TheChek News Flow

Major corporations have greener policy positions than their industry lobby groups

Who’s speaking for Europe’s companies?

The EU’s leaders have been at pains to stress their keen attention to the voice of business, as they develop the next stage of their green growth strategy. Perceived opposition from industry is driving a rethink on various planks of the European Green Deal. But which voices are they hearing — and do they actually represent the priorities of European companies?

New research from the think-tank InfluenceMap has raised some interesting questions on this front. It found that big European businesses have become significantly more supportive of green policies in the public positions they’ve taken — but their industry lobby groups have proved much less so.

In 2019, it found only 3 per cent of nearly 200 companies studied were fully supportive of “science-aligned policy” in their climate advocacy, while 34 per cent were deemed completely “misaligned”. Today, 23 per cent are fully aligned (and a further 29 per cent “partially aligned”), while the misaligned portion is down to 13 per cent.

Definitions of what constitutes “alignment” are of course open to debate (details of InfluenceMap’s methodology are here). But the significant change in these scores is notable. Still more so is the divergence between the policy positions of individual companies, and of the industry associations that represent them.

Among the associations studied by InfluenceMap, the share of those deemed fully supportive of science-based policy rose much more modestly, from 2 per cent in 2019 to 12 per cent today.

Bodies such as the We Mean Business Coalition have been warning for several years about the “lowest common denominator” effect in industry associations that advocate only policies that can be supported by the least ambitious of their members.

That effect is apparent in the InfluenceMap data, which assigned grades from A to E for all the companies and associations studied. Six of the eight automotive companies studied scored between B- and C-; the four cement companies covered all scored between B and C-. But both industry associations — the European Automobile Manufacturers’ Association and the European Cement Association — got a lowly D+.

There are various possible explanations for what is going on here. One is that, when association members thrash out their common position, companies strongly opposed to green policies have been able to overwhelm the lukewarm support of their more progressive peers. Another more cynical theory is that companies have been happy to let their industry bodies push back on green rules — while taking more supportive public stances in their own corporate position, to protect their image and avoid alienating EU authorities.

There were a few higher scorers among the business associations. Perhaps unsurprisingly, renewable energy lobby groups all scored highly. The highest scorer, with a grade of A-, went to the Corporate Leaders Group — a relatively small initiative with 17 members in Europe, including energy businesses Iberdrola and EDF, and the European businesses of US tech giants Amazon, Google and Microsoft.

A point worth remembering here is that much corporate lobbying still happens without full transparency. The InfluenceMap scoring is based only on publicly available information — and may therefore have given flattering scores to companies that have quietly pushed against climate policies while taking more positive stances in public.

As recent work by HEC Paris professor Alberto Alemanno has highlighted, investors still face a serious shortage of information to assess how far companies’ lobbying activities align with their sustainability claims. Pressure from money managers could yet lead to improved transparency in this area, and push companies to think more carefully about the positions taken by their industry associations.

Some businesses are already talking publicly about this issue — notably Unilever, which gets a B grade from InfluenceMap but is part of some trade groups that score much worse.

Last month, Unilever said eight of its 26 industry associations had examples of “misalignment” with its own climate policies, down from 14 of 27 the previous year. “We believe that most of the industry bodies we work with could be doing more,” Unilever said. If they don’t, companies will need to consider whether membership is worth the reputational risk.

Lending to buyout firms and private credit groups is up 20% in a year to $1.2tn

US bank lending to buyout firms and private credit groups has helped fuel a steep rise in loans to non-bank financial institutions, even as regulators fret that growing ties between the two sectors could become a systemic risk. 

Loans to non-banks reached approximately $1.2tn by the end of March, according to a report by Fitch Ratings, a 20 per cent increase year on year driven by lending to the private capital industry. Commercial loans were up just 1.5 per cent during the same period. 

The increase comes as regulators home in on the interconnectedness of banks to private equity and the fast-growing private credit sector, an opaque area of the market that has relatively little regulatory oversight. Regulators have asked banks to disclose more information about their relationships with so-called NBFIs to get a better overview of their exposure to the sector.

Fitch data shows that bank loans to NBFIs have risen since the start of the pandemic, from approximately $600mn at the end of 2019 to over $1tn at the start of this year, as businesses have increasingly turned to private credit for funding. 

That has put private credit firms in direct competition with banks while also turning them into some of their most important clients by providing the leverage that helps boost returns. Banks also have complex and layered relationships with buyout groups, some of which operate the largest private credit companies.

Borrowers that source funding from private credit funds and direct lenders are typically riskier and more levered. As some of these loans are made with money borrowed from banks, there are concerns that bad credit could bleed through to the broader financial system. 

The Fitch report states that for now a downturn in the private credit sector is “unlikely to have widescale financial stability implications for the largest banks”. However, it cautions that it is difficult to fully assess the risks and that “second order effects are more difficult to quantify”. 

The IMF warned in its Global Financial Stability Report last month that increased lending to NBFIs by banks “could make the financial system more vulnerable to high levels of leverage and interconnectedness”. It also highlighted that more than 40 per cent of borrowers from private lenders had negative free cash flow at the end of last year, up from 25 per cent three years prior. 

Most of the exposure to NBFIs is concentrated among 13 banks, including JPMorgan Chase and Wells Fargo. Categories include mortgage, business and consumer credit intermediaries as well as private equity funds and other loans to financial institutions that do not take deposits. 

US banks have only recently started to break down their loan books by asset classes in quarterly reports filed with the Federal Deposit Insurance Corporation. 

JPMorgan was an outlier among the largest banks last quarter by labelling $133bn of its lending to non-banks as “other” instead of breaking it down by type of borrower. But America’s largest bank has since provided more detail on its private credit and private equity loans and unfunded commitments.

“Robust growth in bank lending to non-banks warrants close monitoring as historically excessive growth in credit has led to asset quality problems that negatively affect banks,” the report concluded. But it added that bank exposure to non-banks is typically better than lending to the underlying borrowers.

Super-high altitude UAV with 7,000km range and ability to release up to 100 units of small drones will take off on first mission by June-end

China’s “drone carrier” Jiu Tian will take off for its first mission by the end of June, laying the groundwork for expanding the Chinese air force’s operational reach in unmanned aerial combat.

Chinese media reports at the weekend commented on the coming launch, and state broadcaster CCTV confirmed the mission on Monday.

The first mission flight will mark the beginning of a series of tests before the “drone mother ship” UAV is deployed by the People’s Liberation Army (PLA).

Jiu Tian – or “high sky” – is a super-high altitude, long-range unmanned aerial vehicle (UAV) that debuted at China’s premier Zhuhai air show in November.

With a maximum range of 7,000km (4,350 miles) and an altitude of 15,000 metres (50,000 feet), the jet-powered drone can carry up to 6 tonnes of ammunition and small drones.

It has a maximum take-off weight of 16 tonnes, a wingspan of 25 metres and an ability to fly above many of the medium-range defence systems that are deployed worldwide.

Up to 100 units of loitering ammunition or small drones, including kamikaze UAVs, can be released from both sides of the belly of the aircraft – extending their reach.

If deployed, the Jiu Tian will contribute to the PLA’s swarming capabilities – in which a large group of networked drones are released to work together on military missions or to overwhelm the enemy’s air-defence systems.

It can carry a range of payloads on eight hardpoints and is capable of intelligence, surveillance and reconnaissance assignments, as well as electronic warfare.

Beijing has developed increasingly sophisticated and innovative drones over the past decade, as UAVs have come to play a significant role in modern warfare and asymmetric capabilities. Such operations are believed to be crucial to potential regional military conflicts, such as in the Taiwan Strait.

The heavyweight Jiu Tian UAV carrier adds to China’s stock of advanced drone technology, such as the stealth combat CH-7 and the medium-altitude, anti-submarine Wing Loong-X. Some see it as a potential rival to the two dominant American drone models: the RQ-4 Global Hawk and the MQ-9 Reaper.

The Global Hawk can carry out advanced reconnaissance at up to 18,000 metres and has a similar maximum take-off weight as the Jiu Tian, but cannot conduct strikes. The Reaper is a medium-altitude multirole UAV with a maximum take-off weight of around 5 tonnes.

Designed by state-owned aerospace giant Aviation Industry Corporation of China, the Jiu Tian was built by Xian Chida Aircraft Parts Manufacturing, a subsidiary of state-owned defence enterprise Guangzhou Haige Communications.

According to the manufacturer, the Jiu Tian’s payload compartment has a modular design that allows it to carry out various functions, including transport in high-security and complex environments, public security, border defence, maritime police and maritime surveillance, emergency rescue, land and resources protection, and other fields.

The Chinese navigation system has ascended to a dominant position in its home market, driving nearly US$80 billion of economic output last year

The BeiDou satellite navigation system, China’s answer to GPS, cemented its leading position in the Chinese market last year, as its economic footprint grew more than 7 per cent and it expanded its compatibility to support a broader range of devices.

The home-grown system – named after the seven bright northern stars used for navigation in ancient China – drove a total of 575.8 billion yuan (US$79.9 billion) of economic output in 2024, up 7.39 per cent year on year, according to data published on Sunday by the GNSS and LBS Association of China, a semi-official industry body.

BeiDou is now compatible with 288 million smartphones – mostly produced by domestic brands like Huawei and Xiaomi – in China, and is used to track locations more than 1 trillion times every day, the association said.

China’s leading navigation apps – Baidu Maps and Amap – said they used BeiDou to guide users on journeys of a combined 4 billion kilometres per day.

More than 30 years since its first satellites were launched, BeiDou’s role continues to grow in its home market as China pushes forward with a strategy of technological self-reliance, aiming to reduce its dependence on Western-made systems.

Beijing has poured investment into domestic technologies amid fears the country could be cut off from US services like GPS during a period of heightened geopolitical tensions, but China’s vast market is also turning BeiDou into a viable business.

To expand its reach in China’s consumer market, BeiDou is expanding its compatibility from smartphones and in-vehicle satellite navigation systems to wearables, drones, electric bikes and even robots, the state-run news agency Xinhua reported.

BeiDou is also reportedly broadening its coverage in China and upgrading its technology to reduce latency, as GPS faces growing barriers in the Chinese market due to national security concerns.

“America’s GPS in China is now either not supported on some domestically made devices or deliberately not used due to security reasons, especially when a government agency, state-owned enterprise or military unit needs navigation services or extra-precise mapping,” said an academic at Zhejiang Sci-Tech University, who declined to be named due to privacy concerns.

“Foreign companies face certain restrictions on collecting high-precision mapping data in China, but many smartphones like iPhones support both GPS and BeiDou, automatically selecting the best signal,” he added.

The development of the BeiDou system also drives investment in a range of related hardware and services, including chips, algorithms, data processing, terminal equipment and ground infrastructure, as well as the infrastructure needed to build, launch and maintain satellites.

With its functionality now rivalling GPS in many areas, Beijing is also eager to promote BeiDou overseas.

The Chinese system has already expanded its coverage worldwide and has reportedly honed the precision of its positioning in key Asian countries, including nations across Southeast Asia as well as other countries involved in China’s Belt and Road Initiative.

BeiDou’s operator, the China Satellite Navigation Office, aims to replace its existing constellation with new, more advanced satellites by 2035, with the next-gen satellites reportedly supporting real-time positioning accurate to within a centimetre.

The new satellites will also be able to provide precision positioning for deep-sea exploration and flights at altitudes far beyond those typically used by commercial aircraft, according to state media reports.

Member countries can borrow from Brussels and spend on weapons systems and platforms through joint procurement

EU capitals have agreed to launch a €150bn loans-for-arms fund backed by the bloc’s shared budget, in a landmark shift for Brussels spurred by Russia’s war against Ukraine and US President Donald Trump’s demands for Europe to spend more on its own security.

The initiative, which will allow EU countries to borrow from Brussels and spend on weapons systems and platforms through joint procurement, was proposed by the European Commission earlier this year as a means to speed up the continent’s rearmament.

It secured political agreement from capitals on Monday morning, three officials familiar with the decision told the Financial Times, after months of haggling over the details of how the money can be spent. It will be formally agreed on Wednesday, the officials said.