The 2023 World Economic Forum (WEF) meeting in Davos started five days ago amid an air of pessimism.
Months beforehand, 73% of business leaders surveyed by PricewaterhouseCoopers had predicted a decline in global growth in the coming year, with inflation, volatility and geopolitical conflict topping the risk list. It is hardly a surprising figure given 2022 ended with global stocks having fallen by nearly 20%, with market losses of $30trn, the worst since 2008.
Despite that grim economic forecast, the first three days in Davos were taken up with discussions on EU/US trade issues and then Ukraine, with German chancellor Olaf Scholz and President Zelenskyy the leading speakers.
But day three of the summit also saw a speech from UN secretary-general António Guterres, which emphasised the urgent need for radical decarbonisation, as well as the amplification of systemic global inequalities by a “morally bankrupt financial system”.
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The founder of the Forum, Klaus Schwab, has long wanted it to examine broad global problems, but all too often smaller, specific issues dominate discussion, with matters like Guterres’s concerns over socio-economic divisions and climate breakdown sidelined. The major corporations and opinion formers at Davos are focused on short-term results and shareholder requirements for strong returns, not longer-term challenges.
Schwab himself may be critical of traditional shareholder capitalism and keen on what is termed ‘stakeholder responsibility’ or ‘stakeholder capitalism’, which aims to replace the primacy of profitability and shareholder reward with a wider concern over issues such as climate change and economic marginalisation. It may itself be a questionable concept – but in any case there is little evidence of such a transformation being in prospect for the Davos elite.
Two glaring examples of lack of change came to light just as the WEF got under way. The first related to one of the few achievements of the COP26 climate summit, the Glasgow Financial Alliance for Net Zero (GFANZ), a grouping of 450 organisations in 45 countries with assets exceeding $130trn. Its collective aim was for members to align their investments to help limit the global temperature rise to 1.5°C.
However, indications in the past year reveal little change in behaviour. According to Reclaim Finance, among the banks aligned to GFANZ, 56 of the world’s biggest have invested $270bn in fossil fuel corporations for expansion, while the 58 largest members of the asset management grouping within GFANZ retain $847bn in assets in fossil fuel companies.
Perhaps it is taking time, but time is something we do not have.
The second example of business as usual was the confirmation of a long-held suspicion that fossil fuel companies have known for decades from their own researchers that climate change is directly linked to fossil fuel combustion.
If global heating and climate breakdown have figured little at Davos, then the same applies to Guterres’s other concern: systemic global inequalities
A new study by analysts at Harvard University and the Potsdam Institute for Climate Impact Research reveals that scientists at Exxon, the world’s largest fossil fuel corporation, “were uncannily accurate in their projections from the 1970s onwards, predicting an upward curve of global temperatures and carbon dioxide emissions that is close to matching what actually occurred as the world heated up at a pace not seen in millions of years”.
The researchers examined more than 100 company documents and peer-reviewed scientific papers covering the period from 1977 to 2014. Bear in mind that by 1977 campaigners were already arguing for green policies in relation to fossil fuels. The first period of climate concern had come in the mid-1970s after the publication of the seminal ‘Limits to Growth’ back in 1972.
Exxon’s response was to do its own studies – with those uncannily accurate conclusions. If Exxon had then put serious money into renewable energy resources, other fossil fuel companies would have followed suit and we would be at least a decade further down the road to a decarbonising world. Instead, it doubled down in rejecting the science and went full tilt to exploit fossil carbon for as long as possible.
If global heating and climate breakdown have figured little at Davos, then the same applies to Guterres’s other concern: systemic global inequalities. As with climate issues, there is little new in this: inequalities are becoming extreme as the dominance of market fundamentalism fosters an environment of runaway wealth. Even so, the way in which the financial disruption caused by the Covid-19 pandemic has allowed massive increases in wealth for a few is little short of breathtaking.
In the four-month period from April to July 2020, as lockdowns took hold, the world’s 2,189 dollar billionaires increased their wealth by a staggering 27.5%, a remarkable example of ‘disaster capitalism’ at work.
This year, Oxfam once again timed its annual report on wealth distribution to coincide with the start of WEF, and presented yet more evidence of a system failing the majority of the world’s people. It reported that since January 2020, 63% of all the new wealth generated – some $26trn – went to the richest 1%. It also noted that for the first time in a quarter of a century, the rise in extreme wealth was being matched by a rise in extreme poverty and called for wealth taxes to be levied on the world’s super-rich.
This is hardly likely to happen on any scale, so the prospect of a bitterly divided and environmentally limited world looms. As the economic geographer, Edwin Brooks, put it over half a century ago, the risk is of “a crowded glowering planet of massive inequalities of wealth, buttressed by stark force yet endlessly threatened by desperate people in the global ghettoes”.
It doesn’t have to be.
At least on the climate issue, change can happen quickly. Public concern is close to turning to anger at political inaction, just as the risk of repeated wild weather catastrophes emerges. This is paralleled by the rapid emergence of viable options for radical decarbonisation that could, even now, be implemented quickly enough to prevent the worst excesses of climate breakdown.
That may do little for transforming the neoliberal economy into a genuinely sustainable alternative, but a public consciousness that is up for the challenge of preventing climate breakdown can set the scene for an economic transformation. Just don’t expect the World Economic Forum to be anywhere near the forefront of change.
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