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New rules on what is a green investment

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Climate change and low-carbon solutions are impacting investors’ portfolios.

Mitch Diamond | Getty Images

LONDON — A lack of clarity on what should be classified as a climate-friendly investment has been one of the biggest obstacles stopping money flowing into that area. But the EU is keen to change that.

Investors have complained that it is hard to select which companies are acting responsibly on the climate front, because there hasn’t been a common set of standards to analyze the key information needed.

However, the European Commission, the executive arm of the EU, announced Wednesday a new set of rules that aim to clarify what can be classed as a green investment and what can’t be. This regulation is expected to make it easier for investors to put their money in projects that will contribute to the sustainability of the planet.

The classification, known as taxonomy, will now be discussed with member states and European lawmakers before becoming law. It is part of the EU’s wider efforts to become the first continent in the world to be carbon neutral by 2050.

“We are taking a leap forward with the first-ever climate taxonomy which will help companies and investors to know whether their investments and activities are really green. This will be essential if we are to mobilize private investment in sustainable activities and make Europe climate-neutral by 2050,” European Commission Executive Vice President Valdis Dombrovskis said in a statement.

To achieve its carbon neutrality goal, the commission has suggested member states need to cut their emissions by at least 55% by 2030, compared to 1990 levels. And there will be regular checks on the efforts being made at the national level.

“Significant investments are required to green our economy. We need all companies to play their part, both those already advanced in greening their activities and those who need to do more to achieve sustainability,” Mairead McGuinness, the commissioner responsible for financial services, said in a statement.

What is green?

The new classification considers an economic activity as climate friendly if it contributes to one out of two possible objectives: it is reducing or preventing the adverse impact of climate change on itself, on people, nature or assets; or whether it is contributing to the reduction of greenhouse gas emissions.

The new document, which the commission says is based on science-based criteria, is just a first step and is expected to be updated over time.

“These criteria create common ground for businesses and investors, allowing them to communicate about green activities credibly and help them to navigate the transition to sustainability,” the commission said in the document.

It added that the new criteria covers the economic activities of roughly 40% of EU-domiciled listed companies, in sectors which are responsible for almost 80% of direct greenhouse gas emissions in Europe.

However, this does not include nuclear power activity nor gas, at least for now.

The commission is waiting for some more information before it decides whether or not nuclear, a divisive topic, will feature in the taxonomy. But ultimately this is subject to some political pressure from member states that have high investments in nuclear, such as France.

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Uber rival Ola offers London drivers incentives to go electric

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Ola cab drivers talk with each other as they wait for passengers by a roadside in Amritsar.

NARINDER NANU | AFP | Getty Images

LONDON — Indian ride-hailing firm Ola said Thursday it would offer its London drivers incentives to switch to electric vehicles, turning on the charm as it seeks to convince city regulators it’s fit to operate in the city.

From Thursday, Ola will waive its commission fee until Aug. 13 for drivers that own an electric model. Ola users in London will be able to request a ride from a new “Ola EV” category, which allows only drivers with electric vehicles to accept trips.

The SoftBank-backed start-up launched its app in the U.K. capital in February last year, hoping to unseat Uber as market leader. But it was subsequently stripped of its license just eight months later, with local transport authorities concerned Ola was not “fit and proper” to hold one.

Ola appealed the decision by Transport for London not to renew its license. That means it can still operate in the city. A similar thing has happened to Uber, twice, but the San Francisco-based firm managed to regain its license after a court battle with TfL.

In Ola’s case, TfL found the company had committed “historic breaches” that compromised the safety of the public. It said unlicensed drivers were able to undertake more than 1,000 passenger trips using Ola, and that the company failed to notify regulators immediately when these breaches were first identified.

“We continue to work with TfL to address the issues raised in an open and transparent manner,” Ola said in a statement. “At Ola, our core principle is to work closely, collaboratively and transparently with regulators such as TfL.”

“As Ola stated at the time of TfL’s decision, we are appealing the decision and in doing so, our riders and drivers can rest assured that we continue to operate as normal, providing safe and reliable mobility for London.”

Ola claims to have over 25,000 drivers in London, 700 of which are eligible for Ola EV. Following the launch of Ola EV, the company says it will look to extend its offers through partnerships with other businesses to encourage more drivers to make the switch from polluting vehicles.

In March, Uber reclassified all 70,000 of its U.K. drivers as workers after the country’s Supreme Court ruled that a group of the company’s drivers should be treated as workers, not independent contractors. That meant that Uber had to give its U.K. drivers a minimum wage, holiday pay and pension plans.

Other ride-hailing apps, including Ola, Bolt and Free Now, say they are reviewing the Supreme Court ruling to see if it affects their business.

Ola has been pushing deeper into electric vehicles lately. The company’s Ola Electric unit, which makes electric scooters and charging facilities, has raised over $300 million from investors to date, according to Crunchbase. The firm recently hired Jaguar Land Rover veteran Wayne Burgess as its head of vehicle design.

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MSCI to swap Alibaba’s New York shares with Hong Kong in stock indexes

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Signage for Alibaba Group Holding Ltd. covers the front facade of the New York Stock Exchange November 11, 2015.

Brendan McDermid | Reuters

BEIJING — Stock index giant MSCI said Wednesday it is removing the U.S.-listed shares of Alibaba from its global indexes, and replacing them with Alibaba’s Hong Kong-traded shares.

The move, set to take effect after the close on May 27, could see trillions of U.S. dollars tracking those indexes leave the U.S. Trading volume for Alibaba’s Hong Kong shares, which is a fraction of those listed in the New York, could also surge.

The affected indexes include the benchmark MSCI Emerging Markets Index that many institutional investors use to determine how they should invest outside of the U.S., Europe and Japan.

A representative for Alibaba did not immediately respond to a request for comment.

When the tech giant founded by Chinese billionaire Jack Ma listed in New York in 2014, it marked the biggest initial public offering at that time.

Chinese start-ups have since rushed to list in the U.S. despite political tensions. But as concerns about potential de-listing of Chinese stocks from U.S. exchanges grow, major companies like Alibaba and JD.com have launched dual listings in Hong Kong in the last two years.

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Unequal access for U.S. business

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Chinese and U.S. flags outside the building of an American company in Beijing, China January 21, 2021.

Tingshu Wang | Reuterss

BEIJING — Many U.S. companies in China are still finding it harder to operate in the country compared with their Chinese counterparts in the U.S., the American Chamber of Commerce in China said in a report released Tuesday.

“AmCham China’s members face longstanding structural challenges in the China market that conspire to tilt the playing field against (foreign-invested enterprises) and foreign investors,” the report said.

“Two-thirds of members say they would consider increasing their investments in China if markets were open on a par with those in the US, a slight increase on last year,” the authors wrote.

Foreign businesses in China must often work with a local partner and face many limits on local investment, while Chinese companies can operate in the U.S. with far fewer restrictions.

The market access challenges remain despite increased pressure on Beijing under former President Donald Trump’s administration.

Trump used tariffs and sanctions to address long-standing complaints about China’s business practices — including lack of intellectual property protection and requiring companies to transfer technology.

The following are some industries in which American companies operate at a disadvantage in China, according to the report:

  • Health care services — Foreign investment in medical institutions in China cannot exceed 70%. In comparison, no such cap exists in the U.S.
  • Cloud computing — Foreign firms cannot invest more than 50% in cloud services businesses. There are no such restrictions in the U.S.
  • Movies — The Chinese government sets film release dates and requires that 75% of revenue remains with Chinese film production companies. In the U.S., Chinese companies can distribute films without restrictions and set their own release dates.

IP an area of improvement

The central Chinese government has taken steps in the last few years to improve the operating environment for foreign businesses. A new foreign investment law took effect last year, while Beijing has peeled back ownership restrictions in finance and other industries.

We feel that local officials are reacting to the level of tensions in the relationship, and just taking the safer path, which is to offer preference to domestic industry.

Greg Gilligan

Chairman, American Chamber of Commerce in China

“Chinese courts have improved in terms of disputes in intellectual property rights,” AmCham Policy Committee Head Lester Ross told reporters in a call Tuesday. Citing his perspective as a lawyer, he said that “China’s courts have become somewhat fairer.”

AmCham also found that over the past year, 47% of its members said enforcement of intellectual property rights has improved overall.

Political tensions make business harder

However, political tensions between the U.S. and China have become the primary challenge for AmCham members operating in the Asian country, the report said.

On the call with reporters Tuesday, Chairman Greg Gilligan said the political environment has made it even harder for central government policies supporting foreign business to be implemented at a city level.

“We feel that local officials are reacting to the level of tensions in the relationship, and just taking the safer path, which is to offer preference to domestic industry,” he said.

Gilligan expects tensions between the two countries to persist for at least the next two years, due to domestic politics that require each leader to maintain a firm stance on the other country.

Since taking office in January, U.S. President Joe Biden has kept Trump-era tariffs and sanctions in place, while seeking to work with traditional U.S. allies in putting pressure on China.

As the world’s second-largest economy, China is a “priority market” for more than two-thirds of AmCham’s members, the report said. The business organization said its surveys indicate nearly 85% of members are not planning to move manufacturing or sourcing away from China in the near term.

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