Daily Update: May 24, 2021

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Cybersecurity is solidifying as a top concern within environmental, social, and governance (ESG) as cyberattacks increase in frequency and severity—with the financial losses, reputational damages, and market disruptions that can follow in their wake.

Cyberattacks have proliferated during the pandemic. Coupled with the additional security risks of remote work, the risk of security breaches forced organizations to speed up their digital transformation plans. But policymakers, regulators, and market participants’ broad concerns over companies’ susceptibility to cyberattacks have heightened.

After foreign hackers were able to infiltrate U.S. agencies’ systems by hacking the Texas-based software company SolarWinds late last year, cybersecurity experts called for companies to implement stronger cyber defenses. Even before the cyberattack on Microsoft that ballooned into a global security crisis earlier this year, the technology company’s president, Brad Smith, advocated for lawmakers to make mandatory disclosure requirements for companies and organizations to report any cyberattacks they experience. The cyberattack on Colonial Pipeline, a main artery of the U.S. fuel supply, is the most recent incident that has raised questions over whether industries are adequately prepared to mitigate risk and safeguard vulnerabilities.

The Colonial Pipeline attack “obviously points to the need for continued vigilance on the part of not only the operators but the government itself in determining who is targeting the critical energy infrastructure for potential attacks,” former U.S. Department of Energy Secretary Dan Brouillette told S&P Global Market Intelligence. “I think we need to do a better job, candidly, on the government side, of sharing some of the intel with the industry so that they know what the actual threats are, and they can help determine what are the best defenses that they can deploy against those types of threats  … We have to think about cybersecurity—and, more importantly, the intelligence around cybersecurity—perhaps in a different way if we are to protect the infrastructure.”

Having greater visibility to threats and actual attacks could minimize damages across entire systems.

"I would argue with visibility, and with defense in depth, we can take a more surgical approach to containment ... where we're quicker at detecting the anomaly, contextualizing that anomaly, understand what kind of impacts it could have on production, and then take an action that's proportional," Leo Simonovich, vice president and global head of industrial cyber and digital security at Siemens Energy AG, told S&P Global Market Intelligence of the importance that visibility provides in connecting physical and digital worlds. "That may be that we need to shut down one asset, or maybe that we need to shut down a portion of the system, but ultimately, that puts us in the driver's seat to respond quicker and to respond with a higher degree of precision."

Expanding and developing the cyber insurance market to cover losses related to unexpected cyber-related claims could materialize as another solution to safeguard against such governance risks, according to S&P Global Ratings.

Today is Monday, May 24, 2021, and here is today’s essential intelligence.

Uncertainty in the Global Economy

COVID-19 Pushed Capex Down 8% In 2020, but Recovery Expected In 2021

At the beginning of 2020, the mining companies examined by S&P Global Market Intelligence were forecasting capital expenditures of $162 billion, or 9% higher than 2019 spending. As the COVID-19 pandemic set in globally, however, regional lockdowns forced work stoppages and supply chains were in upheaval. 

—Read the full article from S&P Global Market Intelligence

The Health Care Credit Beat: Reflections on AmerisourceBergen, Bausch, Cigna, Pfizer, and Surgery Partners Earnings

Quarterly earnings season heads into its final weeks, with performance for the health care sector largely neutral to favorable from a ratings perspective. As the COVID-19 vaccination rate in the U.S. steadily climbs and effects of the pandemic lessen, patient procedures should continue to return to near normal volumes. This bodes well for health care service providers as well as manufacturers dependent on procedure volumes.

—Read the full report from S&P Global Ratings

Banking Sector Under Pressure

Large APAC Banks Upping Fintech Bets

Major banks in the Asia-Pacific region could grow to become a larger source of capital for financial technology startups as lenders seek to future-proof their business.

—Read the full article from S&P Global Market Intelligence

Which Banks are Positioned for Low Rates, Digital Adoption Brought by Pandemic

As digital adoption has grown during the pandemic, banks have trimmed their branch networks at an accelerated pace, while investing in new technology to meet changes in customer behavior. A handful of institutions took action even before the pandemic began to position themselves for the rapid digital transformation, and advisers believe many others will be forced to follow to reduce their fixed-cost base against a challenging operating environment, marked by low interest rates and lackluster loan growth.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

Analysis: Japan's Power Supply Facing Risks as it Moves to Decarbonize Energy Mix

The latest power supply outlook for Japan's upcoming summer and winter months highlights immediate energy supply risks during the two peak demand seasons -- a trend likely to continue in the coming years as the country moves to decarbonize its electricity generation mix.

—Read the full article from S&P Global Platts

Hydrogen Use Vital for Western Australian Mining Sector's ESG Goals, Experts Say

Answerable to increasingly climate-conscious investors, the future of Western Australia's mining sector depends on its ability to use hydrogen as fuel and in downstream processes, experts said May 20.

—Read the full article from S&P Global Market Intelligence

Biden Issues Order to Guard U.S. From Climate-Related Financial Risks

President Joe Biden on May 20 announced new steps to safeguard the U.S. economy from the financial risks of climate change. Biden issued an "Executive Order on Climate-Related Financial Risk" that will require the development of a "comprehensive government-wide climate-risk strategy" to identify and disclose climate-related financial risks to the federal government and its assets.

—Read the full article from S&P Global Market Intelligence

The Future of Energy & Commodities

Top Northern Appalachian Coal Mines Ramp Up Q1 Output as Pandemic Pressure Eases

The top 25 coal mines in the Northern Appalachian basin produced more coal in the first quarter of 2021, beating levels from both the prior quarter and the first quarter of 2020, as pressure from COVID-19 lockdowns eased. The region's 25 largest mines by production generated 22.3 million tons of coal in the first quarter, increasing from 19.1 million tons in the prior quarter and 19.0 million tons in the first quarter of 2020, according to an S&P Global Market Intelligence analysis.

—Read the full article from S&P Global Market Intelligence

Exports, Global Demand Lift Top U.S. Producers' NGL Prices, Revenues In Q1

Robust international demand for liquefied petroleum gas drove a sharp spike in realized prices during the first quarter, boosting the NGL revenues of some U.S. shale producers more than 100% above the prior-year period.

—Read the full article from S&P Global Market Intelligence

Ukraine 'Gravely Alarmed' at Nord Stream 2 Sanctions Waiver as U.S. Senators Up Ante

Dozens of Ukrainian gas industry officials and lawmakers have called for work on the Nord Stream 2 gas pipeline to be halted in an open letter following the decision by the US government to waive sanctions against the pipeline's developer.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.