There’s a desire for change among global elites — but not nearly as far as Sens. Sanders (I-Vt.) and Warren (D-Mass.) want to go.
The agenda at this year’s World Economic Forum is dominated by discussions of how to address climate change and inequality. Leaders of large corporations are eager to show they are doing something about the world’s biggest problems and do not need the sweeping policy changes that Sanders and Warren are proposing.
“Businesses are really concerned about the possibility of a far-left administration coming to power that would impose very different ways of operating,” said Colin Mayer, a professor of management studies at the University of Oxford and a forum attendee.
Few business leaders here want to openly declare which candidate they support in the 2020 U.S. presidential election, but there is a widespread belief that populism and climate activism aren’t going away, regardless of who wins the presidency.
“Young people have veered sharply leftward,” Greg Valliere, chief U.S. policy strategist at AGF Investments, wrote in a recent note to clients summarizing the sentiment shift.
Other than President Trump, the attendee creating the most buzz at this year’s World Economic Forum is 17-year-old Swedish climate activist Greta Thunberg. Last year, Thunberg traveled to Davos by train to tell world leaders that climate change was their fault. Her message has been echoed around the world in the past year by teenagers skipping school to march in support of stronger action to address climate change. Those students are asking their parents for change.
“CEOs have kids and grandkids. I’ve heard a lot of stories from executives who were sitting down at the table for Christmas dinner and their nephew asked them, ‘What are you doing about climate change?’” said Rachel Kyte, dean of the Fletcher School at Tufts University and a former World Bank special envoy for climate change.
Chief executives appear to be listening to these young people, many of whom also support liberal politicians.
Larry Fink, head of the world’s largest money manager, penned a widely read letter this month urging his fellow business leaders to view climate change as a financial risk. He said his company would factor climate risk into its decisions about which businesses to invest in, and he specifically cited the September climate protests led by young people as evidence that this issue isn’t going away.
“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” wrote Fink, the chairman of BlackRock and a forum attendee.
There’s a sense among business leaders that climate change is undeniable. Last year capped the world’s hottest decade in recorded history, and extreme events such as the devastating Australian wildfires are becoming more routine. There’s even increasing turbulence on flights from climate change that the many private jets landing in Davos can’t avoid.
For the first time, “climate action failure” was the No. 1 risk in the World Economic Forum’s Global Risk Report, which is based on a survey of more than 1,000 key business and political figures. Environmental issues beat out cyberattacks, disease, inequality and geopolitics.
At Davos, the buzzword this year is “stakeholder capitalism,” the idea that companies have a responsibility to the environment and society to do more than maximize profits. There has long been criticism that global elites come to Davos with a set of talking points but do not actually change their practices.
Kyte says she is cautiously optimistic, at least on climate action. Even big energy, cement and shipping companies are racing to show that they are cleaner than their “dirty” peers, she said. They know new regulations are likely to target them, and they know that investors like BlackRock won’t invest in them if they don’t evolve.
“The question is no longer whether to do something, but what exactly to do and in what way,” said Rich Nuzum, president of Mercer’s wealth business, which works with many of the world’s largest investors.
Business leaders also increasingly recognize the inevitability of there being some sort of price on carbon one day, probably in the form of a carbon tax. Many are trying to prepare for that reality and help shape the policies.
In some ways, inequality is a tougher subject for many at Davos to discuss. More than 100 billionaires are on the official attendee list for the World Economic Forum. When asked last year about how to address inequality, nearly everyone said the answer was “upskilling,” a reference to providing more education and training to people who have been left behind. But few here want to talk about paying more in taxes to fund these programs.
As candidates like Sanders and Warren keep the spotlight on billionaires and protesters take to the streets in Switzerland holding signs that say “Eat the Rich,” there’s an awareness that giving to foundations and charities is no longer enough. But few here are committing to concrete solutions.
“The economic pie is bigger than it’s ever been before in history, which means we could make everyone better off, but we’ve chosen as a society to leave a lot of people behind,” said Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy and a forum attendee. “That’s not just inexcusable morally but is also really bad tactically.”