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Commercial Awareness Update - January 2020
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<blockquote data-quote="Curtley Bale" data-source="post: 18925" data-attributes="member: 4422"><p>Hi guys, </p><p></p><p>Please find this week's commercial awareness update below! (15.01.20) </p><p></p><p><strong>Shareholders urge Barclays to stop fossil fuel lending </strong>(By Curtley Bale)</p><p></p><p><u>The story </u></p><p></p><p>Barclays has come under pressure from a group of 11 institutional investors to stop financing companies in the oil, gas and energy industries that do not align with the Paris Agreement 2015. Barclays is currently the largest financer of fossil fuel-using companies in Europe. The group of investors includes pension funds and around 100 individual shareholders. It is the first time a European bank has faced such shareholder action. Prominent charity ShareAction organised the resolution as they believe Barclays is doing significantly less than its peers in addressing climate change.</p><p></p><p><u>Impact on Businesses and Law Firms </u></p><p></p><p>Shareholders have taken action in an attempt to force Barclays to commit to publishing a plan which states how they will phase out lending to fossil fuel companies. Barclays is the 6th largest backer of fossil fuel companies worldwide, lending £64bn to companies in the period of 2015 – 2018. Failure to take action in this space may see Barclays’ reputation worsen. This has already caused mass demonstrations outside its London HQ and could lead to more of the like.</p><p></p><p>Competitors such as BNP Paribas and Standard Chartered have made pledges to restrict new financing of gas and oil majors, as well as coal-fired plant projects. As a result, Barclays may be seen as a less attractive lending facility as their money contributes to the worsening of climate change. This topic is especially pertinent due to the push for greater environmentally-prudent governance in large, multi-national corporations.</p><p></p><p>Litigation may arise if shareholders bring action against companies or lenders who appear to be causing climate change. Climate change group ClientEarth recently won a litigation battle against the Polish utility company Enea, due to their irresponsible building of a new coal-fired power plant. It was found that company directors had failed in their duty to act in the best interests of its shareholders in the face of climate change. Similar issues led to investment bank Goldman Sachs changing its policy on drilling in the Arctic circle. Liability for potentially contributing to climate change could prove costly for huge organisations such as Barclays, as shareholders are keen on forcing change.</p><p></p><p><strong>Amazon partner with Future Retail in India </strong>(By Rachel Strickland)</p><p></p><p><u>The story </u></p><p></p><p>Amazon has signed a deal with the second biggest retailer in India, Future Retail ('Future') to stock Future's products online. For Amazon, this will mean broadening market share in the second-most populous country in the world and widening its product portfolio. For Future, this means breaking into the e-commerce market, leveraging customer’s data online to plan retailing operations and gaining another distribution channel for customers.</p><p></p><p>Following competitor Walmart buying a majority stake in Indian retailer Flipkart last year, India has been a key growth market for Amazon. Despite India having recently cut its growth forecast to the slowest pace in eleven years due to lower industrial activity and weakening private consumption, India’s digital economy is thriving. Further, according to PWC, India’s e-commerce market will exceed $100 billion by 2022.</p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>For international businesses, investing in India's prospering e-commerce market appears a lucrative investment opportunity. However, restrictive regulations governing international businesses, integration challenges and fierce competition needs to be factored into this opportunity cost.</p><p></p><p>Law firms will need to advise on regulation and in some cases restructuring business models to comply with Indian law. For example, in 2019, India passed an e-commerce law that placed restrictions on foreign-owned companies buying more than 25% from a single retailer to sell on their market place, owning the majority stake in an Indian company while selling their products, or mandating a seller to only sell through their market place.</p><p></p><p>It appears more likely that Indian law firms will stand to benefit from any increased investment as foreign law firms face heavy restrictions. Foreign law firms would either have to coordinate India-related transactions in other offices, for example, the ‘Singapore Solution’ or, operate on a restricted ‘fly-in, fly-out’ basis. Foreign law firms can also strike agreements with Indian law firms. For example, Indian law firm, AZB & Partners, the firm that advised Amazon on a previous minority stake in Future, previously had referral agreements with Clifford Chance.</p><p></p><p><strong>Travelex Cyber-Attack </strong>(By Alice Manners)</p><p><u></u></p><p><u>The story</u></p><p></p><p>On New Year's Eve Travelex suffered a cyber-attack. A ransomware gang has claimed to have downloaded 5GB of sensitive customer data over six months and has threatened to release this unless the company pays £4.6m. Travelex shut down their systems but have denied that any customer data has been stolen.</p><p></p><p>The Information Commissioner’s Office has said that it has not received a data breach report from Travelex. This is required by the GDPR unless the breach is “unlikely to result in a risk to the rights and freedoms of natural persons.”</p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>The incident has quickly demonstrated a ripple effect. Travelex is currently only providing services manually and stakeholders including the Royal Bank of Scotland, HSBC and Barclays, who rely on Travelex infrastructure, have been unable to offer online exchange services.</p><p></p><p>Shares in Travelex’s parent company, financial services group Finablr, have dropped 24.77% in the 13 days since the attack, with two investors selling shares worth up to £72m. However, with little choice in foreign exchange providers, the material financial risk to Finablr is arguably low.</p><p></p><p>The case demonstrates a possible negative element to the GDPR - companies may be incentivised to pay ransoms to minimise negative press. Travelex has refused to declare if they have paid the ransom but, if they did, it could set a dangerous precedent and encourage further cyber-attacks.</p><p></p><p>As data is increasingly created and held by companies, the case reinforces the urgent need for businesses to consider the adequacy of their cybersecurity – Travelex and other companies were apparently warned of their potential vulnerability to ransomware eight months ago. It also teaches both law firms and businesses the importance of preparing an effective response to minimise and repair the effect of a breach; Travelex's lack of proper communication has left many customers outraged.</p></blockquote><p></p>
[QUOTE="Curtley Bale, post: 18925, member: 4422"] Hi guys, Please find this week's commercial awareness update below! (15.01.20) [B]Shareholders urge Barclays to stop fossil fuel lending [/B](By Curtley Bale) [U]The story [/U] Barclays has come under pressure from a group of 11 institutional investors to stop financing companies in the oil, gas and energy industries that do not align with the Paris Agreement 2015. Barclays is currently the largest financer of fossil fuel-using companies in Europe. The group of investors includes pension funds and around 100 individual shareholders. It is the first time a European bank has faced such shareholder action. Prominent charity ShareAction organised the resolution as they believe Barclays is doing significantly less than its peers in addressing climate change. [U]Impact on Businesses and Law Firms [/U] Shareholders have taken action in an attempt to force Barclays to commit to publishing a plan which states how they will phase out lending to fossil fuel companies. Barclays is the 6th largest backer of fossil fuel companies worldwide, lending £64bn to companies in the period of 2015 – 2018. Failure to take action in this space may see Barclays’ reputation worsen. This has already caused mass demonstrations outside its London HQ and could lead to more of the like. Competitors such as BNP Paribas and Standard Chartered have made pledges to restrict new financing of gas and oil majors, as well as coal-fired plant projects. As a result, Barclays may be seen as a less attractive lending facility as their money contributes to the worsening of climate change. This topic is especially pertinent due to the push for greater environmentally-prudent governance in large, multi-national corporations. Litigation may arise if shareholders bring action against companies or lenders who appear to be causing climate change. Climate change group ClientEarth recently won a litigation battle against the Polish utility company Enea, due to their irresponsible building of a new coal-fired power plant. It was found that company directors had failed in their duty to act in the best interests of its shareholders in the face of climate change. Similar issues led to investment bank Goldman Sachs changing its policy on drilling in the Arctic circle. Liability for potentially contributing to climate change could prove costly for huge organisations such as Barclays, as shareholders are keen on forcing change. [B]Amazon partner with Future Retail in India [/B](By Rachel Strickland) [U]The story [/U] Amazon has signed a deal with the second biggest retailer in India, Future Retail ('Future') to stock Future's products online. For Amazon, this will mean broadening market share in the second-most populous country in the world and widening its product portfolio. For Future, this means breaking into the e-commerce market, leveraging customer’s data online to plan retailing operations and gaining another distribution channel for customers. Following competitor Walmart buying a majority stake in Indian retailer Flipkart last year, India has been a key growth market for Amazon. Despite India having recently cut its growth forecast to the slowest pace in eleven years due to lower industrial activity and weakening private consumption, India’s digital economy is thriving. Further, according to PWC, India’s e-commerce market will exceed $100 billion by 2022. [U]Impact on Businesses and Law Firms[/U] For international businesses, investing in India's prospering e-commerce market appears a lucrative investment opportunity. However, restrictive regulations governing international businesses, integration challenges and fierce competition needs to be factored into this opportunity cost. Law firms will need to advise on regulation and in some cases restructuring business models to comply with Indian law. For example, in 2019, India passed an e-commerce law that placed restrictions on foreign-owned companies buying more than 25% from a single retailer to sell on their market place, owning the majority stake in an Indian company while selling their products, or mandating a seller to only sell through their market place. It appears more likely that Indian law firms will stand to benefit from any increased investment as foreign law firms face heavy restrictions. Foreign law firms would either have to coordinate India-related transactions in other offices, for example, the ‘Singapore Solution’ or, operate on a restricted ‘fly-in, fly-out’ basis. Foreign law firms can also strike agreements with Indian law firms. For example, Indian law firm, AZB & Partners, the firm that advised Amazon on a previous minority stake in Future, previously had referral agreements with Clifford Chance. [B]Travelex Cyber-Attack [/B](By Alice Manners) [U] The story[/U] On New Year's Eve Travelex suffered a cyber-attack. A ransomware gang has claimed to have downloaded 5GB of sensitive customer data over six months and has threatened to release this unless the company pays £4.6m. Travelex shut down their systems but have denied that any customer data has been stolen. The Information Commissioner’s Office has said that it has not received a data breach report from Travelex. This is required by the GDPR unless the breach is “unlikely to result in a risk to the rights and freedoms of natural persons.” [U]Impact on Businesses and Law Firms[/U] The incident has quickly demonstrated a ripple effect. Travelex is currently only providing services manually and stakeholders including the Royal Bank of Scotland, HSBC and Barclays, who rely on Travelex infrastructure, have been unable to offer online exchange services. Shares in Travelex’s parent company, financial services group Finablr, have dropped 24.77% in the 13 days since the attack, with two investors selling shares worth up to £72m. However, with little choice in foreign exchange providers, the material financial risk to Finablr is arguably low. The case demonstrates a possible negative element to the GDPR - companies may be incentivised to pay ransoms to minimise negative press. Travelex has refused to declare if they have paid the ransom but, if they did, it could set a dangerous precedent and encourage further cyber-attacks. As data is increasingly created and held by companies, the case reinforces the urgent need for businesses to consider the adequacy of their cybersecurity – Travelex and other companies were apparently warned of their potential vulnerability to ransomware eight months ago. It also teaches both law firms and businesses the importance of preparing an effective response to minimise and repair the effect of a breach; Travelex's lack of proper communication has left many customers outraged. [/QUOTE]
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