Russia courts African allies, backlash against ESG investing and Netflix's continued subscriber loss
July 2022
Hello and welcome! 👋
The start of July usually heralds silly season, when the news cycle slows to a leisurely pace. Needless to say, the past month was anything but quiet!
This edition delves into Russia’s relationship with several African countries, criticism of ESG funds from finance insiders, and Netflix’s plan to revamp its business model.
NURTURING ALLIES IN AFRICA
The war in Ukraine is approaching the six-month mark. With Washington, London and Brussels standing firm against Moscow, the Kremlin is looking outside the West for friends.
First, Vladimir Putin visited Tehran on 19 July to meet Iran’s leaders. Then, this week, Russia’s foreign minister Sergey Lavrov completed a four-nation tour of the African continent. The diplomat stopped over in Egypt, Uganda, the Republic of Congo and Ethiopia.
Reminder: A significant number of African countries have refused to take sides in the conflict between Russia and Ukraine (I explained South Africa’s neutral stance in the May edition). There are various reasons for this, one being historic ties to the Soviet Union.
Although Lavrov came under pressure to remove blockages to grain and fertiliser supplies, the consensus is that he proved Russia is still welcome on the continent. Despite Russia’s low trade and investment volumes with Africa (especially compared to China’s input), it excels in military cooperation - by a huge margin.
According to SIPRI, a global security think tank, Russia is the top seller of arms to the region, accounting for 44% of African weapons imports between 2017 and 2021. Egypt, Algeria, Ethiopia and Mali are notable customers.
In addition to military hardware, Russia offers troop training on the ground, professional mercenaries (allegedly) through the shadowy Wagner Group, sophisticated disinformation campaigns and the ability to thwart UN Security Council resolutions.
Expect some of these issues to be discussed behind closed doors at the second Russia-Africa Summit and Economic Forum later this year.
GREEN CREDENTIALS IN THE SPOTLIGHT
Is the ESG label already falling out of fashion? A growing cohort of asset managers and investors are voicing scepticism of the hype.
To recap: ESG (environmental, social and governance) frameworks are meant to be an ethical way of evaluating funds, companies and countries. Its criteria often take inspiration from the UN’s Sustainable Development Goals, which include actions such as promoting gender equality, expanding clean energy and hiring diverse workforces.
ESG investing has exploded in recent years, attracting trillions of dollars. Scores of businesses and financial institutions now proudly advertise their “green” credentials. However, the shine might be wearing off as industry leaders and investigators expose how the label has evolved into a catch-all for literally any strategy that promises positive social and environmental change.
Due to the lack of regulations or standard rankings, ESG is basically reliant on company reporting. But guess what? Sometimes executives make unrealistic or misleading claims. It’s why the UK is assessing whether fast-fashion retailers are guilty of “greenwashing”.
Encouraging organisations and shareholders to behave responsibly should be an urgent priority. Perhaps the “woke to broke” headlines will trigger soul searching and healthy debate. The Economist, for instance, suggests boiling down ESG “to one simple measure: emissions” to track large carbon culprits.
COMING SOON TO NETFLIX
970,000 people decided to pull the plug on Netflix in the April-June period. While the company’s executives were expecting a much bigger exodus, that figure still represents a second straight quarter of subscribers terminating their accounts.
Netflix remains a heavyweight in the streaming space but its rivals are edging closer. With the exception of Sony Pictures, practically every major studio, network and tech conglomerate (from NBC and Warner Bros. to Apple and Amazon) boasts their own watch-on-demand service. In the process, they’ve removed content from Netflix in order to gain exclusive distribution rights. This is why Captain America, Star Wars, Lost and Friends, to name a few, are no longer available.
Besides a dwindling library of popular classics, Netflix is also dealing with penny-pinching consumers who are scrutinising their budgets. So, bosses Ted Sarandos and Reed Hastings have provided three solutions:
Crack down on password sharing: “Borrowing” a friend’s Netflix password could rack up charges in the not too distant future. The company is experimenting with a model that will prompt users to cover the cost of different homes logged on to one account.
Introduce an ad-supported option: Netflix is partnering with Microsoft to craft a cheaper package where subscribers can pay less per month in return for viewing ads.
Improve original programming: Sarandos and Hastings are committing billions of dollars to in-house, prestige productions. Yes, Netflix can count Stranger Things, Squid Game, The Crown and The Queen’s Gambit among its hits, but how many of the streamer’s shows have the staying power of Seinfeld, The West Wing, Sex & the City, Game of Thrones and, of course, the aforementioned Friends?
Will these adjustments give Netflix the boost it seeks? Let me know your thoughts!
Thanks for reading! Take care and stay curious, Sara x