Pepsi and SodaStream, Apple in China, KPMG Fine: CEO Daily for August 20, 2018

August 20, 2018, 10:41 AM UTC

Good morning.

Today, Fortune releases its fourth annual Change the World list, which highlights companies that are addressing social problems as part of their core business strategy. This list isn’t about charity, or “corporate social responsibility,” or some measure of corporate “goodness.” Rather, it is a testament to the fundamental positive power of capitalism. As Fortune Editor-in-Chief Clifton Leaf writes in the introduction, it’s “about solving problems through the only sustainable and scalable problem-solving machine we know of: business.”

Among those topping the list this year are some well-known names: Merck (No. 2), for the work it has done developing an Ebola vaccine; Bank of America (No. 3), for its $145 billion commitment to financing low-carbon businesses; Alibaba (No. 5), for steering capital to impoverished parts of China; and Kroger (No. 6), for its effort to fight hunger and food waste. You’ll also find some lesser-known companies: Reliance Jio, which earned the No. 1 spot for providing Internet service to hundreds of millions of Indians at rock-bottom prices; and Inditex (No. 4), which has set high standards for protecting worker safety in the global garment industry. The companies were chosen with help from our partners at the Shared Value Initiative based on measurable social impact, positive business results, and degree of innovation. You can see the full list here.

At Fortune, the inauguration of this list in 2015 was a turning point. Since then, we have sharpened our focus on making business better, in every sense of the phrase. Our landmark Fortune Global Forum at the Vatican in 2016, and the CEO Initiative that grew from its aftermath (details here), are key parts of this effort. But we are working to ensure the values underlying the Change the World list drive everything we do. So take some time to read it; it provides good reason to be optimistic about the future.

More news below.

Top News

Pepsi Buys SodaStream

In big carbonated liquid news, PepsiCo is shelling out $3.2 billion for the Israeli fizzy-water-machine firm SodaStream. The purchase (should it go ahead following regulatory scrutiny) will give Pepsi a foot in the "in-home beverage creation" market, as it tries to produce a healthier set of offerings. Fortune

Apple in China

Apple has reportedly pulled 25,000 apps from its Chinese App Store, following criticism in state media over its failure to uphold the law. iPhone gambling apps, which are illegal in China, were seen as particularly problematic. Apple: "We have already removed many apps and developers for trying to distribute illegal gambling apps on our App Store, and we are vigilant in our efforts to find these and stop them from being on the App Store." Wall Street Journal


The accountancy giant KPMG has been fined $3.8 million for failings in its relationship with a client, the British fashion retailer Ted Baker. The U.K. Financial Reporting Council also fined KPMG senior partner Michael Francis Barradell. KPMG provided expert witnesses for Ted Baker in a court case, breaching independence guidelines. The watchdog added: "In addition, there was a self-interest threat arising from the fact that the fees for the expert engagement significantly exceeded the audit fees in the relevant years." Telegraph

Greece Is the Word

Greece is today exiting the third and final tranche of the biggest bailout in modern economic history—that means it can now borrow on international markets, though it shouldn't need to for the next year and a half. During its debt crisis, Greece's economy contracted by a quarter. The bailout, from other Eurozone countries and the IMF, totaled more than $350 billion and came with unpopular austerity measures. Now, although Greece still has big problems, unemployment is sinking and the economy is growing. CNBC

Around the Water Cooler

Autonomous Cars

Uber executives are reportedly divided over the future of the company's autonomous car business. One group within the firm sees the technology as essential to Uber's future, while the other wants the company to sell its Advanced Technologies Group or strike up partnerships. CEO Dara Khosrowshahi is apparently keen on partnerships, but has not yet made a firm decision. New York Times

Content Crackdown

The European Commission is reportedly preparing to end its voluntary approach to the censorship of terrorist propaganda and extremist violence on online platforms, with the likes of Facebook and YouTube facing fines if they do not swiftly remove such material. The platforms have been trying to tackle the problem, but apparently not hard enough—the Commission is apparently looking for a one-hour deadline for content to be removed after it is flagged by law enforcement. Financial Times

Tariff Effects

Over 90% of business economists responding to a survey said they believe current and threatened tariffs were having "unfavourable consequential impacts" on the economy. Around two-thirds of those polled by the National Association for Business Economics also said they predicted negative effects if the U.S. were to withdraw from NAFTA. Of the 251 respondents, 71% said U.S. fiscal policy was too stimulative (up from 52% in February) and 81% said the federal deficit's share of GDP should fall. Bloomberg

Cohen Case

Investigators probing the affairs of former Trump lawyer and fixer Michael Cohen are interested in the more than $20 million in loans granted to him and his family's taxi businesses, as well as the possibility that Cohen broke the law by helping to arrange payoffs for the silence of women who claimed to have had affairs with the president. Per The New York Times, the investigators want to know if Cohen "misrepresented the value of his assets to obtain the loans." NYT

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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