The US banking giant Citigroup will pay $7bn in order to settle a US Department of Justice investigation into its sub-prime mortgage lending activities in the run-up to the 2008 financial crisis. In a statement of facts, Citigroup admitted to having repeatedly ignored both internal and external warnings that many of its loans had serious issues, and that it then concealed that information from investors. The company will pay $4bn to the Department of Justice and $2.5bn will go towards “consumer relief”, including investment in affordable homes and mortgage relief. On announcing the settlement, the bank saw its share prices rise by 3.02%. Last year JPMorgan Chase paid $13bn to settle government investigations, and Bank of America Corporation is currently in discussions with the Justice Department around a $12bn settlement. (BBC News, Wall Street Journal)
Environment
Nestlé chairman warns of water scarcity
Nestlé’s chairman Peter Brabeck has warned that water scarcity needs to be prioritised above climate change by governments around the world. Many companies are now facing the issue of rising water costs, where previously supplies were taken for granted and treated as a free resource. Nestlé has saved $43 million for water conservation and treatment, with many companies reacting similarly, such as Google and Coca Cola. In some cases, global warming is also playing a role in water shortages. EDF Energy was forced to spend €20 million altering a hydropower project in the French Alps where the glacier providing meltwater had retreated too much. However Mr Brabeck explains that climate change is not to blame, saying that “we have a water crisis because we make wrong water management decisions.” The politics of water scarcity continue as countries across the globe enforce stricter legislation regarding water, creating anger within industries such as agriculture, where water usage is essential. (Financial Times*)
China to waive 10% purchase tax on electric vehicles
The Chinese government has announced an initiative to exempt electric cars from a 10% purchase tax as part of its expanded programme of measures to fight climate pollution. The exemption will last until the end of 2017. Electric vehicles have been identified as a strategic industry for China in which it could gain global leadership, reduce emissions, and gain greater energy independence. However, electric vehicle sales are lagging behind government targets: it is hoped the tax break will boost sales. The Chinese government has described the initiative as a “win-win” for industrial development and environmental protection. The Science and Technology Minister has also called for boosts to the infrastructure that will promote the use of electric vehicles, such as more numerous and convenient charging stations. (Bloomberg)
Human Rights
Samsung contractor suspended due to child labour claims
Samsung Electronics has recently postponed business with Dongguan Shinyang Electronics, one of the largest manufacturing factories in southern China, after finding “evidence of suspected child labour.” This investigation was carried out after China Labor Watch, a New York-based NGO, issued a report detailing breaches related to child labour. The group found three workers aged younger than 16, the legal working age in China, that were working 12 hour night shifts producing plastic parts. Samsung issued a statement saying “it is unfortunate that the allegation surfaced despite Samsung’s efforts to prevent child labor at its suppliers.” These findings come despite Samsung prioritising the reduction and eventual eradication of child labour since 2012. (New York Times)
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