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Businesses face proposals on abortion, guns and climate change as groups with various viewpoints strive to get their agendas heard at this year’s annual meetings

A backlash against companies taking on issues ranging from climate change to abortion rights is helping to push shareholder proposals to record numbers this year.

More advocacy groups are using these resolutions to try to inject their voices into the corporate agenda, questioning companies’ adoption of policies that some view as being overly political. One group, for example, put forward a resolution requesting that Eli Lilly report on the risks of supporting abortion. Last year, the drugmaker expressed its opposition to Indiana’s near-comprehensive abortion ban.

Such proposals questioning companies’ stances on social and environmental issues have come in record numbers, surging to 74 for annual meetings held before May 31, up from 43 last year, according to data from ISS Corporate Solutions, a unit of proxy-advisory firm ISS.

“The incredible dissension in the political arena is spilling over into the capital markets,” said Heidi Welsh, executive director of the Sustainable Investments Institute, a U.S.-based nonprofit that says it provides nonpartisan analysis of sustainability issues. “Companies are getting dragged into partisan fights that they don’t want to be in, but they can’t avoid it anymore.”

Companies are facing proposals from both sides of the political spectrum, dragging them into the increasingly fractious conversations over environmental, social and governance issues. In total, 682 shareholder proposals were filed for annual meetings being held through May 31, according to ISS Corporate Solutions.

“This is becoming a focal point of our society as a whole,” said Jun Frank, an ISS Corporate Solutions managing director and lead author of a paper on the topic scheduled to be published this week.

As Republican politicians including Florida Gov. Ron DeSantis continue to push back on ESG, conservative-leaning shareholders have put forward proposals questioning, for example, the prudence of corporate diversity policies and the feasibility of decarbonization. Businesses should focus on the bottom line, they say.

“Companies are abandoning their fiduciary duties to shareholders to adopt the hard left position,” said Scott Shepard, a fellow at the National Center for Public Policy Research, a Washington-based conservative think tank that has put forward a number of anti-ESG proposals. “We’re just trying to get them back to sanity and neutrality.”

A left-leaning counterpart, California-based foundation As You Sow, said it wants to promote “environmental and social corporate responsibility” through shareholder advocacy. Proposals by liberal advocates aim to drive companies to scrutinize their carbon emissions or audit the racial makeup of their workforce, among other things.

A 2021 Securities and Exchange Commission policy change that has made it harder for companies to limit these proposals is also helping drive their growth.

Proxy season, a chance for shareholders to help shape corporate agendas, runs in the spring, when most companies have their annual meetings. Although shareholder resolutions are generally nonbinding, and most don’t pass, even a 30% vote in favor of an issue is often viewed by proponents as a strong message that the company needs to seriously consider it.

This season, American Express spoke out against an abortion-related proposal that would ask the company to report on the risks of cooperating with law-enforcement officials investigating abortions in states where the procedure is illegal. Amex’s board said the company is required to comply with law-enforcement requests. Shareholders agreed with Amex and voted down the proposal.

Alphabet, the parent company of Google, recommended that shareholders vote down a similar abortion-related proposal, saying the tech company routinely pushes back on “overbroad” demands. Shareholders are scheduled to vote on it in June.

Many boards try to avoid alienating customers and shareholders and thus tend not to take sides, advising that every proposal be voted down. In some cases, they negotiate with shareholders to withdraw proposals before a vote happens. But studying these proposals eats up board time and exposes the companies to potentially unwelcome media attention.

Mastercard is facing shareholder pressure on the possible tracking of gun-related transactions. The credit-card company said that although it has committed to working with officials on addressing gun violence, it paused efforts to implement a separate merchant category code for gun stores after several states introduced legislation on the category codes issue. The proposal targeting Mastercard is up for a vote in June.

“They’re in the business of doing business. Most companies would probably rather stay out of the political discourse,” said Michael Littenberg, a partner at law firm Ropes & Gray who advises companies on ESG issues. “There’s an increasing amount of proposal fatigue. The more proposals that companies get, the more proposals they have to spend time thinking about at the board level.”

Maria Ghazal, counsel at Business Roundtable, an association for company chief executives, said, the SEC policy change also has “lowered the bar” and has led to a “broken system forcing companies to divert resources and attention to addressing an influx of proposals that are often unrelated to their governance and long-term success.”

Many proposals ultimately fail to resonate with most shareholders: Last proxy season, about 12% of ESG-related proposals targeting S&P 1500 companies that went up for a vote won support from a majority of shareholders, according to data from accounting firm Ernst & Young.

Still, the Sierra Club, an environmental group, said investors sent a message in April when 28% of Bank of America shareholders voted for a proposal requesting that the bank disclose details on how it would meet its 2030 climate transition target. The bank’s board advised shareholders to vote no, saying the bank disclosed 2030 targets related to manufacturing, energy and power generation, and intended to provide more disclosures next year.

“Any material vote from the more substantial, longer-term investors in companies will usually trigger some kind of reaction from the board,” said Nathan Fabian, chief responsible investment officer at Principles for Responsible Investment, a United Nations-affiliated advocacy organization whose signatories include BlackRock, Vanguard Group and other institutional investors.

The current political climate means companies can expect more proposals next year.

“These proposals are not going away,” Ropes & Gray’s Littenberg said. “I can guarantee you that next year we will have another record number.”

Off-label use of Novo Nordisk’s drug can help people shed excess pounds

A drug approved by the Food and Drug Administration to treat people with Type 2 diabetes has ignited a craze among social-media influencers, the rich and famous and everyday people alike. Ozempic, made by Novo Nordisk A/S, has gained popularity for its off-label use, helping users drop excess pounds within a matter of months.

Demand has soared for Ozempic as well its sister drug, Wegovy, and Eli Lilly & Co.’s Mounjaro. Ozempic’s main ingredient, known as semaglutide, is in Wegovy, which was approved by the FDA in 2021 to treat obesity.

Lilly’s Mounjaro, whose main ingredient is tirzepatide, was approved by the FDA in 2022 to treat diabetes, though it has also been used for weight loss.

Supply for the drugs hasn’t always kept up with demand. Wegovy was in short supply during much of 2022 because of a manufacturing problem, which fueled the demand for alternatives such as Ozempic and Mounjaro, leading to shortages at times for those drugs, too. The shortages have sometimes deprived people with diabetes of their prescription refills. The companies are adding manufacturing capacity but supply constraints have continued.

Here’s what to know about Ozempic and other drugs like it:

How does Ozempic work?

Ozempic is in a category of medications that work by mimicking the effects of a naturally occurring gut hormone called glucagon-like peptide-1, or GLP-1. Receptors to GLP-1 are found in the pancreas, the brain and elsewhere in the body. The drug enhances these receptors, which help the pancreas make more insulin, in turn helping to reduce blood-sugar levels that can become elevated in people with diabetes.

The drugs limit the amount of sugar that the liver releases into the bloodstream, and slow down how long food stays in the stomach. GLP-1 drugs contribute to weight loss by suppressing appetite and making you feel full sooner when you eat. Mounjaro also promotes a second gut hormone known as glucose-dependent insulinotropic polypeptide, or GIP, which is believed to enhance these effects to treat diabetes and obesity. Ozempic, Wegovy and Mounjaro are injected once weekly.

Who should take Ozempic and drugs like it?

Ozempic and Mounjaro are approved for people with Type 2 diabetes, but doctors have discretion to prescribe them off-label for obesity because clinical studies showed they induced weight loss. Doctors generally should reserve such off-label prescriptions for people who meet criteria for being overweight or obese, but in some cases patients who meet neither of those criteria are still getting their hands on Ozempic to lose weight. Lilly is seeking FDA approval to market Mounjaro specifically for weight loss, in addition to its approved use in diabetes.

Wegovy is approved for weight management in people with a body-mass index of at least 30—the criteria for obesity—or at least 27 in people who also have a weight-related condition such as high blood pressure. A BMI of 30 is equivalent to a 5-foot, 9-inch person who weighs at least 203 pounds. In studies, Wegovy helped people lose up to about 17% of their body weight, while Mounjaro helped people lose up to about 22.5% of their weight, on average. The studies for Ozempic weren’t designed to assess weight-management outcomes.

How much do these drugs cost?

The drugs are expensive, ranging from $935 for an Ozempic injection pen that lasts a month, to $1,349 per 28-day supply of Wegovy pens in the U.S. Many insurers cover Ozempic and Mounjaro for diabetes, but coverage is spotty for their use in weight loss.

Commercial insurance and Medicaid coverage for Wegovy have been expanding, according to its manufacturer, Novo Nordisk, though insurers often require prior authorization before paying for the drug.

Scholars differ on whether the Constitution lets the president pay debts, whatever Congress says

The debt-ceiling standoff has renewed debate over the Constitution’s 14th Amendment. Some lawyers argue it lets President Biden unilaterally pay the nation’s debts without heeding Republicans’ demands; others say that idea fundamentally misreads the Constitution. Here’s an overview of the so-called 14th-Amendment strategy and why it looms large in negotiations between the White House and House Republicans.

Ratified in 1868, the 14th Amendment is best known for extending citizenship to former slaves and guaranteeing “equal protection of the laws.” But it also contains a more obscure, less-litigated section that requires the government to repay its debts. That clause, Section 4, states: “The validity of the public debt of the United States, authorized by law, …shall not be questioned.”

Section 4 was added to address debts incurred in fighting the Civil War. It punished the Confederacy’s creditors while protecting lenders that helped finance the Union war effort.

Some Democrats say the 14th Amendment lets Biden bypass the effort by Republican lawmakers to lay down conditions for paying off debts already incurred. They argue that because he as president has a duty to ensure repayment of the government’s debts, he is within his power to keep borrowing money to do so—even if Congress disapproves.

The Supreme Court has never addressed the 14th-Amendment theory, which only in the last decade or so has gone from “fringe” to “mainstream,” according to the legal historian Garrett Epps, an early proponent of the strategy.

Treasury Secretary Janet Yellen said she doubted that the 14th Amendment was an effective solution to the current debt standoff. “What I would say, it’s legally questionable whether or not that’s a viable strategy,” Yellen said.

Some experts say invoking the 14th Amendment to exceed the debt ceiling would be downright unconstitutional. In the U.S. constitutional system, Congress holds the power of the purse and controls government spending. Allowing the executive branch to incur debt without the approval of Congress violates this separation of powers, these scholars maintain.

“It’s pretty central to our system of government that Congress has to be the one figuring these things out,” said Philip Wallach, a senior fellow who focuses on regulatory-policy issues at the American Enterprise Institute, a center-right think tank based in Washington, D.C. “The Biden administration even flirting with these ideas really suggests that the administration’s fidelity to the Constitution is questionable or opportunistic.”

Other scholars say Biden wouldn’t be overstepping his authority, but simply ensuring that Congress’s own spending commitments are honored.

“Yes, Congress has the power of the purse,” said Georgetown law professor Anna Gelpern. “But there are constitutional limits on the way in which Congress exercises its power, and exercising it to undo its own commitments is not permissible.”

The president has voiced support for the 14th-Amendment strategy and concerns about its practicality.

“I’m looking at the 14th Amendment as to whether or not we have the authority—I think we have the authority,” Biden told reporters Sunday. “The question is, could it be done and invoked in time that it would not be appealed, and as a consequence past the date in question and still default on the debt. That is a question that I think is unresolved.”

If the president were to invoke the Amendment and exceed the ceiling, Republicans would surely sue. It is unlikely such legal challenges would get resolved before June 1, when Yellen has said the U.S. government could become unable to pay all its bills.

Putting aside who has the better legal arguments, the 14th-Amendment strategy comes with clear risks and downsides, said David Kamin, who served as deputy director of the White House National Economic Council earlier in the Biden administration.

“Even though I think there’s strong arguments around the 14th Amendment, it’s not one that provides a clean solution relative to Congress doing what it should and actually raising the debt limit,” said Kamin, now a professor at New York University’s law school.

No president has ever used the 14th Amendment to address the debt ceiling, which wasn’t instituted by Congress until 1939 and for many decades rarely triggered a political battle. The 14th-Amendment strategy gained attention in 2011, when Barack Obama was president and House Republicans used debt-ceiling talks to force spending cuts. Former President Bill Clinton said at the time that he would invoke it “and force the courts to stop me.” Obama demurred.

TCS Capital has 4%-plus stake in Yelp, asks recommendation site to consider merger with Angi

Activist investor TCS Capital Management has built a stake in Yelp YELP -0.67%decrease; red down pointing triangle and is calling on the service-recommendation site to explore strategic alternatives including a sale, according to people familiar with the matter.

TCS Capital owns more than 4% of the shares outstanding of Yelp’s common stock, making it one of the company’s five biggest shareholders, the people said. TCS Capital has been an investor in Yelp for most of the past five years, but the stake hasn’t been revealed publicly before.

TCS Capital believes that Yelp could be sold to another technology or media company or private-equity buyer, for at least $70 a share—or more than double the current stock price, according to a letter the fund’s founder and president, Eric Semler, plans to deliver to Yelp’s board Tuesday. The letter was seen by The Wall Street Journal.

Shares of Yelp, which has a market capitalization of about $2.2 billion, closed Monday at $32.52, off about 17% from a 52-week high of $39.26. The shares are down from a high of nearly $100 in 2014.

Semler also plans to tell Yelp’s board that his investment firm is prepared to make its own bid to acquire Yelp, with a group that includes an executive who has served as chief executive officer of a public company in the same business, the letter says, without naming the executive.

Alternatively, Yelp could explore a tax-free merger with online-services company Angi, formerly known as Angie’s List, Semler plans to say in the letter.

Semler, who founded TCS Capital in 2001, won a board seat at Angie’s List in 2016 after his firm called on the business-review platform to explore strategic alternatives, including a sale to IAC’s consumer-review site HomeAdvisor. IAC in 2015 had made an unsolicited buyout offer for Angie’s List, but the proposal was rebuffed.

IAC ultimately acquired Angie’s List and combined it with HomeAdvisor to form a new publicly traded company, Angi, in 2017.

Angi went on to acquire Handy Technologies, an on-demand platform that helps match people looking for household services with professionals, in 2018. Angi has a market capitalization of about $1.6 billion as of Monday.

Semler believes a combination of Yelp and Angi would yield “enormous revenue synergies and cost savings that could ultimately double the value of Yelp’s shares” and create a powerhouse player in what he describes as a booming market for home services.

Yelp’s longstanding chief executive, Jeremy Stoppelman, co-founded the business in 2004 and has served as CEO for nearly two decades.

Semler believes that Stoppelman has received “unconscionable compensation packages” and that Yelp’s board of directors lacks industry experience, according to the letter.

“Yelp maintains an active dialogue with our shareholders and values constructive feedback on our business and ways to create value,” a Yelp spokesperson said.

Despite ongoing pressures in the broader advertising market, Yelp has managed to keep increasing sales. The company reported first-quarter revenue of $312 million, up 13% from the same period a year earlier. It booked year-over-year growth of roughly 25% in its biggest and fastest-growing category by revenue, Home Services.

The first quarter of 2023 brought fewer so-called proxy battles than many had expected coming into this year, as activists agreed to more truces and companies got proactive in making changes such as cost cuts and executive shake-ups.

Overall, the number of activist campaigns in the U.S. dropped 30% in the first quarter from a year earlier, according to an analysis by bankers at Barclays, making it the slowest start to the year in the past five years.

But in recent weeks, activity has started to pick back up, hinting at what could end up being a busy summer season.

The Journal reported that Engaged Capital was planning to run a proxy fight for three board seats at Shake Shack before the activist investor reached an agreement with the burger chain almost immediately thereafter.

Meantime, Elliott Investment Management earlier this month published a letter asking Goodyear Tire & Rubber to appoint five new independent directors and find ways to untap value in its retail-store network. Elliott also recently revealed a stake in NRG Energy and is asking for a strategic review of the power company’s home-services unit, Vivint.

And a boardroom brawl between Carl Icahn and biotech giant Illumina is also expected to head to a shareholder vote later this week.

Steel boxes pile up at ports after sharp fall in demand following pandemic-era boom

Global production of shipping containers has slumped dramatically as demand for goods sinks following the easing of pandemic restrictions, leaving the corrugated steel boxes to pile up at major ports.

Figures provided to the Financial Times by Drewry, a maritime research consultancy, show that production of 20-foot equivalent units — the industry’s standard size for a container— fell by 71 per cent from 1.06mn to 306,000 between the first quarter of 2022 and the same period this year.

The decline marks a sharp reversal from two years ago, when container manufacturing boomed in response to a pandemic-induced surge in demand for physical goods, which led to a shortage of the rectangular boxes.

However, demand for exports has waned since restrictions eased and economies have reopened, leaving the shipping industry with the opposite problem: a surplus of containers that threatens to overwhelm ports in China, where up to 95 per cent of the world’s boxes are produced.

AP Møller-Maersk, one of the world’s largest shipping conglomerates, has said it is halting production of dry containers until at least 2024, though it said it may resume building 20ft boxes sooner than its larger 40ft versions as the demand for the former appears to be more resilient.

Anne-Sophie Zerlang Karlsen, Maersk’s head of Asia-Pacific customer delivery, told the Financial Times the company was also seeking to sell or scrap more of its older boxes to take advantage of the glut.

The drop-off in demand has hit manufacturers hard. Profits at China International Marine Containers, one of the country’s largest producers of the boxes, plunged 91 per cent year-on-year to Rmb160mn ($23mn) in the first three months of this year.

Sales of standard containers dropped 77 per cent during the period, the Shenzhen-headquartered company said, blaming a “continuous decline in the container trade and an insufficient demand for new containers”.

COSCO Shipping Development, the container manufacturing arm of state-owned shipping group COSCO, saw profits dip 71 per cent in the first quarter of this year to Rmb398mn.

World Trade Organization economists believe export growth will stutter for the duration of this year, suggesting demand for containers will remain weak. The latest WTO forecasts, out last month, estimate a boost to trade in goods of just 1.7 per cent this year — down from 2.7 per cent growth in 2022.

Container shipping lines are already having to cope with a severe decline in profits following a record period for earnings during Covid-19 lockdowns, when supply chain disruptions — along with the boom in demand for goods — drove up the cost of shipping.

The boom left shipping groups rushing to stock up on new containers after pandemic-induced bottlenecks at many ports led to shortages of boxes in place to ship goods from Asia.

In 2021, global production reached 7.1mn standard-sized containers, more than double the output in 2020, according to Drewry.

Now demand has fallen so dramatically that port owners in the region face the fresh problem of having to find space for record volumes of unused boxes.

Stockpiles are now at record levels across the Asia-Pacific region, Karlsen said, adding that “massive amounts” of containers were expected to continue to pile up in ports the region throughout this year.

The availability of boxes at Shanghai, the world’s largest container port, has been higher this year than during the spring lockdown of 2022, according to analysis firm Container xChange.

However, Michael Fitzgerald, deputy chief financial officer at the Hong Kong-listed shipping group Orient Overseas Container Line, said earlier this month that the glut at Chinese ports had eased “over the past few weeks”.

Daniel Křetínský: the Czech energy tycoon building a European media and retail empire

Billionaire investor in groups from Royal Mail to Le Monde deploys coal and gas wealth to accelerate diversification drive

The first time a young Daniel Křetínský visited Rome he stayed in a hostel 40 kilometres outside the city to save money. A few decades later, the Czech billionaire criss-crosses Europe in a private jet regularly, as one of the continent’s most prolific dealmakers.

The 47-year-old’s fortune has doubled to more than $10bn in the past year, according to estimates by Forbes and people with knowledge of his business, as the energy crisis supercharged profits at his power, gas and coal businesses.

He is now seeking to deploy the windfall to accelerate his group’s expansion into media, logistics and retail, building on a string of recent transactions in Germany, the UK and especially France.

An avowed Francophile, Křetínský has taken an interest in many of the country’s highest-profile active deals as he gradually sheds his outsider status. Since 2018, he has snapped up power plants and magazine titles such as Elle and Marianne, while building stakes in newspaper Le Monde, broadcaster TF1 and electronics retailer Fnac-Darty.

“He’s a builder, not a financier . . . he wants to build something long term that produces products and services,” said Denis Olivennes, an adviser who presides over CMI France, the French arm of Křetínský’s company Czech Media Invest. “He’s not a speculator.”

Some might question that characterisation. Křetínský built his empire by scooping up overlooked businesses on the cheap, often using external financing. Its backbone was a set of unloved, often carbon-intensive businesses that helped turn his Prague-based energy group EPH into a sprawling conglomerate with €30bn in assets and with revenues that nearly doubled to €37.1bn last year.

Křetínský has a long way to go to fulfil his ambitions outside energy. EPH generated the vast majority of his empire’s more than $40bn in revenues last year, according to people close to the business.

A football fanatic who owns AC Sparta Prague and in 2021 bought a 27 per cent stake in English Premier League club West Ham United, the former lawyer was described as sharp, strategic and detail-oriented by people who know him.

In France, Křetínský is in exclusive talks to buy publisher Editis from billionaire Vincent Bolloré’s media group Vivendi, and has floated the idea of taking over the declining IT services business of Atos in a spin-off deal — with a cheque for several hundred million euros attached to finance a turnround.

His most recent pitch in the country is to lead a more than €1bn capital injection into deeply indebted food retailer Casino, in which he is already the second-biggest shareholder. If successful, it could wrest control of the group from founder Jean-Charles Naouri, who has resisted previous deals that would have loosened his grip.

Křetínský receives advice in the country from figures including Olivennes, a media veteran with experience in retail as well as in navigating France’s halls of power, and Jean-Michel Mazalerat, who runs the French subsidiary of his energy company.

“Every time there is a big bid in France, whether it is Editis or Casino, he’s there,” said one French investor. “He bought his way into the establishment and it’s working.”

Křetínský declined to comment.

Born in 1975 in the Czech city of Brno to a professor and a judge, Křetínský learnt French as a schoolboy and travelled to France on exchange programmes. After beginning his university education in his hometown, he continued his legal studies in Dijon. “There’s a sentimental link there,” said one adviser.

Following a stint as a junior lawyer in Brno, in 1999 Křetínský joined J&T, an investment group founded in Slovakia, and quickly rose to become a partner and noted dealmaker. After buying a German coal company in 2009, J&T decided to spin off its energy assets into a new structure, EPH, granting him a 20 per cent stake in the venture.

His nose for a deal confirmed, Křetínský went on to lead lucrative acquisitions in central and eastern Europe, first in energy infrastructure then in power generation, eventually assuming control of EPH. He also forged ties with the late Petr Kellner, one of the Czech Republic’s richest men and the father of Křetínský’s future partner Anna Kellnerová, an Olympic showjumper.

“I was not surprised that he has become a successful entrepreneur . . . He does not waste time on things that are not important to his goals,” said Jiří Gottweis, who employed Křetínský at his Brno law firm.

Křetínský’s energy portfolio expanded rapidly with the acquisition of assets including power plants in the UK from Centrica and in Italy from Eon, as EPH became one of the biggest power suppliers in Europe.

His deals have not come without controversy. One of his early successes was securing a monopoly on Slovakia’s gas storage operations in a co-ownership deal with the Slovak government that included a pipeline company that transmits Russian gas — a connection that raised eyebrows when he first started investing in western Europe.

Gary Mazzotti, chief executive of EP Infrastructure, whose assets include Křetínský’s Slovak gas business, said the businessman’s decisions were based on pragmatism.

“People get obsessed with Russian risk but at the end of the day people here need to eat, sleep and have energy,” he said. “So if it comes from Russia, OK, but if not Europe can find alternatives. I know the story is whether we can survive without Russia but the reality is that we already have been.”

In Germany, Křetínský became known as a “coal baron” after taking over a number of coal-fired power plants as well as mines producing lignite, a highly polluting variety of the fuel.

“His realisation was that a 40 per cent renewable goal by 2040 was probably not realistic, and even then 60 per cent is still going to be fossil-based power,” said a person who has worked with him on energy projects. “Meanwhile, everyone rushed into renewables so returns were very low. When everybody is rushing into one side of the market, he’s playing the other side.”

For Mazzotti, “Daniel is a realist . . . someone who understands how long processes will take . . . He invests in common sense even if that common sense is sometimes not palatable”.

EPH said this month that it would split its German assets into a separate entity “to constructively negotiate with the German authorities on a phaseout of coal-fired power plants by 2030”.

By the mid-2010s, Křetínský was beginning to look beyond energy for other undervalued sectors. He landed on retail and logistics, which had struggled with the rise of online shopping, and media, where the internet had disrupted business models.

As well as Fnac Darty, his retail portfolio includes stakes in German wholesaler Metro as well as US sneaker chain Foot Locker and UK grocer J Sainsbury.

His 2018 investment in Le Monde, viewed as a pillar of the French establishment, ruffled feathers among the paper’s journalists and shareholders. While Křetínský had already snapped up radio stations in eastern and central Europe and magazine titles from French group Lagardère, buying into France’s biggest daily newspaper brought national attention and scrutiny.

“The view at Le Monde is that Daniel doesn’t count or doesn’t exist,” said one senior insider at the paper.

CMI France, his French media group had €220mn in annual revenues, according to people with knowledge of the business, a figure that could rise substantially if the Editis deal goes through. “Then we start to become a size of group that is interesting, with about €1bn in revenues,” a person with knowledge of the business said.

Further media deals were likely, according to people close to Křetínský. He had also cast his eye further afield, at one point looking to buy UK broadsheet The Telegraph before abandoning the project, the people said.

Not all of his investments have met with immediate success, however, including his 25 per cent stake in the parent company of the UK’s Royal Mail. But associates said Křetínský tended to take a long-term view on investments.

By diversifying, “he wants to create an enterprise equivalent to his energy interests”, said one of his advisers. “Keep in mind he’s only 47. By the time they’re as mature as his energy business he’ll be 60. Time is on his side. It’s a sort of second career, a second stage in the development of his group.”

Capital Group predicts $1tn will flow into debt markets in next few years as investors move to lock in higher yields

Large asset management groups are piling back into fixed income to lock in the higher yields on offer after a “cataclysmic” period of performance for bonds last year.

A steep rise in US interest rates over the past 12 months sent bond prices tumbling but has now left yields on Treasury notes higher than they have been for most of the past decade. With the Federal Reserve close to the end of its tightening cycle, institutional and retail investors are buying both sovereign and corporate bonds.

“Bonds are exciting again, for the first time in a long time. They were boring with zero rates for several years,” Sebastien Page, chief investment officer of T Rowe Price’s global multi-asset strategy, told the Financial Times.

“It’s very simple — yields are much higher than they were and it just means you have higher expected returns,” added Page, who likes high-yield corporate bonds.

More than $332bn flowed out of active fixed income strategies in the US last year, according to Morningstar data. But the tide has now turned and more than $100bn has poured into fixed income funds during the first four months of this year.

Managers are equating the shift in capital into fixed income with the scale of the movement of assets from actively managed funds into lower-cost passive funds that track an index, a shift over the past decade that has fundamentally reshaped the asset management sector.

“We’re seeing enormous moves into fixed income,” said Yie-Hsin Hung, the chief executive of $3.6tn-in-assets State Street Global Advisors at the Milken Institute conference earlier this month, noting large flows into bond exchange traded funds and passive funds. “It feels like the beginning stages of what happened in equities, moving much more into passive.”

Mike Gitlin, chief executive of Capital Group, which manages $2.2tn in assets, told the conference that, due to the higher interest rate environment “we’re seeing an average of $500mn in net new flows into the bond markets at Capital Group per week”.

“I think you’ll see $1tn flow back into the bond market in the next few years,” he added. “I think it’s coming and I think you’ll see it accelerate.” 

Part of the shift in enthusiasm is down to the fact that bonds performed so badly last year. The yield on the two-year US Treasury, which moves with interest rate expectations, rocketed from 0.7 per cent to 4.4 per cent while the 10-year yield jumped from 1.5 per cent to 3.8 per cent. The bonds now yield 4.2 per cent and 3.6 per cent respectively. Bond prices fall as yields rise.

“2022 was cataclysmic for fixed income. It was by some measures, the worst year on record,” said T Rowe Price’s Page.

The ability to generate high yields while taking relatively low levels of risk is set to allow more traditionally risk averse investors — such as those who handle retirement savings — to allocate into the space. “Finally people can allocate to fixed income and get a return. You could have one-third of your pension fund in fixed income and still hit your target,” said Franklin Templeton chief executive Jenny Johnson on an earnings call earlier this month.

Investors are betting the Fed may be forced to cut interest rates as soon as this year. Asset managers have the largest long position — a bet that prices will go up and yields will come down — in two-year Treasury notes this year, according to data from the Commodity Futures Trading Commission.

“We think as interest rates calm in the market, we feel like there will be one more raise and then sit there through 2023, and probably not have a decrease,” said Johnson. “People will try to lock in those higher rates.”

However, she added that not all fixed income is set to yield outsized returns this year, and active selection of bonds will become more crucial. “It’s an important time to be active in the fixed income space. This is not a great time to be passive in it.”

Asset managers say that actively managed fixed income has also become a preoccupation for their clients after years of credit being a relatively quiet part of their portfolio. “We have seen a significant uptick in interest from clients,” said Eric Burl, the head of discretionary at Man Group in the UK.

“The utility of fixed income in your portfolio has completely changed . . . It’s not just that you can make equity like returns, but that’s clearly part of it,” said Page at T Rowe Price.

“It’s a time to be more active rather than less,” he said. “Now’s not the time to own the entire market.”

David Calhoun tells transport executives there is no cheap way of decarbonising air travel

Boeing’s boss has warned that new climate-friendly biofuels will “never achieve the price of jet fuel”, pouring cold water on a central pillar of the aviation sector’s strategy to slash emissions.

Airlines say sustainable aviation fuels (SAF) — made from food waste such as cooking oil and plants — can bring rapid decarbonisation by replacing the kerosene-type fuels, such as Jet A, used in aircraft today.

But SAF currently accounts for less than 1 per cent of global aviation consumption and trades for at least twice the price of traditional jet fuel.

“We will create scale and get more economic,” Boeing chief executive Dave Calhoun said. But he added: “No, I don’t think we will ever achieve the price of Jet A. I don’t think that will ever happen. It is more positive and it will have an impact, but it’s gonna be what it’s gonna be.”

The comments from Calhoun echo concerns raised privately in the sector about the difficulties — and expense — involved in decarbonising an industry that, in creating mass transcontinental travel, represented one of the crowning achievements of the petroleum era.

“He’s saying the quiet bit aloud,” said Robert Campbell, head of energy transition research at Energy Aspects, referring to Calhoun’s comments. “There are no cheap ways to do SAF — if there were, we would already be doing them.”

Tax credits for SAF production in the US were among vast clean energy subsidies in the Biden administration’s sweeping Inflation Reduction Act (IRA), passed last year. The EU has also mandated that airports use increasing volumes of SAFs to fuel jets in Europe.

The International Air Transport Association, a trade group including the world’s biggest airlines, set a target in 2021 to achieve net zero emissions by 2050. SAF would account for 65 per cent of the abatement, Iata reckons.

But the move would be costly, said Willie Walsh, the former chief executive of British Airways, who runs Iata.

“It is achievable,” he told a Financial Times conference last week. But “anyone who says the costs of transitioning to net zero are going to be low or unnoticeable I’m afraid is fooling themselves”.

“Passengers will have to pay higher fares. We need to be honest with our customers”, Walsh said. “Airlines are not in a financial position to absorb that cost, so ultimately it will have to be passed on to consumers.”

The US price of sustainable aviation fuel on Friday closed at $6.83 a gallon, while a gallon of jet fuel cost $2.34, according to energy data provider Argus Media.

Among the costs associated with a switch to 100 per cent SAF use is that all existing fuelling infrastructure — at airports and aboard planes — must be adapted to handle the biofuel, which lacks the “aromatics” present in hydrocarbons that help seal pipes.

Boeing and its rival Airbus say they will render their aircraft capable of handling 100 per cent SAF by 2030, compared with 50 per cent at present. Boeing is also rolling out a new modelling tool, Cascade, to help airlines and policymakers assess methods of decarbonisation.

Critics of SAF have also warned that as demand for the fuel rises, feedstock from food fats will be quickly exhausted, creating new demand for crops, threatening forests, or generating an incentive to grow feedstocks on land needed to supply food.

The Biden administration, which has set industry a “grand challenge” to produce 3bn gallons a year of SAF by 2030 from less than 16mn now, says feedstock will come from agricultural waste produced alongside corn and soyabeans, and woody biomass in western states.

But analysts say that until long-term demand for the fuel is guaranteed, investors will be reluctant to plough capital into new SAF production capacity, leaving costs for a niche product high.

Tom Vilsack, the US secretary of agriculture, said the IRA tax credits would help the industry overcome that investment roadblock, although price parity with jet fuel would not be achieved soon.

“At the beginning you’re going to have government support and assistance . . . to learn the efficiencies that need to go into ultimately getting that price down”, Vilsack told the Financial Times last week.