Connect with us

Finance

G20 waters down experts' climate finance report, despite UN pressure to act

Published

on

G20 waters down experts' climate finance report, despite UN pressure to act

A climate and finance report by independent economists was toned down after feedback from G20 nations, even as the UN says they must all slash emissions

As UN chief António Guterres called on the G20 to “lead” on climate, Climate Home can reveal that the group of big countries watered down a report by top economists on how the financial system should shift to enable climate action.

Guterres made his comments by video at the launch of the United Nations’ Emissions Gap Report which showed that, under their current policies, the G20 countries as a group will fail to meet their 2030 targets to cut planet-heating emissions.

Separately, Climate Action Tracker has found that no G20 country’s policies are compatible with limiting global warming to the Paris Agreement goals of either 1.5 degrees Celsius or “well below” 2C.

“The largest economies – the G20 members, responsible for around 80% of all emissions – must lead,” Guterres said on Thursday.

Advertisement

At COP16, countries clash over future of global fund for nature protection

He spoke as officials from G20 climate and finance ministries and central bankers gathered in Washington DC to attend a meeting of the G20 Taskforce on a Global Mobilization against Climate Change (TF-CLIMA), an initiative of the Brazilian G20 presidency aimed at bringing climate and finance officials out of their silos to talk about tackling climate change.

One of their tasks is to react to a report the taskforce commissioned from a group of 12 independent experts, led by economists Vera Songwe and Mariana Mazzucato, on how the G20 countries can shift their financial systems towards tackling climate change.

Brazil’s Secretary for Climate, Energy and Environment André Aranha Corrêa do Lago told a briefing for journalists on Wednesday that the experts were requested to do a “strong report”, going beyond what the G20 can agree to in a joint declaration. It was “important to leave as a legacy a document that shows that we believe that more is needed”, he said.

The report, published on Thursday, lists five “myths” blocking climate action, including that it will slow economic growth and that governments lack the resources to fix climate change and should leave it to the market. It recommends that G20 governments should implement green industrial strategies, reform the global financial system and scale up financing for climate projects.

Weakened after criticism

However, according to a draft of the report from September 4 seen by Climate Home, the final, public version was watered down in response to critical feedback from G20 governments through their negotiators.

Advertisement

Comparing the earlier and later versions, there was a weakening of various points – from criticism of the G20 to warnings over climate impacts, praise for a billionaires’ tax for climate and calls for central banks to help fight climate change.

References to “G20 inaction” were replaced with “G20 inertia”, and the line “each year the destruction to the planet is harsher than the last” was deleted. A reference to a “stark increase” in global temperatures was softened to “a temperature increase on this scale”.

European Central Bank holds back plan to boost climate finance for Africa, Latam

Information in support of Brazil’s proposal for a 2% tax on the wealth of billionaires worldwide was also cut, including a description of the idea’s popularity with “electorates around the world”. An observation on the proposal’s “relatively straightforward” nature to implement was replaced by “questions over the feasibility of implementation”.

The September draft said France, Spain and South Africa supported the wealth tax proposal “while the US opposes it”, but this was deleted from the final version. The US has not made its position on the tax clear in public.

In addition, a recommendation that central banks and supervisory and regulatory bodies should mitigate climate-related financial risks and help mobilise private finance for green investments was modified with the caveat “within their mandates”.

Advertisement

A source with knowledge of discussions told Climate Home that the recommendations on central banks had been criticised by the US, EU and France, and some developing countries.

Just transition?

On the same day, the UN Emissions Gap report warned that the 1.5C goal will be gone within a few years unless all countries collectively commit to cut 42% off annual greenhouse gas emissions by 2030 and 57% by 2035 in their next round of national climate plans due by next year – and back them up with rapid action.

The report showed that global greenhouse gas emissions set a new record high of 57.1 gigatonnes of CO2 equivalent in 2023, a 1.3% increase from 2022 levels, with rises in sectors from power to transport and agriculture. Guterres said emissions needed to fall 9% each year to 2030 to meet the 1.5C limit and “avoid the very worst of climate change”.

In a warring world, Azerbaijan’s COP29 truce appeal draws fire as “PR exercise”

The report said all G20 governments must step up efforts and “do the heavy lifting” by reducing the group’s collective emissions – accounting for 77% of the global total – dramatically.

But it argued that stronger international support and more climate finance will be essential to ensure that climate and development goals can be realised fairly across G20 member countries, as well as globally.

Advertisement

The G20 includes some developing countries – like India, Indonesia and Brazil – that, despite being large and rising emitters today, have relatively low levels of emissions per capita and have historically contributed far less than rich, industrialised nations to global warming.

In response to a question from Climate Home, UN Environment Programme Executive Director Inger Andersen told journalists that the Emissions Gap Report recognises that some countries have a higher ability to move first, but emissions cuts are needed by all G20 nations.

“Every G20 country, irrespective of where it stands on the long historical trail, has an opportunity to lean into this investment opportunity and change its emissions structure,” she said. UN chief Guterres has nonetheless called on the wealthier ones to stretch and do even more, to leave space for those who will find it harder to meet net-zero emissions by 2050, she added.

Anne Olhoff, chief scientific editor of the report, noted that all G20 countries apart from Mexico, have made pledges to reach net-zero emissions later this century. She said those that have yet to peak their emissions – China, India, Indonesia, Mexico, Saudi Arabia, Republic of Korea, and Türkiye – should do so as soon as possible, and then start cutting them rapidly in order to meet their net-zero targets.

(Reporting by Joe Lo; additional reporting by Megan Rowling; editing by Megan Rowling)

Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Finance

A’s Unveil $1.5 Billion Vegas Ballpark Financing; Could Be Demolished After 30 Years

Published

on

A’s Unveil .5 Billion Vegas Ballpark Financing; Could Be Demolished After 30 Years

With the Dodgers wrapping up the 2024 World Series on Wednesday, the business of Major League Baseball in the offseason gets underway. On Thursday, the A’s unveiled their financing details for a new ballpark in Las Vegas.

The Las Vegas Review-Journal reports how owner John Fisher and the A’s plan to finance the $1.5 billion ballpark. The club updated the Las Vegas Stadium Authority and will present documentation to the board on Dec. 5th that comes in form of four letters outlining details.

Key to the financing, the family of John Fisher will commit up to $1 billion in equity investment in the club. The Fisher family. Based on the latest Forbes valuation the family has a new value of $8.9 billion.

Advertisement

Debt, in the form of a $300 million construction loan from U.S. Bank and Goldman Sachs who have been working with the A’s for the past four years.

A separate letter from U.S. Bank details that there are sufficient financial holdings and equity within the Fisher family to cover the loan.

The last letter will be signed by the A’s they are in receipt of the loan and equity commitment for the ballpark.

All of the provisions are tied to customary conditions for a large project.

Advertisement

As Early As 30 Years The Ballpark Could Be Demolished

The deed for the ballpark provides a worst-case scenario in which the A’s exit the ballpark and, yet again, relocate. Should the ballpark outlive its usefulness – the stadium no longer hosts A’s and isn’t selling at least 150,000 tickets per year to other events – the land would be sold back to Bally’s and GLPI. The A’s would be responsible for demolishing the ballpark.

The earliest this could occur would be 30 years after completion. Should the A’s meet the 2028 planned opening date that could mean the wrecking ball as early as 2058.

As noted, that’s the worst case scenario. Should the A’s agree to continue past the initial 30-year lease term the A’s are afforded a series of lease extensions that could total as much as 99 years.

Continue Reading

Finance

Annual climate finance doubled between 2018 and 2022 but needs to increase at least fivefold to avoid worst consequences of climate change, study shows – CPI

Published

on

Annual climate finance doubled between 2018 and 2022 but needs to increase at least fivefold to avoid worst consequences of climate change, study shows – CPI

31 October 2024, London – Climate finance is going to be at the center of COP29 negotiations in Baku next month. A new study shows that annual climate finance must increase at least fivefold by 2030 to meet the goals of the Paris Agreement and to avoid the worst consequences of climate change.  

Read the report

The Global Landscape of Climate Finance 2024: Insights for COP29 report, published today by Climate Policy Initiative (CPI), found that climate finance flows reached almost USD 1.5 trillion, having doubled between 2018 and 2022.   

However, climate finance currently only represents 1% of global GDP, far short of what is needed. Emerging markets and developing economies (EMDEs) may need around 6.5% of their GDP by 2030 to meet climate goals.  

“While global climate finance has made some strides, a much more ambitious, cohesive, and effective approach is essential to address the vast funding gap,” said Barbara Buchner, CPI’s Global Managing Director. “The data from CPI’s Global Landscape report leaves no doubt that investment needs to scale across all fronts—domestically, internationally, and across sectors—to reach our mutual climate goals. COP29 is an opportunity to establish clear, collaborative commitments to finance the transformation needed for a sustainable future.” 

Advertisement

CPI’s report further details the cost of inaction, estimating that projected economic losses by 2100 will be five times greater than the climate finance that is needed by 2050 to stay within a 1.5°C warming scenario. The economic impact under a “business-as-usual” scenario will be exponential if climate action is delayed, further exacerbating financial strain on all economies. 

Alarmingly, investments in fossil fuels continued to rise globally throughout 2023 and 2024 to surpass USD 1 trillion, despite global commitments to reduce fossil fuel investments. Subsidies for fossil fuel consumption in emerging economies increased fivefold during the same period.  

The insights provided in this year’s Global Landscape of Climate Finance 2024, the most comprehensive overview of global climate-related primary investment, are particularly crucial ahead of COP29, which marks a critical juncture for establishing the New Collective Quantified Goal (NCQG) to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. 

Several large-scale processes need to occur simultaneously in the next five years to accelerate the scale, speed, and quality of climate finance amid constrained budgets and conflicting political and financial priorities. To enhance the scale and effectiveness of global climate finance, CPI proposes prioritizing the following topics: innovation and replication; targeting and allocation; domestic policies and ownership; and cross-cutting, multi-stakeholder action.  

For more information, register for the webinar on Monday, 4 November 2024.  

Advertisement

Read the report

Media contact: 
Jana Stupperich 
Senior Communications Associate 
jana.stupperich@cpiglobal.org  

About Climate Policy Initiative
CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has offices in Brazil, India, Indonesia, South Africa, the United Kingdom, and the United States. 

Advertisement
Continue Reading

Finance

Inside Super Micro's wake-up call: After riding the AI wave, the $20 billion tech giant is crashing back to earth amid a financial crisis and family drama

Published

on

Inside Super Micro's wake-up call: After riding the AI wave, the  billion tech giant is crashing back to earth amid a financial crisis and family drama

Silicon Valley tech company Super Micro was supposed to be riding high: After flying under the radar for a quarter of a century, the company had ridden the coattails of the recent generative AI boom. The $20 billion manufacturer builds some of the most important hardware used to power the top artificial intelligence models–that is, high-performance servers that house the leading AI chips, including Nvidia’s.

Over the past five years, as the AI boom picked up steam before exploding post-ChatGPT, Super Micro’s shares soared over 3,000% and its reported revenue doubled to $7.12 billion, to earn it a glitzy debut on the Fortune 500. But accounting issues have continued to haunt the company: It settled with the Securities & Exchange Commission in August 2020 over two years’ worth of alleged accounting violations, and then in 2024 short-seller Hindenburg Research claimed Super Micro continued to engage in questionable accounting practices.

And now, things just got even more real. Super Micro’s auditor resigned in the midst of its work with the tech firm, a move generally considered to be one of the reddest of red flags in the financial and investment community. And after Super Micro broke that news to investors, auditor Ernst & Young came back with a World Series grand slam rebuttal. 

In a letter to the regulators, EY said it only agreed with the company’s disclosures in the first paragraph, the first sentence of the second paragraph, the third paragraph, the first three sentences of the fourth paragraph, and a few others. That’s it.

“We have no basis to agree or disagree with other statements of the registrant contained therein,” EY wrote to SEC commissioners. 

Advertisement

For investors, those can be read as fighting words. Super Micro’s stock tumbled 33% on Wednesday.

Governance expert and Georgetown University associate professor Jason Schloetzer told Fortune this type of resignation is unusual and is consistent with a “noisy withdrawal.”

“It’s pretty clear there are irreconcilable differences between management and the auditor that are severe enough to spill into the public domain,” said Schloetzer. “An auditor resignation is already in red flag territory, so this one will certainly get close scrutiny from capital markets participants and regulatory agencies. Management will have some explaining to do.” 

What went down at Super Micro? 

The auditor’s response was prompted by the disclosure Super Micro made this week announcing EY’s departure. Critically, Super Micro told investors it “does not currently expect that resolution of any of the matters raised by EY, or under consideration by the Special Committee, as noted below, will result in any restatements of its quarterly reports for the fiscal year 2024 ending June 30, 2024, or for prior fiscal years.” Generally, Super Micro’s disclosure that they don’t think these concerns will prompt them to correct their financials is meant to soothe investors that are skittish about potential accounting problems. 

The company formed the special committee in question after EY flagged concerns about its financial reporting to the board’s audit committee last July. In response, the board formed a special committee to investigate—and hired law firm Cooley LLP and forensic accounting firm Secretariat Advisors to probe. As of today, that review remains ongoing, according to Super Micro.

Advertisement

In a statement to Fortune, a Super Micro spokesman said it disagreed with EY and added it is working “diligently” to hire a new auditor. The spokesman emphasized that Super Micro does not believe it will need to issue any restatements or corrections to its financials. 

Accounting expert Francine McKenna told Fortune that the EY resignation went beyond the usual quiet exit auditors make when they slip away from an engagement. “There are noisy resignations and then there are resignations that bang a big giant gong—and this is as bad as it can get,” said McKenna, who authors The Dig newsletter.

In its resignation letter, EY wrote that it was no longer able to rely on management and the board’s audit committee, which is supposed to be made up of independent directors who oversee the company for the benefit of shareholders. “When you can’t rely on management, that’s bad,” said McKenna. “If you can’t trust the audit committee, there is something very wrong.”

A Super Micro spokesman told Fortune: “We have announced a first quarter business update call for Tuesday November 5th.” Not ideal timing, given that’s Election Day. Super Micro declined to comment further. 

Amy Lynch, former regulator with the SEC and Financial Industry Regulatory Authority, told Fortune it appears EY has “serious concerns about the company and contacted the SEC in order keep themselves from being charged in any subsequent enforcement action.”

Advertisement

“SMCI may very soon find itself under investigation by the SEC for accounting-related fraud, if not already,” said Lynch, founder and president of FrontLine Compliance. “The SEC acts very quickly in these circumstances.”

The SEC did not immediately respond to a request for comment.

EY’s abrupt departure is the latest in a pileup of problems at a company considered a Wall Street darling not that long ago. Super Micro got a warning letter from Nasdaq last month after it failed to file its annual financial report on Aug. 29. The stock was still trading on the tech-heavy exchange, but the company was given a 60-day notice to either pony up a 10-K or submit a plan to regain compliance.

Super Micro got an extension until Nov. 27 to deliver on its fiscal year 2024 audited financial statements. The company also implemented a 10-for-1 forward stock split that took effect Sept. 30, increasing its authorized shares from 100 million to 1 billion. Stock splits are commonly used to make shares more affordable to investors because it lowers the price per share. Nvidia did a split this year also. It can also boost liquidity and flexibility in equity compensation. Super Micro CEO Charles Liang’s salary was revised in 2021 to just a dollar a year and all his comp was converted into performance-based stock options, according to the company, with potential value of $60 million. 

What’s up with the short report?

In August, famed short-seller Hindenburg Research hit the company with a 19,000-word short report. It claimed to have found “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures” after a three-month investigation. Super Micro described the report as “false and misleading” in a letter to investors. 

Advertisement

That was after the SEC previously fined the company $17.5 million for alleged improper accounting from 2015 to 2017. Super Micro paid the fine without admitting or denying the findings. Former chief financial officer Howard Hideshima was also fined in the action—and cofounder and CEO Liang, while not charged with misconduct, had to repay the company $2.1 million in stock profits he received while the accounting errors were occurring—a compensation clawback.

It likely required a lot of heavy lifting from the audit committee. During 2018, the committee met 42 times, 38 of which were special meetings. In 2020, it met 15 times, with 11 special meetings. The grand total for the past three fiscal years is 47 audit committee meetings. On average, according to data from governance benchmarking analytics firm Esgauge, S&P 500 audit committees met about eight times a year for the past three years. 

Super Micro: A family affair

The company was founded in September 1993 by board chairman and CEO Liang and his wife, Sara Liu. A third cofounder, Yih-Shyan (Wally) Liaw was involved until January 2018 when he resigned all his positions as the company dealt with regulators following a previous audit committee investigation. But, as of May 2021, Liaw was back, advising Super Micro on development. He returned to full-time employment in August 2022 and rejoined the board in December 2023, according to the company’s most recent proxy report.

The company also involves multiple family relatives in its business entities, based on its disclosures. At least two sisters-in-law work at the company and a third loaned $12.9 million (plus interest) to Liang. The company’s most recent disclosure showed that he owed her $16 million. 

Cofounder Sara Liu’s brother, Hung-Fan (Albert), works for the company; Sara Liu’s sister-in-law, Shao Fen (Carly) Kao, works there; Sara Liu’s other sister-in-law, Mien-Hsia (Michelle) Hung, also works there.

Advertisement

In October 2018, Liang personally borrowed the $12.9 million from Chien-Tsun Chang, the spouse of his brother Steve Liang (also Charles Liang’s sister-in-law). Charles needed it to pay back margin loans to two financial institutions that had been secured by Super Micro’s stock, the company’s disclosures state. The loans were called in after Nasdaq suspended the stock from trading on Aug. 23, 2018 after Super Micro failed to file multiple quarterly and annual reports with the SEC. It was delisted from the Nasdaq Global Select Market and quoted on the OTC Market. It was relisted on the exchange on Jan. 14, 2020.

From there, the disclosed inter-company transactions and business relationships get even more complex. Super Micro has entered into a series of agreements with a Taiwan corporation called Ablecom Technology and one of its affiliates, Compuware Technology, according to Super Micro’s financial filings. 

Super Micro outsources server design and manufacturing to Ablecom Technology. In fiscal 2023, Super Micro bought $167.8 million in products from Ablecom, and as of June 2023, Super Micro owed Ablecom $36.9 million. Super Micro also paid Ablecom $12.1 million for “design and tooling” in fiscal 2023, according to Super Micro.

There’s another family relationship in that mix. The CEO of Ablecom is Steve Liang, brother of Charles, per Super Micro’s financial disclosures. The complexity intensifies from there—according to Super Micro’s most recent proxy statement,  Steve Liang and his family own 28.8% of Ablecom. Charles Liang and his wife Sara Liu own 10.5% of Ablecom. Bill Liang (brother of Steve and Charles) is on Ablecom’s board and is CEO of the other entity involved, Compuware. (Neither Charles Liang nor Super Micro own stock in Compuware and Super Micro doesn’t own stock in Ablecom or Compuware. Ablecom owns less than 50% of Compuware, the company reported.) 

Furthermore, Ablecom’s sales to Super Micro make up a “substantial majority” of its net sales, the company disclosed. For the fiscal years ended June 30, 2023, 2022, and 2021, Super Micro bought products from Ablecom totaling $167.8 million, $192.4 million, and $122.2 million, respectively. During the same period, Super Micro owed Ablecom $36.9 million, $46.0 million and $41.2 million, respectively. Super Micro paid Ablecom $12.1 million, $8.3 million, and $8.6 million, respectively, for design services, tooling assets and miscellaneous costs, per the company filings. 

Advertisement

Meanwhile, Compuware is a distributor for Super Micro in Taiwan, China, and Australia—and Super Micro outsources power design and manufacturing to Compuware. Compuware’s sales of Super Micro products to other businesses make up a majority of Compuware’s net sales. In fiscal 2023, Super Micro sold $36.3 million in products to Compuware and in June 2023, Compuware owed Super Micro $24.9 million. In fiscal 2023, Super Micro bought $217 million in products from Compuware, and in June 2023, Super Micro owed Compuware $66.2 million. Super Micro paid Compuware $2 million for “design and tooling.”

In addition, Super Micro and Ablecom jointly established Super Micro Asia Science and Technology Park in Taiwan “to manage shared common areas.” Each company contributed $200,000 for a 50% ownership stake in the venture, according to the company’s disclosures. 

Super Micro says its maximum financial exposure to Ablecom was $23.7 million in outstanding purchase orders as of June 30, 2023, and Super Micro’s maximum financial exposure to Compuware was $46.8 million in outstanding purchase orders as of June 30, 2023.

Super Micro also disclosed that a sibling of Yih-Shyan (Wally) Liaw, a board member and senior vice president of development, owns approximately 11.7% of Ablecom’s capital stock and 8.7% of Compuware’s capital stock.

For now, Super Micro’s spokesman said it will talk with investors on the Election Day call. But in a September letter to customers and business partners, Liang (the CEO and founder, not his siblings) emphasized the accounting delay that impacted its annual report and the Hindenburg issue wouldn’t impair its ability to deliver goods. 

Advertisement

“Importantly, however, when we announced the decision to delay our Annual Report filing, we indicated that based on the work done so far, we don’t anticipate any material changes in our fourth quarter or fiscal year 2024 financial results,” wrote Liang. “This is good news. I continue to have strong confidence in our finance and internal teams.”

Continue Reading

Trending