The Vatican and business come together
It may seem an unusual pairing: big businesses and Pope Francis, a pontiff who has repeatedly criticized capitalism in scathing terms. But they announced a new partnership today, the latest sign of the growing influence of environmental, social and governance, or E.S.G., practices in business.
Meet the Council for Inclusive Capitalism with the Vatican, a group of businesses, investors and other groups that represent $2.1 trillion in market cap and 200 million employees. The group has announced pledges toward environmental and sustainable-business goals that fit into the E.S.G. movement, with Francis’ blessing.
The 27 leaders of the council are known as Guardians for Inclusive Capitalism, and include Ajay Banga of Mastercard, Marc Benioff of Salesforce and Brian Moynihan of Bank of America. They will meet each year with Francis and Cardinal Peter Turkson, who leads the Vatican department dealing with many social issues.
“An economic system that is fair, trustworthy, and capable of addressing the most profound challenges facing humanity and our planet is urgently needed,” Francis said in a statement.
The group is the brainchild of Lynn Forester de Rothschild, the businesswoman who has backed ventures to promote so-called inclusive capitalism in the wake of the 2008 financial crisis. Among them is Inclusive Capital Partners, an E.S.G.-focused activist hedge fund co-founded with Jeff Ubben.
There are reasons to be both hopeful and skeptical of the initiative. The corporate pledges are meaningful, but some aren’t new: BP, for example, restates a commitment to achieve net zero carbon emissions by 2050 that it announced in February. And while the council has posted the pledges publicly, there’s not much to hold the companies accountable (aside from the risk of disappointing the pope).
But it is notable for opening a new front in the E.S.G. movement. The pope, whose time in the church has focused on concern for the poor, has long criticized capitalism for its sins and excesses. (Five years ago, he called it “the dung of the devil.”) In an encyclical — the most authoritative teaching a pope can make — he issued in October, Francis rebuked market capitalism for failing humanity during the pandemic.
HERE’S WHAT’S HAPPENING
Britain begins Covid-19 vaccinations. A 90-year-old woman became the first patient in the Western world to receive a fully tested and authorized vaccine, as the country distributes shots made by Pfizer and BioNTech. The U.S. has ordered 100 million doses, but it has emerged that the Trump administration rejected an offer of more from Pfizer in July.
Boris Johnson heads to Brussels facing a Brexit impasse. The British prime minister said he would negotiate in person with the European Commission’s president, Ursula von der Leyen, seeking a trade agreement between Britain and the E.U. Several areas of disagreement remain, and the current trading terms expire on Dec. 31.
Nielsen overhauls the way it measures ratings. The firm said it would incorporate digital viewing and streaming into its widely followed T.V. audience metrics, which could alter the way some $100 billion in ads are sold and assessed. Speaking of which, the Japanese advertising giant Dentsu plans to cut 6,000 jobs as the pandemic upends the industry.
Goldman Sachs moves to take full control of its China securities joint venture. It has agreed to buy out its local partner’s 49 percent stake. Beijing said it would allow such moves earlier this year, and other Western financial companies are preparing to follow.
“Davos” will be in Singapore. The World Economic Forum will hold its 2021 annual meeting, traditionally staged in the Swiss Alps in January, in Singapore in May, citing Covid-19 concerns. The gathering’s focus will be — what else? — recovering from the pandemic.
Uber gives away the keys to its self-driving cars unit
Years ago, the Uber co-founder Travis Kalanick called the company’s Advanced Technologies Group “existential” for the business. Now, Uber is paying a start-up to take over the division.
The division will become part of Aurora, a Pittsburgh-based company focused on autonomous long-haul trucking. Aurora had previously agreed to supply self-driving tech to Volkswagen and Hyundai, though both are now working with other partners. As part of the deal, Uber will invest $400 million in Aurora for a 26 percent stake and will take a seat on Aurora’s board.
It’s all about losses and headaches. Mr. Kalanick saw autonomous driving as an eventual means to eliminate the cost of human drivers, and built up the business by acquiring Otto, a trucking start-up founded by a former Google engineer. But Uber ran into a thicket of problems:
Google’s self-driving car affiliate, Waymo, accused Otto’s founder, Anthony Levandowski, of stealing trade secrets. Uber and Waymo eventually settled their legal fight, and Mr. Levandowski admitted to theft.
A self-driving Uber car struck and killed a woman in Arizona in 2018, ensnaring the company in a legal and regulatory mess.
Uber’s investors have long called for it to cut ties with the project, in hopes of stemming steep losses. (In 2018, Uber took a $500 million investment from Toyota to help keep the unit alive.) Those demands grew louder as the pandemic battered the company’s finances.
The deal raises questions about the future of Silicon Valley’s self-driving obsession. Investors have poured billions into the technology, but have yet to produce an armada of self-driving vehicles.
“Their decision makes no economic sense, and even the most casual Wall Street investor can see the difference between disruption and dysfunction.”
— Christopher Nolan, the film director, is not happy with WarnerMedia’s plan to release movies simultaneously in theaters and streaming on HBO Max, per The Hollywood Reporter.
Etsy is known as a site where artisans and small businesses sell wares like handmade face masks. But it’s also something else, The Times’s Matt Phillips and Gillian Friedman write: the best performer in the S&P 500 this year. That’s a remarkable turnaround for a company that struggled soon after its 2015 I.P.O. and was forced to embrace Wall Street’s rules.
Can a new sort of activist shake up Exxon?
Engine No. 1, a new E.S.G.-focused investment firm founded by former activist investors, is taking on an ambitious target for its first campaign: Exxon Mobil. It thinks that by combining the traditional activist investor playbook — agitating for actions that boost shareholder returns — with long-term social and environmental concerns, it has a shot at succeeding where social activists, environmentalists and others fell short.
Exxon’s shares are down roughly 40 percent this year. The pandemic hit the price of oil while the industry was already grappling with the long-term shift to cleaner energy sources. That leaves the company more vulnerable to activists pitching a change in strategy.
Under its current C.E.O., Darren Woods, Exxon has continued to expand its exploration and production operations, acting on what Engine said in a letter to directors were faulty assumptions about the price and availability of oil. (European rivals have much more aggressively shifted toward renewables.) Exxon’s announcement last month that it was cutting spending did not go far enough, Engine said, and offered “little reason to hope that this change marks a new era.” A spokesperson for Exxon told DealBook the company was reviewing Engine’s letter.
The fund is pushing for changes to Exxon’s board, a common tactic of activist investors (though unusual at the outset of a campaign). It has proposed adding four executives, including specialists in clean energy that it said will be key to the company’s future.
Engine will need powerful allies. Exxon is worth $172 billion, and the fund only has a $40 million stake. It says it already has the support of CalSTRS, the country’s second-largest pension fund, which owns another $300 million or so.
It’s a big test for a new kind of activist. Funds like Engine, which was founded this month, aim to add a sharper edge to E.S.G. investing via “active ownership,” as the founder Chris James put it. “Over the long term, shareholder and stakeholder interests align, and companies that invest in their stakeholders are better, stronger companies as a result,” he said when announcing Engine’s founding. Other new funds, like Inclusive Capital Partners (mentioned above), are adopting a similar, as yet unproven approach. Reshaping Exxon would be a very substantial piece of proof.
THE SPEED READ
The online lender SoFi has reportedly held talks to go public by merging with a SPAC. (Reuters)
Bob Dylan agreed to sell the rights to his songwriting catalog to Universal Music Group for potentially more than $300 million, the biggest such deal by a single songwriter. (NYT)
A new investment firm plans a fund to bet against privately held start-ups. (WSJ)
Politics and policy
President-elect Joe Biden plans to name Gen. Lloyd Austin as secretary of Defense. He would be the first Black man in the role. (NYT)
The District of Columbia’s attorney general is investigating whether President Trump’s family improperly profited from its Washington hotel. (NYT)
A Senate fight is brewing over Mr. Trump’s nomination of Nathan Simington to the F.C.C., with control of the commission at stake. (Bloomberg)
A second federal judge blocked the Trump administration’s move to ban downloads of TikTok in the U.S. (WSJ)
Shares in Palantir jumped after the data-mining company won a three-year contract from the Food and Drug Administration to help with drug approvals. (Bloomberg)
European tech companies are set to raise $41 billion this year, a record, despite the pandemic. (Atomico)
Best of the rest
Paul Sarbanes, the former Maryland senator who co-authored the Sarbanes-Oxley Act, a sweeping overhaul of accounting regulations in the wake of scandals like Enron, died on Sunday. He was 87. (NYT)
MSNBC named Rashida Jones as its next president, making her the highest-ranking Black woman in American TV news. (NYT)
Chuck Yeager, the first test pilot to break the sound barrier, who was immortalized in Tom Wolfe’s book “The Right Stuff,” died yesterday. He was 97. (NYT)
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