Finance

Why the finance world is not backing down on ESG, despite the backlash in the U.S.

Published

2 years ago

October 7, 2022

Why the finance world is not backing down on ESG, despite the backlash in the U.S.

Hello, Peter Vanham right here in 40 Fulton, Fortune’s HQ, filling in for Alan.

Whereas right here in America, the backlash towards ESG investing and decarbonization is rising, again in Europe, many monetary establishments are doubling down on their local weather commitments, setting in movement a flying wheel with giant ramifications.

That dynamic was at full show this week at Constructing Bridges, a sustainable finance convention arrange by the Swiss finance neighborhood and the United Nations.

At a session I attended on “Internet-Zero alliances”, Swiss Re govt Claudia Bolli summarized her firm’s conundrum as follows: “Local weather change is a enterprise danger, and it’s on our steadiness sheet. The query is: can we preserve it on the steadiness sheet?”

Already, she stated, there are particular areas the place the Swiss monetary big has determined the reply is “no”: “We’ve that for instance with the coal trade. They might find yourself with stranded belongings,” she stated. Within the close to time period, vitality safety considerations might stop Swiss Re from appearing on that evaluation. However in the long run, “it is rather clear” the place the reinsurer is headed.

Enterprise sentiments like these matter, particularly from Swiss Re. The corporate is the world’s second largest reinsurance firm, twice as large as Berkshire Hathaway, for example, backstopping many insurers in quite a lot of methods. If it stops (re)insuring coal-related investments, the latter will face greater prices, and probably, turn into un-investable.

The kicker? Swiss Re has already stated that it’s going to do exactly that: by 2030 within the OECD, and 2040 elsewhere, their coal-related insurance coverage merchandise will finish.

This sort of chilly monetary calculus might clarify why—no less than for now—practically not one of the 500 banks, asset managers and different monetary establishments who signed up for the “Glasgow Monetary Alliance for Internet Zero” (GFANZ) final yr have stop the coalition for the reason that U.S. backlash towards ESG took off.

As a working example: once I requested Judson Berkey, the American UBS govt in control of engagement with policymakers and regulators, whether or not his firm’s current blacklisting by the state of Texas would have an effect on his firm’s dedication to net-zero, his reply was adverse.

“I don’t suppose anybody needs to get off the highway to net-zero,” he stated. “We attempt to assist our purchasers and buyers, and wish to go on this journey collectively. But when sure political entities determine [to go the other way], that’s their determination.”

Individually, because it’s Friday, some reader suggestions from yesterday’s CEO Every day:

“I disagree [with] merely saying that oil pricing and the Fed are the first explanation for financial stress. The true causes for the present explanation for inflation are comparatively easy: worldwide governments, probably the most inefficient customers of capital, are spending cash like drunken sailors.”
—B.M.

“In these risky instances, until speculators are reined in and prime firms decide to truthful pricing, governments will gang up and regulate and tax. Since I consider the US govt is damaged, Biden and the Congress received’t have the braveness to tax and regulate, and speculators and prime firms know this, we now have to be ready for additional gyrations and volatility.”
—A.M.

“Making an attempt to pin the present and deepening recession on speculators is whistling in the dead of night. This mess was led to by the colossally silly and economically damaging insurance policies of needlessly throwing trillions of non-existent {dollars} at American Staff whereas concurrently chopping home oil manufacturing. Voila! Inflation!”
—S.C.

Extra information beneath.

Peter Vanham
@petervanham
peter.vanham@fortune.com

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Finance

‘It Won’t Be Enough’: Financial Experts Warn Gen X About Key Retirement Pitfalls

Published

7 hours ago

January 21, 2025

Press Room

‘It Won’t Be Enough’: Financial Experts Warn Gen X About Key Retirement Pitfalls

As the oldest members of Generation X (those born between 1965 and 1980) approach retirement, financial experts warn that many in this group may not be as prepared as they think. Generation X faces unique challenges as they prepare for retired life, from shortfalls in savings to unexpected costs that may arise.

Here’s what experts say Gen Xers need to know to avoid these key pitfalls and ensure a more secure retirement.

Many Gen Xers are significantly behind in their retirement savings. A recent study by Northwestern Mutual found that only 7% of Gen X respondents have saved more than 10 times their annual income–the amount most experts recommend for a comfortable retirement.

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Perhaps even more concerning, over half of Gen X respondents say they have only saved three times their annual income or less. Fidelity recommends having at least three times your annual salary by age 40, six times your salary by age 50 and eight times your salary by age 60 to stay on track for a comfortable retirement.

This shortfall in savings is compounded by the fact that many Gen Xers do not have a retirement income plan. According to Allianz, only 30% of Gen Xers have mapped out how they will fund their post-work years, the lowest rate among all generations surveyed.

A common misconception among Americans is that taxes decrease in retirement. However, financial experts caution that many Gen Xers could face higher-than-expected tax burdens. The reason? Most have their retirement savings in tax-deferred accounts, like 401(k)s and IRAs, which require taxes to be paid upon withdrawal.

“The big problem is that a lot of them are going to be faced with a lot of taxes in retirement,” Jonathan Dane, founder and chief investment officer for Defiant Capital Group in Pittsburgh, told U.S. News. He says one way to mitigate this is to stop putting money in tax-deferred accounts and transition to Roth accounts, which allow for tax-free withdrawals.

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Another concern is healthcare costs. While Medicare provides comprehensive coverage starting at age 65, it doesn’t cover everything. Long-term care expenses, like assisted living, typically aren’t included. Experts suggest considering long-term care insurance or using a health savings account (HSA) to prepare for these costs.

Finance

Deregulation to boost banks, a ‘force for strength in the economy’

Published

15 hours ago

January 21, 2025

Press Room

Deregulation to boost banks, a ‘force for strength in the economy’

Bank of New York Mellon (BK) CEO Robin Vince joins Yahoo Finance Executive Editor Brian Sozzi at the 2025 World Economic Forum in Davos, Switzerland, to discuss US President Donald Trump’s return to the White House and his expectations for the president’s second term and the impact on the financial sector.

“To see a government that’s really focused on growth and being able to make the economy everything that it can be, because ultimately, as one of America’s leading banks, we are focused on helping our customers to be able to grow and thrive. You know, that’s what our platforms are all about,” Vince says.

As deregulation under Trump is expected to benefit the financial sector, Vince says he’s “not that concerned” about the risks associated with loose regulation. “We have to be vigilant that that doesn’t happen. We need a strong, healthy financial system,” he says, explaining, ” We’ve seen how the strong banks have been able to actually help the system over the course of the events … We’ve been a force for strength in the economy, and that’s actually the role that we should be playing.”

The CEO underlines, “I’m looking forward. I’m thinking about the innovation. I’m thinking about the investment. I’m thinking about helping to make economies grow and our clients be successful.”

Watch the video above to hear more from the BNY CEO on tariff expectations, a potential uptick in merger and acquisition (M&A) activity, and his crypto outlook.

Click here for more of Yahoo Finance’s coverage from the World Economic Forum in Davos.

Check out Yahoo Finance’s Davos interview with Bank of America (BAC) CEO Brian Moynihan here.

This post was written by Naomi Buchanan.

Finance

Global climate finance alliances at risk as top lenders pull out | Semafor

Published

23 hours ago

January 21, 2025

Press Room

Global climate finance alliances at risk as top lenders pull out | Semafor

Major global climate finance alliances are increasingly at risk with European lenders reportedly mulling following major US banks in withdrawing from the UN-backed Net Zero Banking Alliance.

The timing of the departures of top US banks including Citigroup, Goldman Sachs, JP Morgan, and Morgan Stanley — as well as four large Canadian counterparts, and potentially top lenders in Europe, too — is significant: US President Donald Trump and other Republicans have led criticism of finance’s role in the energy transition, and the latest departures come months after the COP29 climate summit sought to increase targets for global climate finance.