Hello from London, where hundreds of officials, civil society representatives and business people are convening today and tomorrow to discuss Ukraine’s recovery from Putin’s war. As a top aide to Ukrainian president Volodymyr Zelenskyy made clear in our Monday edition, the country is looking to put green finance at the centre of its reconstruction strategy.
UK prime minister Rishi Sunak is calling on business to make an impact at the conference, saying: “Ukraine’s bravery on the battlefield must be matched by the vision of the private sector.” But so huge are the sums required — and so meagre the funds so far committed — that Ukraine’s push for assistance is clearly just beginning.
Meanwhile, Kenza is off to Paris to cover the two-day global finance summit hosted by French president Emmanuel Macron, which kicks off tomorrow. That will focus on how to finance sustainable development for lower-income nations, including the measures in the Bridgetown Initiative pushed for by Barbados prime minister Mia Mottley (see today’s Smart Read for more on that).
Kenza will have the lowdown from Paris in Friday’s Moral Money. In today’s edition, Kaori highlights the “right to repair” laws coming for the electronics industry, while Patrick looks at how a new El Niño phenomenon is driving concern on Wall Street. Thanks for reading. — Simon Mundy
Make tech fixable again
Have you noticed that your electronic devices have become harder to fix? In the past, if your television broke, you could usually take out the manual and attempt to fix it yourself or bring it to a repair shop.
“We don’t have neighbourhood TV repair shops anymore. We used to but the manufacturers drove all those repair shops out of business,” Kyle Wiens, chief executive of iFixit, a US-based ecommerce website that sells repair parts and publishes repair guides, told me. For years, manufacturers have been criticised for making their products more challenging to repair. Apple has used screws that could only be tightened with special screwdrivers that the company’s technicians had access to, for example.
But now there is a growing effort to reverse this trend.
On July 1, New York state’s Right to Repair law will come into effect, requiring manufacturers to make it easier to repair electronics such as smartphones and laptops. “It will impact consumers not just in New York. It’ll have an impact around the world,” said Wiens.
For new items bought after July 1, manufacturers will need to make tools, parts and documentation such as repair manuals available to consumers and independent repair providers. “The information will be available for free online,” Wiens said. And come January 2024, companies that do not adhere to the law will be hit with penalties.
Minnesota also recently passed a law that goes beyond consumer electronics and will apply to products manufactured three years prior to the law’s entry into force.
The hope is that these laws will help extend the lifespan of devices and reduce e-waste, 6.9mn metric tonnes of which are produced in the US alone. Consumers will benefit too — higher repair rates for electronics could help US households save as much as $50bn a year, according to analysis by the Public Interest Research Group.
Having a network of local repair shops could also make the economy less vulnerable to supply chain squeezes for consumer electronics — as we saw during the pandemic.
Similar laws are being introduced across the US and Europe. In the US, every state apart from Utah, Arizona, New Mexico, Wisconsin and Mississippi have introduced such laws, according to The Repair Association.
In March, the European Commission proposed new rules that would require manufacturers to repair goods within the guarantee period and provide repair services for items that are within 10 years of purchase. The European parliament and European Council are considering adopting the rules.
As right to repair laws become more prevalent, we may start to see companies shift focus to longevity and compete “to make the most fixable, best supported, longest lasting” products, said Nathan Proctor, senior director for the Public Interest Research Group’s right to repair campaign. (Kaori Yoshida, Nikkei)
Strong El Niño forecasts pose new uncertainties for companies and markets
Travel west from the Galápagos Islands to the International Date Line and you will find a weather phenomenon poised to shake up the global climate in the months ahead. The US National Oceanic and Atmospheric Administration this month declared the start of an El Niño event — a months-long phenomenon in which Pacific Ocean surface temperatures near the equator rise significantly above normal levels, with huge implications for global weather patterns.
The El Niño effect occurs roughly every two to seven years, and tends to push world temperatures higher in the year after it begins. With global warming continuing its relentless progress, experts are warning that the global average temperature could easily hit a new record in 2024. The World Meteorological Organization, meanwhile, says this El Niño means there’s a 66 per cent chance that we’ll hit 1.5°C above pre-industrial levels in the next five years.
Companies have already started warning their shareholders about El Niño’s consequences. Fruit giant Del Monte highlighted earlier this year that El Niño events in 2016, 2017 and 2019 caused droughts in Kenya and hurt the company’s pineapple farms there. Mall owner Simon Property said in February that the extreme weather El Niño is set to bring could drive up insurance costs.
Analysts at Deutsche Bank warned this month of “widespread predictions” that El Niño’s effects would strengthen towards the end of the year. If this event meets the official definition of “strong” — as some experts are forecasting — this would be only the third such event in the 21st century, they added. Certain coffee futures contracts have hit all-time highs, Deutsche noted. Sugar and cocoa futures are also gaining.
Energy prices could also be pushed up by El Niño, Deutsche macro strategist Henry Allen told me. El Niño’s “precise effects are very hard to predict,” he cautioned, and impacts “can vary significantly”.
“In some areas like the southern US, El Niño raises the likelihood of flooding, whereas in others — like Australia — it raises the likelihood of drought,” Allen said.
If El Niño brings drier days to Australia, it might benefit the country’s big insurance companies.
Bushfires only account for about 11 per cent of catastrophic insurance claims dating back to 1968, according to Morgan Stanley, but cyclones, storms and floods comprised 59 per cent of claims. El Niño conditions could be “a reprieve from record losses in 2024” for insurers, analysts at Morgan Stanley said in a June 13 report, adding that El Niño had correlated with fewer hurricanes in the Atlantic.
Moral Money is not a weather news service. But we want to inform readers about the corporate and markets consequences of climate change. El Niño is here and has already injected further uncertainty into a fraught macroeconomic situation. (Patrick Temple-West)
Smart read
Behind the “Bridgetown Initiative” up for discussion at this week’s Paris summit are the sharp arguments and disruptive thinking of Avinash Persaud, a top Wall Street analyst turned public intellectual and Barbadian government envoy. For Foreign Policy, Lee Harris has written an excellent in-depth profile on Persaud — and his radical ideas that could yet help unlock big flows of finance for developing nations.
Read the full article here