Your commercial news round-up: Shell, buy now, pay later, Subway, pubs, crypto

• Environmental charity ClientEarth is suing the directors of multinational oil and gas company Shell over claims the business failed to adequately manage the risks posed by climate change. The charity, which is a minor shareholder in Shell, has claimed that under the 2006 Companies Act, the board of directors have breached their legal duties by failing to implement an effective energy transition plan. Section 172 of the act stipulates that directors have a duty to promote the success of the company. ClientEarth alleges the company’s “climate plan is fundamentally flawed”, arguing that the oil giant has failed to properly prepare for its plans to become net zero, and is therefore “increasing the company’s vulnerability to climate risk, putting its long-term value in jeopardy”. The case, which has already secured the support of more than 12 million shareholders, has the potential to establish new precedent for climate-conscious shareholder action against corporate boards. The charity has petitioned the High Court for an order to demand the oil giant adopts an effective strategy to manage its climate risk in line with its duties under the Companies Act. It’s now up to the court to decide whether to grant permission to ClientEarth to bring its claim forward.  

• An eight-week consultation has been launched by government ministers to investigate buy now, pay later (BNPL) offers to ensure greater protection for consumers. Companies, such as Klarna, Clearpay and Laybuy, will be subject to new rules outlining the information they must disclose to consumers about the terms of their loans. Labour MP Stella Creasy labelled BNPL firms as “legal loan sharks”, with consumer champion Martin Lewis adding that the regulation process surrounding such schemes has been “painfully slow”.  It’s hoped that following this new consultation, legislation will emerge ensuring “loans are affordable for consumers”, and all BNPL advertisements are “fair, clear and not misleading”. Under new proposals, the Treasury stipulated that not only would consumers have the right to have their complaints reviewed by the financial ombudsman, but it would also ensure all BNPL products were regulated by the Financial Conduct Authority. Andrew Griffith, the economic secretary to the Treasury, said: “People should be able to access affordable credit, but with clear protections in place. That is why these proposed regulations are so important.” 

• Fast-food giant Subway has put something new on the menu, but it’s not a sandwich – it’s the business. On Tuesday, Subway which has been family owned for the past 58 years, announced it’s contemplating selling its estimated $10 billion business. The franchise, which has more than 37,000 restaurants in over 100 countries, making it one of the largest chains in the world, hit a financial peak in 2012 when it made $18 billion in sales, but has struggled over the past decade battling numerous scandals. The company had its sandwich fillings come under scrutiny in 2021 when a class-action lawsuit claimed its tuna filling didn’t contain tuna, but instead a “mixture of various concoctions”. Further scrutiny arose when an Irish court ruled that subways bread couldn’t be legally described as ‘bread’ due to its sugar content being five times more than Ireland’s traditional definition of bread. In addition, a number of its original franchises turned against the company amid claims the business had exploited immigrants who account for 50% of the chain's franchise owners. Subway has insisted the company’s “management team remains committed to the future and will continue to execute against its multi-year transformation journey” but has employed JP Morgan to advise and conduct the company’s sale exploration process.  

• From subs to pubs, British pubs have been pushed to financial breaking point under the cost-of-living crisis, after new data found an 83% increase in pub and bar insolvencies. The hospitality industry is facing catastrophic problems that Kate Nicholls, chief executive of UK hospitality, has warned will deliver a “final blow to business”. Accounting company UHY Hacker Young revealed 512 pub and bar businesses failed in 2022 alone – a 232 increase from the year before. Debt from pandemic loans, soaring energy costs, labour shortages, and food and drink inflation are pushing the industry to breaking point. Emma McClarkin, chief executive of the British Beer and Pub Association, has warned the spiralling energy costs are “causing businesses to fail”. In November, McClarkin called for “urgent action” to be taken to rescue pubs and brewers after the Bank of England increased interest rates from 0.75% to 3% – the highest single increase in three decades. To make matters worse, the government has recently announced its plans to cut the amount of help available to businesses in relation to energy costs from April.  

• The SEC has agreed to propose a number of rules that will toughen safeguards around investors’ assets in crypto currencies. Four out of five of the SEC commissioners supported the proposal, which will now undergo public comment and a second vote before final implementation. The move comes after several high-profile crypto companies collapsed revealing the vulnerability of customers' funds. FTX is just one of the exchanges that made numerous headlines this year, after its managers were charged with misusing customer funds. Under current arrangements, a large number of crypto exchanges act as custodians of investors' assets, however they’re also able to borrow from, and lend assets to, customers. The SEC’s proposed rule changes would require investment advisors to produce written agreements with qualified custodians, in order to protect clients’ assets should the custodian collapse. Qualified custodians are understood to be part of heavily regulated financial groups, such as trust companies, banks and broker deals.  

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