming said. 

President Donald Trump and Democratic nominee Joe Biden sparred on a number of issues, including their qualifications to manage the U.S. economy, the nomination of Amy Coney Barrett to the Supreme Court as well as the U.S.’ handling of the coronavirus pandemic.

Biden came into the debate with an average lead of 6.1 percentage points in recent polls, according to RealClearPolitics. The former vice president was also the favorite to win the election in betting markets heading into the debate.

“Most people come away from it thinking it was an ugly experience,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “I don’t think it changed peoples’ minds really.”

Many market strategists have cited uncertainty around the election as a key headwind for the market before year-end with each outcome bringing its own risks and benefits. Some investors have raised concerns about a potential Biden win as they fear it could lead to higher corporate taxes and tighter regulations. But at the same time, it could ease concerns about the trade war and lack of stimulus to bolster the economy in the wake of the coronavirus.

Investors are also worried about the potential the Nov. 3 result is too close to call and neither candidate concedes. That uncertainty could particularly weigh on the market.

Trump frequently claims that mail-in balloting leads to voter fraud even though experts have repeatedly said there’s no proof of that ever having been a problem in the United States. Last week the director of the FBI told a Senate committee that there’s no evidence of widespread voter fraud in the United States “whether it’s by mail or otherwise.”

Regardless, on Tuesday night Trump said, “As far as the ballots are concerned, it’s a disaster. This is going to be a fraud like you’ve never seen.”

“I think we’re going to do well because people are really happy with the job we’ve done. But we might not know for months because these ballots are going to be all over” the place,” he added. 

“Questions on election fraud were raised, which will add to concerns about a volatile post-election period if there is a close or uncertain electoral outcome,” wrote Ed Mills of Raymond James in a note entitled “Dumpster Fire Debate.”

Still, positive data regarding a potential coronavirus treatment from Regeneron Pharmaceuticals kept some of the market’s losses in check.  

Regeneron said after the close Tuesday its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients.

“The greatest treatment benefit was in patients who had not mounted their own effective immune response, suggesting that REGN-COV2 could provide a therapeutic substitute for the naturally-occurring immune response,” Regeneron Chief Scientific Officer George D. Yancopoulos said in a statement.

Regeneron shares rose 4% in early trading.

The major averages snapped a three-day winning streak on Tuesday, with the Dow falling more than 100 points, or 0.5%. Those losses came amid concerns over a virus resurgence. New York City Mayor Bill De Blasio said the city’s daily positive rate of coronavirus tests is back above 3% for the first time in months.

“Coronavirus infection rates are rising in Europe and the United States as children return to school,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, wrote in a note. “We expect the United States to continue its modest pace of economic improvement, though virus growth and a softer labor market are threats.”

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First U.S. presidential debate was an ’embarrassment’

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Baidu DuerOS voice assistant, smart devices unit valued at $2.9 billion

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A security personnel stands guard at the opening session of Baidu’s annual AI developers conference Baidu Create 2019 in Beijing, China, July 3, 2019.

Jason Lee | Reuters

GUANGZHOU, China — Chinese internet giant Baidu has raised an undisclosed sum of money for its business division focused on voice assistants and smart devices. 

The new funding for Baidu’s “Smart Living Group” (SLG) values that business at 20 billion yuan or $2.9 billion. CPE, Baidu Capital and IDG Capital participated in the investment round. 

Baidu runs a platform called DuerOS which it calls a conversational artificial intelligence system. DuerOS allows devices to use Baidu’s voice assistant so users can communicate with hardware by speaking to it. For example, Baidu has its own range of smart devices under a brand called Xiaodu which includes speakers and wireless earphones all equipped with its voice assistant. 

But DuerOS is also an open platform, meaning other hardware makers can also install it on their devices. 

The outside funding will give a cash injection to one of Baidu’s divisions that could be key to its long-term growth as it faces stiff competition in its core business. Baidu is China’s biggest search engine and makes money from advertising.

China’s advertising market has been hit by the coronavirus pandemic. Pre-pandemic, digital ad spending in China was forecast to rise 13% in 2020, according to eMarketer. The research firm now estimates it will rise only 5%, to $75.33 billion.

Over the past couple of years, Baidu has faced rising competition in search as Chinese internet users continue to move away from web browsers to so-called “super apps” like Tencent’s WeChat. These sorts of apps lets users access services and search all within one platform. 

Baidu has its own super app called the Baidu App which continues to grow. Daily active users reached 204 million in June. 

But part of Baidu’s strategy has been to try to diversify its revenue stream, putting an emphasis on areas from artificial intelligence to driverless cars and healthcare. Its Smart Living Group is involved in that effort with voice assistants playing a key role. 

And analysts see potential here for monetization. 

“We believe Baidu remains on-track for double-digit revenue growth over the longer-term,” Mizhuo analysts said in a note earlier this month.

Mizhuo said they “feel comfortable with that goal” as the company has yet to monetize investments such as voice search “which makes up roughly 20% of the search volume and its mini-program platform.” 

Mini-programs refer to apps within the Baidu App. It means users don’t need to go to a separate app store to use certain services. 

Baidu said the investment into the Smart Living Group is expected to be completed in the fourth quarter of 2020. The Chinese company will hold “super voting rights” in the business group and is expected to continue to consolidate the financial results of SLG, as a majority shareholder.

Meanwhile, Baidu is in talks with investors to raise up to $2 billion over three years for a new biotech company, CNBC earlier this month reported. It will be a standalone entity that would focus on using artificial intelligence to create new drugs and make early-stage diagnoses of diseases. 

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