Daily Update: January 31, 2022

Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy.

ESG is no longer a buzzword. As investors increasingly base their decisions on today’s environmental, social and governance challenges, their actions could spur greater accountability, greater regulatory oversight and credible disclosure backed by better data.

After 2020, how companies have solidified need a strong commitment with ESG principlesmomentum continued until 2021. Over the past year, the quality and quantity of ESG data has improved in response to demand and regulatory factors. The Biden administration has reinvigorated ESG policies and the climate emergency. Global conversations about the energy transition have become increasingly nuanced and shifted from a focus on climate change mitigation to climate resilience. Social and governance issues have gained traction with global investors and policymakers. Going forward, investors, boards and government leaders are likely to face a number of intersecting pressures and challenges in 2022 that will advance their transparency, disclosures and actions, according to S&P Global Sustainable1.

Boards of directors and heads of government can need to do more to demonstrate that they are sufficiently equipped to understand, oversee and integrate ESG issues and principles in the face of a shareholder activism and public pressure on whether to divest poor ESG results. New ESG regulations can also see increased convergence companies on ESG data, metrics and reporting requirements and measures of success.

Calls for companies to achieve their net zero commitments are likely to grow louder and include social issues alongside environmental issues. Market players can come together to assess the importance of natural capital and biodiversity risks, as well as social issues in supply chainswhile financial institutions specifically prioritize climate stress testing.

the sustainable debt market is poised for continued growth this year, but will face the challenge of managing that growth against growing concerns about greenwashing.

These are the “key ESG trends that we believe will drive the conversation in 2022. Critically, these trends exhibit overlaps and interactions that will directly influence the prospects for meaningful progress on ESG matters in 2022,” said said S&P Global Sustainable1 President Richard Mattison. and S&P Global Ratings Global Head of Sustainable Finance, Bernard de Longevialle, said in S&P Global’s 2022 ESG Trends Outlook. “The E, S and G trends we have identified should not be considered in isolation, but rather we believe they should be understood in relation to each other.”

Today is Monday, January 31, 2022and here is today’s essential intelligence.

Economy


Listen: The Essential Podcast, Episode 53: On the Glass Cliff – Women CEOs During the Pandemic

Gabriel Morin of Université Paris 2 and Daniela Brandazza of S&P Global join the Essential podcast to talk about joint research on the differences between the communication styles of male and female CEOs during the first months of the pandemic.

—Listen and subscribe to the Essential Podcast, a podcast from S&P Global

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Capital markets


Global Sovereign Rating Trends 2022: Despite Stabilization, Pandemic Threatens Recovery

The evolution of the pandemic remains the main risk for sovereign ratings. A more fragile social context and political polarization will limit the ability of governments to implement measures to rebalance revenues and expenditures. This year is likely to be a year of transition in terms of fiscal consolidation, which, if further delayed, could become a drag on ratings. Rising global interest rates will pose an additional challenge for emerging markets, especially those that rely heavily on external financing.

—Read the full report from S&P Global Ratings

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International trade


Indonesia’s crackdown on commodity exports raises supply concerns

The recent resurgence of resource nationalism in Indonesia has triggered price hikes for several commodities and raised concerns about global supply. Renewed emphasis on ensuring low domestic commodity prices and the development of higher value-added downstream industries are expected to further increase price volatility in sectors such as coal, LNG, metals and oil. Agriculture. The country is a major producer of metals and LNG and is also the world’s largest exporter of thermal coal and palm oil.

—Read the full article from S&P Global Dishes

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ESG


Key trends that will drive the ESG agenda in 2022

As many large corporations set sustainability goals and release ESG-related data in 2021, investors, regulators and the general public are exercising greater scrutiny of corporate sustainability efforts. In 2022, boards and government leaders will face increasing pressure to demonstrate that they are sufficiently equipped to understand and oversee ESG issues, from climate change to human rights to social unrest.

—Read the full report from S&P Global Sustainable1

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Energy and raw materials


As Europe seeks alternatives to Russian gas, Algeria has pipeline capacity to spare

In 1981, while trying unsuccessfully to block a Soviet gas pipeline during a Cold War chill, then-US President Ronald Reagan warned Europe of its growing dependence on oil. Russian energy, urging the continent to seek alternative suppliers, particularly in North Africa. 41 years later, a similar geopolitical game is playing out as tensions between Russia and the West rise, with President Joe Biden saying his administration is working with the EU to identify other sources of vital natural gas, including – again – from North Africa.

—Read the full article from S&P Global Dishes

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Technology and media


AMC shares fall from grace as company seeks to refinance high-rate debt

In 2021, retail investors referred to AMC as a “meme stock”. Thousands of armchair traders crammed into the ticker out of appreciation for the century-old company and to thwart Wall Street short-sellers. AMC took advantage of the gains, issuing both debt and equity to shore up its cash. The company ended 2021 with nearly 514 million shares outstanding, massively diluted from the 104 million shares traded at the end of 2019, according to data from S&P Global Market Intelligence. However, the stock market tsunami receded in the first month of 2022, and the company finds itself with a debt-laden balance sheet and market capital well below the high water level of the previous year.

—Read the full article from S&P Global Market Intelligence

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Written by Molly Mintz.