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Reducing emissions from sectors such as agriculture and food will be essential to keeping global warming well below 2 degrees Celsius, according to a new report from the UN Intergovernmental Panel on Climate Change.

The landmark report on climate change and land, prepared by 108 scientists over two years, highlighted the central role that land plays in absorbing and emitting greenhouse gases.

Land use accounts for 23 per cent of human greenhouse gas emissions, including agriculture, deforestation and wildfires, and the report warned that land’s ability to absorb carbon could be under threat as the world warms.

“Land is really struggling under the pressures that we put on it at the moment,” said Jim Skea, who co-chairs the IPCC working group on climate change mitigation and is a professor at Imperial College London. “Climate change is adding to all the other burdens that we put on land.”

The air over land is warming twice as fast as the world average, according to the report, which found that land surface air temperature has risen by 1.53C since pre-industrial times, compared with a global rise of 0.87C during that period.

The air over land warms faster than over oceans because land cannot absorb as much heat — and this warming can exacerbate heatwaves and drought on land.

The new findings come amid growing concern over climate change, as the damaging impact of global warming has become more evident and as the world has so far failed to reduce emissions, which hit a record high last year.

Political momentum to take action has been growing, particularly in Europe, where the UK and France both recently pledged to reach net zero emissions by 2050, and the Green Party saw big gains in the European elections.

“As human beings, we really rely on land to supply us with food, water, fibre, energy,” said Almut Arneth, co-lead author of the first chapter of the report. “We have a system that is fairly under stress by humans and is increasingly under stress by climate change. So there is some urgency to act, to do many things better.”

The report estimates that dietary changes and reducing food waste could have a big impact on global carbon emissions.

If the whole world became vegan, it could cut greenhouse emissions by about 8bn tonnes annually, the equivalent of the annual carbon emissions of the US and India.

Dietary changes have the potential to decrease emissions by between 0.7bn tonnes annually (if a small number of people eat less meat) and 8bn tonnes a year.

Food waste was also identified as an emissions culprit, accounting for 8-10 per cent of total human greenhouse gas emissions annually, the report said.

“The way we eat presents major opportunities for reducing greenhouse gas emissions,” said Cynthia Rosenzweig, a co-ordinating lead author of the IPCC report and a senior research scientist at Nasa Goddard Institute for Space Studies.

“If there are dietary changes towards more plant-based, legumes, fruits, nuts and seeds . . . there is a double benefit, which is that those diets are more healthy as well.”

Total global food systems account for 10bn-19bn tonnes of greenhouse gas emissions per year, more than the emissions of China, the world’s largest emitter.

The report also warned that climate change could impact food security, as food systems become more interconnected and as warming impacts crop yields in some places. “The potential risk of multi-breadbasket failure is increasing,” said Prof Rosenzweig.

While increased carbon dioxide in the atmosphere can help plants grow faster — it acts as a plant fertiliser — new research has shown that it also decreases protein in grain crops, and reduce micronutrients such as zinc and vitamin C, she added.

Better land use, such as planting forests and reducing deforestation, will be an integral part of limiting global warming to well below 2C, the report said.

“Land is currently taking up 29 per cent of our CO2 emissions, and that is a great service that the land is giving us,” said David Viner, a lead author of the report’s seventh chapter.

“However, that will change in future,” he said. The increase in carbon dioxide in the air will lead to more absorption of CO2 by plants in the future, the report said, but this will be offset by changes such as desertification, which make it harder for the land to absorb CO2.

A potential increase in biofuels — crops that are planted for their energy value, such as corn and ethanol — could cause food prices to rise and have other adverse side-effects, it added.

Economic and monetary developments

Overview

Based on a thorough assessment of the economic and inflation outlook for the euro area, also taking into account the latest staff macroeconomic projections, the Governing Council took a series of monetary policy decisions at its monetary policy meeting on 6 June to support the convergence of inflation towards levels of below, but c lose to, 2%. Despite the somewhat better than expected data for the first quarter, the most recent information indicates that global headwinds continue to weigh on the euro area outlook. The prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets, is leaving its mark on economic sentiment. At the same time, further employment gains and increasing wages continue to underpin the resilience of the euro area economy and gradually rising inflation. Against this overall background, the Governing Council decided to keep the key ECB interest rates unchanged and adjust its forward guidance on the key ECB rates to indicate its expectation that they will remain at their present levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. It also reiterated its forward guidance on reinvestments. And, finally, it decided upon the modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III), most notably their pricing parameters. The Governing Council also assessed that, at this point in time, the positive contribution of negative interest rates to the accommodative monetary policy stance and to the sustained convergence of inflation is not undermined by possible side effects on bank-based intermediation. However, the Governing Council will continue to monitor carefully the bank-based transmission channel of monetary policy and the case for mitigating measures.

New flagship device comes in two sizes, as company contends with resistance to premium prices

Samsung Electronics Co. unveiled its latest flagship smartphone Wednesday, hoping extra variety with the new Galaxy Note 10 device attracts consumers who aren’t so likely anymore to want the same new thing.

The debut in New York City, before a partisan crowd, followed a familiar script for a familiar-looking device. But the event prompts a question: How much magnetism is left with a top-of-the-line smartphone?

Samsung’s newest premium handsets, once its dominant growth driver, now make up just one-quarter of the company’s total shipments, as affluent consumers see fewer reasons to upgrade. At the same time, the new Galaxy Note 10 arrives at a pivotal moment that carries significant opportunity. As U.S. restrictions slow rival Huawei Technologies Co., Samsung can woo back buyers who had left for the Chinese rival.

Samsung, the world’s largest smartphone maker, launched the Galaxy Note 10 at Brooklyn’s Barclays Center. For the first time, the South Korean technology giant chose to offer two sizes of the phone, with screens measuring diagonally at 6.3 inches and 6.8 inches respectively. The phone is also equipped with new camera tricks. “The Galaxy Note 10 delivers the speed and productivity you need,” said D.J. Koh, Samsung’s mobile chief, at the event.

“These events appeal to fewer and fewer people,” said Cliff Maldonado, a senior analyst at BayStreet Research LLC, which tracks device sales. With more frequency, sales of the high-end models fade after the first 45 days, following an initial bump from enthusiasts, he added.

The two variants of the Galaxy Note 10 implement the types of advances expected with a new release. They are slimmer and more powerful, packing more robust processors and batteries. Using Samsung’s “Infinity-O” display, the typically off-center, front-facing camera finds itself now at the top-middle of the phone. Both models ditch the earphone jack.

The Galaxy Note 10 also syncs with personal computers running on Microsoft Corp. ’s Windows 10 operating system. This allows users to field text messages or access smartphone photos on a computer.

Phones known as flagships, such as the Galaxy Note 10, have historically juiced sales for Samsung and rival Apple Inc. They fetch the highest prices, fuel brand image and notch the biggest profits.

Last year, Samsung sold three versions of such devices: two Galaxy S phones and a single Galaxy Note model.

This year, the number will balloon to seven when Samsung adds a third flagship device. Next month, the company plans to introduce the Galaxy Fold, the mainstream industry’s first foldable-screen phone. The nearly $2,000 device folds in half like a book and, when opened, unfurls to the size of a small tablet.

The Galaxy Fold will join the two Galaxy Note 10 variants and four models of the Galaxy S10 in Samsung’s stable of flagships.

Experts warned that Samsung’s expanded library risks cannibalizing the company’s overall sales, as some buyers can upgrade to a new device at a lower price point than previously offered. “The whole Samsung premium tier is getting quite crowded,” said Wayne Lam, an industry analyst at research firm IHS Markit , a market researcher.

Handset makers are searching for answers, as global shipments slid 2% from the prior year for the three months ended June 30, according to Canalys, a market researcher.

Canalys said Samsung, which had posted sales declines over the past year, reported a 6% boost driven mostly by growth from its midtier lineups, as the South Korean firm benefited from Huawei’s stumbles outside China. Although revenue rose, Samsung said last week that its operating profit sank 42% from the prior year, the result of promotions required to boost sales.

A more tiered approach is seen elsewhere across the industry, as buyers show a willingness to forego extra horsepower for a more affordable price.

Apple’s most recent offerings include the lower-cost iPhone XR model that outsold two pricier versions. In May, Alphabet Inc. ’s Google started selling the Pixel 3A phone, offered at half the price of the Pixel 3, which helped drive a doubling in unit sales during the latest quarter. Samsung’s own Galaxy S10 rollout earlier this year included a pared-down S10e variant.

New flagship phones, in their first year of sales, have constituted a smaller share of Samsung’s total shipments in recent years. As recently as five years ago, the premium devices represented the majority of phones sold, according to International Data Corp., a market researcher. But the ratio has fallen to just 26% this year, IDC said.

“There is a loss of that halo around their flagship phones versus the past,” said Ryan Reith, an IDC research vice president.

The Galaxy Note series was the first mainstream plus-size phone when it made its debut about eight years ago, winning a loyal fan base with its S Pen stylus. But it ran into controversy in 2016, when Samsung was forced to issue a global recall of Galaxy Note 7 devices over faulty batteries that caused some devices to catch fire. The incident cost the company roughly $6.5 billion.

Preorders for the Galaxy Note 10 start Thursday, with the devices hitting shelves in select markets on Aug. 23.

Samsung said the base model of the Galaxy Note 10, with 256 gigabytes of memory, would be priced at $949 in the U.S.—a $50 reduction from the prior year. The larger Galaxy Note 10+ starts at $1,099 in the U.S., with a 5G version available initially through Samsung’s website and Verizon Communications Inc.

The case for a weaker currency is clearer as the country’s growth has downshifted

SHANGHAI—China’s abrupt devaluation of the yuan this week is an acknowledgment from Beijing that its domestic economy needs help, a vulnerability that Chinese policy makers have played down during the escalating trade conflict with the U.S.

The yuan’s slip to below 7 per U.S. dollar put the Chinese currency at its weakest point since 2008—and aligned it closer to economic trends that have pushed growth near quarter-century lows. The currency’s fall of about 3% Monday in offshore trading hit global markets hard as investors concluded Chinese policy makers, who influence the yuan’s exchange rate, might be giving up hope of putting to rest a trade fight with the U.S. that has dented global commercial confidence.

A steadying in the yuan around the 7 rate by midweek helped calm markets.

The case for a weaker Chinese currency has become clearer as the country’s growth has downshifted, economists said, but fundamentals took a back seat to political decisions to preserve the yuan’s strength during the highly charged U.S. trade negotiations. The dollar has gained ground against China’s yuan amid the dispute, just not as quickly as it has against many other currencies.

While top government officials in Beijing sought to build goodwill with the U.S. administration, China’s central bank has “been leaning against the wind” by resisting downward forces hitting the yuan, said David Loevinger, a managing director of California-based TCW Group Inc., who formerly represented the U.S. Treasury in Beijing.

A weaker economy tends to lessen demand for a currency, and on this basis the yuan has been overdue for a slide, economists said.

Battered exporters in China should welcome even a small devaluation if it makes their products cheaper for foreign buyers, analysts said. The currency adjustment may also give pause to companies hoping to sell bonds overseas to avoid what would be higher costs of repayment.

Apart from angering the U.S., Beijing’s primary risks now, analysts said, are undermining confidence in the country’s currency and building expectations among consumers and businesses that it has much further to fall. So, while analysts forecast more yuan weakness, they doubt Beijing will push it significantly lower.

Hours after China’s currency move Monday, the U.S. Treasury labeled Beijing a currency manipulator, a largely symbolic designation that triggers a request for the International Monetary Fund to investigate. The IMF hasn’t commented, but in writing about trade tensions last month, a senior economist there, Gita Gopinath, credited China for “greater exchange rate flexibility and the associated real appreciation over the last decade.”

Beijing also pointed to past strength in the yuan in rejecting the manipulation assessment, saying it has risen about 40% since 2005. China’s central bank cited trade factors in explaining the yuan’s slip Monday.

A weaker Chinese currency is welcome news for tableware maker Langfang Jinheng Stainless Steel Products Co. in the northern province of Hebei.

Manager Liu Jifeng said the exchange-rate adjustment could help lower the export prices of its forks and spoons in the U.S. The company expects prices of these products to rise in the U.S. if President Trump follows through on a plan he announced Friday to impose 10% import tariffs on more Chinese products on Sept. 1—the threat that appears to have triggered Beijing’s looser control of the yuan Monday. “All we can do is to limit possible damage,” Mr. Liu said.

Trade remains critical to China’s economy, even as policy makers boast that domestic consumption contributes almost two-thirds of its economic growth. Net exports globally were still worth about a fifth of the 6.2% growth China recorded for the first half, even though in the U.S., Mexico displaced China as the No. 1 trade partner. “It should be exporting more, and would be but for U.S. protectionism,” Columbia University economist Jeffrey Sachs said in an email.

China is expected to report exports dropped 2% in July from the year earlier when data are published Thursday in Beijing, following a 1.3% pullback in June, according to economists polled by The Wall Street Journal. Likewise, imports probably slid 9% last month, a reflection of cooling domestic activity, and worse than the previous month’s 7.3% drop, according to the estimates.

U.S. policy toward China may have been the determining factor in the yuan move this week, but the backdrop is the economic cool-down, such as a slumping outlook for exports and rising domestic financial risks, says Zhang Ming, a researcher at Chinese Academy of Social Science, a state-backed think tank in Beijing.

“If the U.S. continues to escalate trade frictions, it can’t rule out the possibility for Chinese government to let the yuan weaken upon market pressure so as to help exporters to offset higher tariffs,” Mr. Zhang said.

Higher costs offset rise in first-half revenue, UK-based lender says

Losses at Funding Circle deepened in the first half, as the business lender struggled with weak demand and an increase in bad debts in the UK, its largest market.

The London-based company’s pre-tax loss widened to £31m, from £27m in the same period last year. Revenues increased 29 per cent to £81.4m, but the rise was more than offset by higher costs, particularly for marketing and new staff.

The company warned in an unscheduled update last month that revenue growth would slow in the second half as it tightened lending criteria and cut forecasts for investor returns on its existing loans.

It gave more detail on the weakness in its full interim report on Thursday, explaining that in the UK, its largest market, around 15 per cent of its portfolio had been affected by a “deterioration in the consumer credit environment since 2016”. In particular, smaller and younger companies had suffered, leading it to tighten its rules for who it was willing to lend to.

Samir Desai, Funding Circle chief executive, said: “We remain confident in our aim to become the world’s largest small business loans provider, helping millions of businesses to create jobs and support economic growth. Small businesses remain underserved.”

Funding Circle was founded as a peer-to-peer lender, relying on retail investors to fund the loans that it originates. However, it has shifted focus in recent years with the majority of funding now coming from institutional investors.

The company’s initial public offering last year was considered a milestone for the young sector, but shares in the company have since fallen more than 75 per cent as investors have been discouraged by a series of downbeat updates.

Adidas says on track to overcome US supply problems

German sportswear group in line with expectations for second quarter

German sportswear maker Adidas met analyst sales and profit expectations in the second quarter and said it was on track to overcome supply chain problems that are hampering sales in the US and burdened the Nike rival with higher air freight costs.

Adjusted for currency swings, the German sports brand for the second quarter reported a 4 per cent year-on-year revenue increase to €5.5bn, driven by a 37 per cent jump in ecommerce sales and a 14 per cent increase in China.

The operating profit grew at 9 per cent to €643m, as it negotiated better terms with suppliers, sold more high-margin products and scaled back on discounts. Hence the operating margin rose to 11.7 per cent, after 11.3 per cent a year ago.

Reported net income attributable to shareholders rose by a third to €532m in the second quarter, beating analyst expectations as the tax bill in the three months fell 8 per cent.

“The stock has been a star performer in the sector [year-to-date] so there is some risk of a de-rating,” Citigroup analysts wrote in a note to clients, adding that “any weakness [in the share price] will likely prove a good buying opportunity ahead of any acceleration [in the second half of 2019]”. Full-year guidance was confirmed, they added, and investors believe strongly in the group’s business model and management team.

This year, shares in Adidas have risen 49 per cent, compared with a 10 per cent increase of Germany’s Dax 30 blue chip index.

Adidas half-year performance could have been even better had the group not suffered from supply shortages in the US, an issue chief executive Kasper Rorsted flagged to investors in March.

Due to bungled internal planning, Adidas has not been able to meet the higher-than expected demand for mid-priced apparel in the US. In March, the company warned it will lose between €200m and €400m of sales, equating to 1 per cent to 2 per cent of revenue this year, with the main pain to be felt in the first half of the year.

“We remain confident about the sequential revenue acceleration in the second half of the year,” Mr Rorsted staid in a statement on Thursday, adding that the group stands by its previous guidance, expecting a full-year growth of 5 to 8 per cent once currency fluctuations are stripped out.

FCA chief ‘interested in hearing’ from French rival as talks open over Nissan stake

The chief executive of Fiat Chrysler Automobiles says the company is open to restarting merger talks with Renault, in a sign that the aborted €33bn tie-up could yet go ahead.

Despite significant hurdles to a deal, Mike Manley told the Financial Times that the Italian-American carmaker was still “interested in hearing” from its French rival, adding that a combination offers “significant synergies”.

“The industrial logic that was present before, it is still present,” he said. “Should the circumstances change, then maybe dreams come together and things can happen.”

FCA and Renault held private talks for several months earlier this year about combining to form a “European champion” with higher global sales than General Motors.

After the Financial Times reported the discussions in May, FCA publicly launched a €33bn merger proposal.

The deal fell apart just 10 days later, after increasing exasperation on the part of FCA’s board at the behaviour of the French government, which owns 15 per cent of Renault’s shares and has double voting rights.

The fractious state of Renault’s global alliance with Nissan, which has been shaken by the ousting of Carlos Ghosn, the former chairman of both companies, was also a factor in the talks failing.

“As they work through those things, those circumstances that are necessary to move or change potentially could happen”, Mr Manley said. “If that was the case, we would be interested in hearing from them.”

The comments came as top executives at Renault and Nissan opened discussions on the potential reduction of the French group’s 43 per cent stake in the Japanese carmaker, in an effort to salvage the fraying alliance.

The imbalance in the relationship, where Nissan holds only a 15 per cent non-voting stake in Renault, has been a source of tension for the partners. It remains unclear how fast the talks will advance with differences in how the two companies want to rebalance their capital structure.

Nissan is aiming to reduce Renault’s stake to 20-25 per cent, according to people briefed on exchanges, while the French carmaker envisions a holding of 30-35 per cent.

The talks, first reported by the Wall Street Journal, did not rely on Renault reviving the deal with FCA, the people said. But they added that the French carmaker remained keen to find a way forward with the support of Nissan.

Both Nissan and Renault declined to comment.

Global carmakers are increasingly seeking alliances as they battle rising investment demands and stagnating sales.

Mr Manley stressed FCA had a “solid future” as an independent business, but added: “That doesn’t mean to say that, if there is a better future through an alliance and partnership or merger, that we wouldn’t be open and interested to it.”

FCA’s plan is to double profits by 2022 compared to 2018 levels, while pushing into electric cars. The company posted second-quarter profits last week that were 14 per cent higher on the same period last year at €793m, driven by sales of pick-up trucks in North America.

Mr Manley became FCA chief executive last summer after predecessor Sergio Marchionne left the business days before his death.

The business had been stung by the US-China trade war and poor performance in China, forcing Mr Manley to downgrade expectations within days of assuming the post. Shares have fallen by about a third in the past year, trading at mid-2017 levels.

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