Good morning. A law in California requires retailers to manage how clothing waste is disposed of, putting new responsibilities on apparel businesses as governments increasingly scrutinize fast fashion, Clara Hudson reports for Risk Journal. (free link)

• First of its kind: The mandate tasked textile producers with joining a government-approved producer responsibility group by July 1. It is the first extended producer responsibility law for textiles in the U.S., essentially putting the onus on clothing makers to manage where their products end up. The law requires them to participate in an organization intended to boost—and pay for—recycling.
   
• Beyond California: The law applies to clothing and other textile producers, including those outside of the state who sell clothes or material in California. By joining the waste management group, chosen by a state recycling agency, companies will ultimately have to fund the recycling and responsible disposal of the materials, making it easier for the state to collect and repurpose clothing.
   
• Long ramp-up: But the program under the producer responsibility group has until 2030 to become fully operational, which means member fees won’t be due soon. Businesses that don’t comply could face penalties, however. The law covers a lot of different products from handbags to towels.
   
• Other scrutiny: The apparel industry has already been navigating heightened pressure in the U.S. over greenhouse gas emissions and landfill waste from supercharged clothing production, particularly from fast fashion brands.

Davos founder Klaus Schwab plots a return to World Economic Forum.

Klaus Schwab is trying to make a comeback at the World Economic Forum.

The 88-year-old founder recently sent letters to board members with a list of demands, legal threats and a request for an advisory role that would give him a say in appointing the Forum’s future leadership, according to documents viewed by The Wall Street Journal.

Schwab resigned as chair of the Forum—which hosts an annual meeting in January in Davos, Switzerland—last year after a public clash with the board for opening an investigation into a whistleblower’s allegations of misconduct. A Wall Street Journal investigation in 2024 uncovered evidence of a toxic culture at the Forum for women and Black employees. Schwab denied any wrongdoing.

• A senior Justice Department official said he ordered prosecutors to abandon a fraud and bribery case against Indian billionaire Gautam Adani and others, primarily because the case had weak ties to the U.S., Risk Journal reports. (free link)
   
• President Trump confirmed that he called FIFA President Gianni Infantino and asked him to review U.S. striker Folarin Balogun’s one-game suspension, a move that set off an uproar among soccer fans across the world.
   
• The European Commission had adopted a more simplified reporting standard for sustainability, amid wider U.S. opposition to increased climate reporting requirements for companies, reports Risk Journal’s Yusuf Khan. 

‘Killer robots’ must be banned, U.N. Secretary-General says.

The United Nations’s chief wants humanity to forbid killer robots.

U.N. Secretary-General António Guterres called Monday for lethal autonomous weapons to be “banned by international law,” resurfacing an AI-safety dispute that was core to Anthropic’s schism with the Pentagon earlier this year.

“Machines selecting and engaging their target and taking a life—without human control and judgment. That is morally repugnant,” Guterres said in a speech about AI governance in Geneva. “Let us call them what they are: killer robots.”

• Iran’s Islamic Revolutionary Guard Corps fired missiles at two commercial ships near the Strait of Hormuz early Tuesday, according to a senior U.S. official, marking an escalation that threatens to complicate negotiations to end the U.S.-Iran war.
   
• A vast crowd of mourners joined the funeral procession Monday for the body of Ali Khamenei, one of the biggest moments in a week of events that were part eulogy for the former supreme leader killed at the start of the Iran war and part an elaborately managed exercise in political messaging to the country’s allies and enemies.
   
• Risk Journal reports: The U.K. government announced Monday a package of reforms to block foreign money from influencing British elections, including a timebound cap on large donations from people who have recently moved to the U.K. and tougher checks on company donations. (free link)
   
• Russia’s latest missile attack on the Ukrainian capital, which killed at least 12 people and wounded close to 50, has exposed a grim reality: Ukraine has virtually run out of Patriot interceptors that stop ballistic missiles.
   
• Inflation expectations in Canada zoomed upward in the second quarter due to the anticipated impact on elevated energy costs from the conflict in Iran, according to a quarterly business-outlook survey from the Bank of Canada.
   
• The risks facing the Federal Reserve have “completely flipped around” over the past year, Fed governor Christopher Waller said during remarks on a panel in Rome on Monday. Last year, Waller advocated for rate cuts and was “willing to tolerate a longer movement back” to the Fed’s 2% inflation goal because a shaky labor market outweighed inflation running above that target, he said.
   
• Increased borrowing by investors in equity markets has raised the risk of a sharp fall in prices that could threaten the stability of the financial system, the Bank of England warned Tuesday.
   
• Toyota will spend $3.6 billion to bring production of its top-selling midsize pickup, the Tacoma, back to the U.S. by 2030, the Japanese automaker said Monday.

• Maine Senate Democratic nominee Graham Platner said his campaign would be reflecting on the “best path forward” after a woman he was romantically involved with publicly alleged that he sexually assaulted her, an allegation he denied.
   
• Prosecutors seeking the death penalty in the killing of conservative activist Charlie Kirk began laying out their evidence Monday as they push for a murder trial.
   
• Microsoft will cut some 3,200 jobs from its Xbox videogames division as it restructures the struggling business.
   
• Walmart is cutting prices on thousands of items to help customers with affordability after years of inflation.

Follow us on X at @WSJRisk. Send tips to our reporters Max Fillion at max.fillion@dowjones.com, Clara Hudson at clara.hudson@wsj.com, Yusuf Khan at yusuf.khan@wsj.com and Richard Vanderford at richard.vanderford@wsj.com. 

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