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New Tax on Buybacks Is Weeks Away, but Finance Chiefs Aren’t Too Worried

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New Tax on Buybacks Is Weeks Away, but Finance Chiefs Aren’t Too Worried

A brand new company tax on inventory buybacks hasn’t anxious finance chiefs sufficient for them to rethink their technique.

The 1% levy on buybacks, which takes impact in January, may price firms billions of {dollars}, however numerous executives say they anticipate to proceed repurchasing firm inventory.

U.S. firms have spent tons of of billions in latest quarters on these transactions, describing it as an excellent use of capital that signifies conviction of their plans and helps scale back share depend, which in flip can increase inventory costs. Within the third quarter, S&P 500 firms spent $210 billion on inventory buybacks, down round 10% from a 12 months earlier, in response to preliminary knowledge from S&P Dow Jones Indices, a unit of rankings agency

S&P World Inc.

The businesses spent roughly $220 billion within the second quarter, up 10.5%, and $281 billion within the first, up practically 58% from the prior 12 months.

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Firms within the S&P 500 would have paid a mixed $1.93 billion in taxes and misplaced about 0.45% in working earnings had the levy been in impact for the third quarter, in response to Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices. 

In latest days, companies together with vitality main

Exxon

Mobil Corp., residence enchancment retailer

Lowe’s

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Cos. and funds expertise agency

Mastercard Inc.

have expanded packages or introduced new ones to repurchase their inventory, regardless of the brand new tax.

Michael Mullican, chief monetary officer of Academy Sports activities & Open air Inc.



Photograph:

Academy Sports activities & Open air Inc.

“We don’t just like the tax; no one likes it,” stated

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Michael Mullican,

chief monetary officer at

Academy Sports activities & Open air Inc.,

a sporting items and out of doors recreation retailer. “Nevertheless it’s not important sufficient to the place it will sway our considering.”

Katy, Texas-based Academy Sports activities & Open air has about $400 million remaining below an present buyback authorization, and doesn’t plan on accelerating repurchases due to the tax, Mr. Mullican stated. 

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For Bolingbrook, Unwell.-based

Ulta Magnificence Inc.,

a maker of magnificence merchandise, the impression of the tax can be minimal, finance chief

Scott Settersten

stated. The corporate’s board in March licensed a brand new buyback program that allows Ulta Magnificence to repurchase as much as $2 billion in shares.

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The corporate purchased again 340,000 shares through the third quarter at a price of $137.5 million, leaving $1.4 billion remaining below its repurchase plan. “The 1% is just not going to make us change our method within the close to time period,” Mr. Settersten stated. “For us, it’s not significant.” 

Executives from auto retailer

Sonic Automotive Inc.,

web retailer

Overstock.com Inc.

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and burrito chain

Chipotle Mexican Grill Inc.

additionally stated they don’t anticipate their buyback methods to shift due to the tax. 

“It received’t cease us from it. It’s just a bit little bit of a toll on that highway,” stated

Jonathan Johnson,

Overstock’s chief government, referring to the excise tax. The corporate introduced a $100 million buyback program in August 2021, which can run by means of Dec. 31, 2023. As of late October, Overstock had round $40 million left, Mr. Johnson stated, including that the tax received’t be a figuring out issue for Overstock when it decides whether or not to purchase again what’s left below this system. “Candidly, the 1% tax simply appears like one other calculation into ‘Is it an excellent factor to purchase again shares or not?’” he stated. Exxon and Lowe’s didn’t instantly reply to requests for remark. Mastercard declined to remark.

The brand new tax, which can apply to publicly traded firms, was a part of the local weather, healthcare and tax regulation referred to as the Inflation Discount Act, which handed in the summertime. At 1% of the truthful market worth of shares, it’s forecast to lift $74 billion in federal income over the course of a decade, in response to projections from the Joint Committee on Taxation, which supplies nonpartisan evaluation of tax laws for Congress. Had it been in impact final 12 months, the tax would have raised roughly $8.4 billion from the most important public firms within the U.S. It’s set to be levied on internet buybacks, that means complete shares repurchased minus new shares issued through the 12 months.

For some firms, the tax won’t have an effect on buyback plans, however for others, it’s a motive to speed up repurchases, S&P’s Mr. Silverblatt stated. This might drive up the amount of share repurchases earlier than the tax goes into impact, he stated. 

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BankFinancial Corp.

, a Burr Ridge, Unwell.-based financial institution holding firm, will doubtless purchase again shares through the fourth quarter. “It’s somewhat costlier to purchase shares again beginning subsequent 12 months as a result of excise tax,” stated CEO 

F. Morgan Gasior

on an Oct. 31 name with analysts. “So I anticipate that we’ll have an affordable quantity of exercise right here within the fourth quarter, perhaps not fairly [to] the identical extent because the third quarter, however nonetheless wholesome.” 

The corporate’s board in October elevated the variety of shares permitted for repurchase by 300,000 and prolonged the deadline for the repurchase authorization by two months, to late April. BankFinancial within the third quarter repurchased over 231,000 shares, in response to a regulatory submitting. “Given the excise tax that takes place in ’23, it makes extra financial sense to do extra in ’22,” Mr. Gasior stated on the decision. Neither Mr. Gasior nor BankFinancial responded to requests for remark.

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SHARE YOUR THOUGHTS

How will the brand new tax on inventory buybacks have an effect on firm repurchase plans within the years forward? Be part of the dialog beneath.

The Securities and Alternate Fee earlier this week reopened a remark interval for a proposed share buyback rule due to the approaching tax. First launched in December 2021, the proposed rule goals to enhance firms’ disclosures about buyback packages to “reduce the data asymmetries” between firms and traders, SEC Chair

Gary Gensler

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stated final 12 months.

Write to Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com

Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Cop29: $250bn climate finance offer from rich world an insult, critics say

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Cop29: 0bn climate finance offer from rich world an insult, critics say

Developing countries have reacted angrily to an offer of $250bn in finance from the rich world – considerably less than they are demanding – to help them tackle the climate crisis.

The offer was contained in the draft text of an agreement published on Friday afternoon at the Cop29 climate summit in Azerbaijan, where talks are likely to carry on past a 6pm deadline.

Juan Carlos Monterrey Gómez, Panama’s climate envoy, told the Guardian: “This is definitely not enough. What we need is at least $5tn a year, but what we have asked for is just $1.3tn. That is 1% of global GDP. That should not be too much when you’re talking about saving the planet we all live on.”

He said $250bn divided among all the developing countries in need amounted to very little. “It comes to nothing when you split it. We have bills in the billions to pay after droughts and flooding. What the heck will $250bn do? It won’t put us on a path to 1.5C. More like 3C.”

According to the new text of a deal, developing countries would receive a total of at least $1.3tn a year in climate finance by 2035, which is in line with the demands most submitted before this two-week conference. That would be made up of the $250bn from developed countries, plus other sources of finance including private investment.

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Poor nations wanted much more of the headline finance to come directly from rich countries, preferably in the form of grants rather than loans.

Civil society groups criticised the offer, variously describing it as “a joke”, “an embarrassment”, “an insult”, and the global north “playing poker with people’s lives”.

Mohamed Adow, a co-founder of Power Shift Africa, a thinktank, said: “Our expectations were low, but this is a slap in the face. No developing country will fall for this. It’s not clear what kind of trick the presidency is trying to pull. They’ve already disappointed everyone, but they have now angered and offended the developing world.”

The $250bn figure is significantly lower than the $300bn-a-year offer that some developed countries were mulling at the talks, to the Guardian’s knowledge.

The offer from developed countries, funded from their national budgets and overseas aid, is supposed to form the inner core of a “layered” finance settlement, accompanied by a middle layer of new forms of finance such as new taxes on fossil fuels and high-carbon activities, carbon trading and “innovative” forms of finance; and an outermost layer of investment from the private sector, into projects such as solar and windfarms.

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These layers would add up to $1.3tn a year, which is the amount that economists have calculated is needed in external finance for developing countries to tackle the climate crisis. Many activists have demanded more: figures of $5tn or $7tn a year have been put forward by some groups, based on the historical responsibilities of developed countries for causing the climate crisis.

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This latest text is the second from an increasingly embattled Cop presidency. Azerbaijan was widely criticised for its first draft on Thursday.

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There will now be further negotiations among countries and possibly a new or several new iterations of this draft text.

Avinash Persaud, a former adviser to the Barbados prime minister, Mia Mottley, and now an adviser to the president of the Inter-American Bank, said: “There is no deal to come out of Baku that will not leave a bad taste in everyone’s mouth, but we are within sight of a landing zone for the first time all year.”

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US Treasury Selects BNY as Financial Agent for Direct Express Program | PYMNTS.com

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US Treasury Selects BNY as Financial Agent for Direct Express Program | PYMNTS.com

The Bank of New York Mellon (BNY) will serve as the financial agent for the Direct Express program, which provides 3.4 million Americans with a prepaid debit card to receive monthly federal benefits.

The U.S. Department of the Treasury’s Bureau of the Fiscal Service said in a Thursday (Nov. 21) press release that it selected BNY for this role after evaluating proposals from multiple financial institutions and seeing the bank’s offering of features and customer service options.

The new agreement will begin Jan. 3 and will last five years, according to the release.

“Since 2008, the Direct Express program has paid federal beneficiaries seamlessly, inclusively and securely, while sparing taxpayers and customers the costs and risk associated with cashing paper checks,Fiscal Service Commissioner Tim Gribben said in the release.This new agreement will further our goals of delivering a modern customer experience and strengthening Treasury’s commitment to paying the right person, in the right amount, at the right time.”

With this agreement, BNY will add to the cardholder experience features like online/digital funds access, bill pay, cardless ATM access, omnichannel chat and text customer service, online dispute filing and in-person authentication options, the bank said in a Thursday press release.

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“Drawing on our leading platform capabilities, we look forward to advancing the program’s goal of providing high-quality financial services to individuals and communities throughout the U.S.,Jennifer Barker, global head of treasury services and depositary receipts at BNY, said in the release.

Seventy-seven percent of the recipients of disbursements opt for instant payments when given the option, according to the PYMNTS Intelligence and Ingo Payments collaboration,Measuring Consumers’ Growing Interest in Instant Payouts.”

That’s because consumers looking for disbursements — paychecks, government payments, insurance settlements, investment earnings — want their money quickly, the report found.

In October, the Treasury Department credited the Office of Payment Integrity, within the Bureau of the Fiscal Service, with enhancing its fraud prevention capabilities and expanding offerings to new and existing customers.

The department said itstechnology and data-driven” approach allowed it to prevent and recover more than $4 billion in fraud and improper payments, up from $652 million in 2023.

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Islamic finance: a powerful solution for climate action – Greenpeace International

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Islamic finance: a powerful solution for climate action – Greenpeace International

Across the globe, Muslim communities find themselves disproportionately affected by climate change, with extreme weather events, rising food insecurity, and other climate impacts taking a toll on their livelihoods, cultural practices, and spiritual life. 

In the last few years, devastating floods swept through Pakistan, affecting millions, displacing thousands, and leaving entire communities struggling to rebuild. In Indonesia, one of the world’s most populous Muslim-majority countries, rising sea levels threaten to submerge coastal villages and erode vital agricultural lands. Meanwhile, in parts of the Middle East and North Africa, persistent droughts and water scarcity are increasing pressures on already fragile ecosystems and economies.

Pakistan’s 2022 monsoonal floods affected 33 million people across the country and claimed more than 1730 lives. Climate change has been identified as a contributing factor to the increasing frequency and severity of floods in Pakistan.

The climate crisis is having a profound impact on the daily lives and religious practices of millions of people

These climate pressures extend beyond immediate threats to survival. Climate change has also begun affecting food security in Muslim-majority regions, especially during Ramadan, a holy month where fasting is practised from dawn until dusk. In communities already grappling with the impacts of droughts or floods, maintaining food stocks for Ramadan can become a significant challenge. In Somalia, where cycles of drought and flash floods have eroded food systems, many families are forced to navigate long-standing shortages, with climate-induced shocks compounding existing vulnerabilities.

August 2019: A member of Greenpeace Indonesia’s Forest Fire Prevention (FFP) team holds a carbon monoxide meter as Muslims attend Idul Adha prayers at Darussalam Mosque. Haze from forest fires blankets the area in Palangkaraya City, Central Kalimantan, Indonesia. High atmospheric carbon dioxide levels, combined with deforestation-induced dry conditions, further exacerbate these fires. © Ulet Ifansasti / Greenpeace

Food insecurity is a worsening crisis as global warming affects harvests, disrupts fisheries, and drives up food prices, making the observance of Ramadan particularly strenuous, both physically and economically. This brings climate change into the daily lives and religious practices of millions in profound ways, reminding us that the climate crisis is as much a social and economic issue as it is an environmental one.

Islamic finance: a financial system grounded in ethical responsibility

Islamic finance has been operating in the global financial system for decades, providing an ethical foundation rooted in Islamic principles that promote fairness, social responsibility, and environmental stewardship.

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Islamic Social Finance for Climate Action at COP 28 in Dubai. © Marie Jacquemin / Greenpeace
December 2023, COP28: An Islamic Social Finance For Climate Action event co-hosted by UNHCR and Greenpeace MENA (as part of the Ummah for Earth Alliance) explored the critical role of Islamic Social Finance in addressing global humanitarian and climate challenges. © Marie Jacquemin / Greenpeace

Ethical banking is a core pillar of Islamic finance. Through principles like zakat (charity) and waqf (endowment for public good), Islamic finance encourages financial activity that uplifts communities, supports sustainable projects, and avoids investments in industries harmful to people and the planet. 

Many Islamic financial institutions in countries like Malaysia, the United Arab Emirates, and Saudi Arabia already support projects aimed at protecting the environment and enhancing social welfare. Success stories are already emerging. Malaysia’s green sukuk initiative has mobilised billions for renewable energy projects, while the UAE’s recent US$3.9 billion in green sukuk issuance demonstrates growing momentum. Saudi Arabia’s Vision 2030 has allocated US$50 billion for renewable initiatives, targeting an emissions reduction of 278 million tons by 2030. 

A US$400 billion opportunity for climate action

While Islamic finance principles already provide a framework that aligns well with sustainability, there is still much room to strengthen its role in addressing the climate crisis, enhancing resilience in vulnerable communities, and shifting investments towards clean, renewable energy.

A new report by Greenpeace Middle East & North Africa (MENA) (as part of the Ummah For Earth Alliance) and the Global Ethical Finance Initiative (GEFI), highlights the transformative potential of Islamic finance in accelerating the global transition to renewable energy and addressing the triple planetary crisis: climate change, pollution, and biodiversity loss.

The report shows that the Islamic finance industry continues its robust expansion, with assets projected to reach USD$ 6.7 trillion by 2027, and that a strategic allocation of just 5% toward renewable energy and energy efficiency initiatives could mobilise approximately USD$ 400 billion by 2030 – a transformative sum for climate-vulnerable regions.

In the build up to COP26, in October 2021, the Ummah for Earth alliance delivered a message to world leaders through a projection on the Glasgow Central Mosque close to the conference venue. The coalition solarised the Glasgow central mosque with around 120 solar panels. © Ummah For Earth / Greenpeace MENA
In the build up to COP26, in October 2021, the Ummah for Earth alliance delivered a message to world leaders through a projection on the Glasgow Central Mosque close to the conference venue. The coalition solarised the Glasgow central mosque with around 120 solar panels. © Ummah For Earth / Greenpeace MENA

Islamic finance can help foster climate-resilient infrastructure, restore and protect biodiversity, and finance climate adaptation projects in at-risk communities. By explicitly directing funds away from fossil fuels and into green energy projects, Islamic financial institutions like the Islamic Development Bank (IsDB) can lead by example, especially in regions that are both vulnerable to climate impacts and hold significant influence in the global fossil fuel market. These institutions must accelerate their commitment to renewable energy investments.

As climate impacts intensify, Islamic finance offers a bridge between faith-based values and practical climate solutions. The convergence of Islamic finance and climate action represents more than a financial opportunity – it’s a moral imperative aligned with Islamic principles of environmental stewardship (khalifah) and balance (mizan).

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Islamic finance, grounded in ethical principles and community responsibility, has a unique role to play in the global climate movement, particularly in the Global South. For millions across the globe, this form of finance offers a culturally relevant and powerful instrument to not only protect their communities from the worsening climate crisis but to promote environmental and economic sustainability in ways that align with their beliefs. Islamic finance offers a bridge between economic strength and ethical stewardship, creating pathways toward a more equitable and sustainable world for all.

November 2024 - Islamic Finance & Renewable Energy Greenpeace MENA (member of the Ummah For Earth alliance), GEFI

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