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Sustainability in Davos 2017: at the core of Responsive and Responsible Leadership
Like it or not, the World Economic Forum (WEF) Annual Meeting in Davos is still the most influential and one of the largest jamborees in the world, with more than 3,000 business, academy, civil society, media, religious and government leaders, plus some celebrities, from over 100 countries attending more than 400 sessions. This year’s theme was Responsive and Responsible Leadership. What is discussed in Davos does not stay in Davos and has direct impact on business strategies and public policies, including on sustainability issues.
For the third year in a row sustainability was on the spotlight in Davos and even more this year, competing with technology and the new global order issues. The week before Davos, the Global Risks Report, ranked environmental concerns more prominently than ever, with all five risks in this category assessed as being above average for both impact and likelihood, notably extreme weather events and failure of climate change mitigation and adaptation as well as water crises – have emerged as a consistently central feature of the risk landscape, strongly interconnected with many other risks, such as conflict and migration.
China: the new leader?
The big star this year was the President of China, Xi Jinping, attending the Swiss mountain meeting for the first time. His speech defending globalization, poverty reduction and climate action – see quotes below – was remarkable and in contrast with Donald Trump’s inaugural speech in Washington. Xi Jinping did not say much about human rights, governance and other sustainability issues, but he did say “Priority should be given to addressing poverty, unemployment, the widening income gap and the concerns of the disadvantaged to promote social equity and justice. It is important to protect the environment while pursuing economic and social progress so as to achieve harmony between man and nature and between man and society.”
Sustainable Development Goals
Coinciding with Davos, the Business and Sustainable Development Commission issued its Better Business, Better World report with 60 key market “hot spots” or business opportunities to tackle social, environmental challenges, and re-build trust with society, including reducing food waste, affordable housing, energy efficient buildings and other which can be worth of $12 trillion in market value and 380 million jobs by 2030.
The SDGs were actively discussed in Davos. The most exciting debate was probably the “Advancing the Sustainable Development Agenda” session with Unilever’s CEO and SDGs star, Paul Polman, the CEO of Anglo American, Mark Cutifani, the CEO of Save the Children, Helle Thorning-Schmidt and others. Paul Polman, who knows the goals and even targets by heart, highlighted that the SDGs have a high rate of return for business as they “take risks away, build reputation and can attract better people”. Another simple equation mentioned by Polman: “the cost to implement the SDGs is $3-4 trillion per year, which is only 3-4% of the global GDP, and the benefits are enormous, between 12 up to $30 trillion by 2030”. Interestingly, among the “humble” delegates at the session there was even a Queen, Mathilde Queen of Belgium.
At his keynote speech, President Xi Jinping reinforced his support to the SDGs: “It is important to protect the environment while pursuing economic and social progress so as to achieve harmony between man and nature and between man and society. The 2030 Agenda for Sustainable Development should be implemented to realize balanced development across the world.”
The Compact for Responsive and Responsible Leadership championed by the Philips CEO, Frans van Houten, and debated at a session with the leaders of McKinsey, Hitachi and others. Its first shared conviction says “Society is best served by corporations that have aligned their goals to serve the long-term goals of society. The Sustainable Development Goals offer a useful roadmap for such alignment.” More than 100 CEOs signed to the Compact by the end of Davos, according to Frans van Houten at the Responsive and Responsible Leadership in 2017 panel with the Co-Chairs of the Annual Meeting.
The Sustainable Development Investment Partnership (SDIP), an initiative by the World Economic Forum and OECD, was re-launched at the almost empty Press Conference: Investment in Sustainable Infrastructure. How to finance the SDGs was also discussed in a paper launched in Davos by UBS, the Swiss bank, called Mobilizing Private Wealth for Public Good which comes with a simple equation: Meeting the SDGs will require $5-7 trillion of annual investment. Household wealth globally totalled $250 trillion in 2015 and has huge potential in helping to fund them. In that sense, especially relevant are SDGs relating to: zero hunger (SDG 1); good health and well-being (SDG 3); quality education (SDG 4); industry, innovation, and infrastructure (SDG 9); affordable and clean energy (SDG 7); and climate action (SDG 13).
In an open letter called Sustainable development is good for UK business to the UK Prime Minister, over 80 companies, including BT, Coca-Cola, Fujitsu, HSBC, Ikea, Jaguar Land Rover, Nestlé, Office Depot, Sainsbury’s, Tesco, Unilever and Vodafone have called on the Government to “demonstrate to business (its) commitment to deliver the SDGs in the UK; work with businesses to deliver the SDGs, creating a transparent reporting framework and clear benchmarks; [and] require all department (…) to work with business and other stakeholders to develop an SDG delivery plan.”
In his keynote speech, the new UN Secretary General António Guterres was keen on partnerships with the private sector: “Without the private sector, we will not create enough jobs, we will not bring enough dynamism and stability to the societies that need to be enhanced with the implementation of the Sustainable Development Goals.”
With the departure of Barack Obama – and the urgent air pollution problems in China – Xi Jinping is now definitely the new global leader on climate action. China is closing more than 100 coal power plants, building the largest renewable energy infrastructure in the world and creating a carbon emissions trading scheme (ETS) bigger than all existing ETSs combined. China will implement the Paris Agreement even if the US does not implement what both countries signed in 2014 and confirmed in 2016: “The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it as this is a responsibility we must assume for future generations.”, Xi Jinping said to praise of many, from business leaders to Greenpeace.
António Guterres, the new UN Secretary General, was a keynote speaker at Cooperation for Peace: A New Vision for the United Nations and said: “the best allies of all those that want to make sure that the Paris Agreement is implemented, the best allies today in the world are probably in the business sector and it is very important to fully mobilize them.”
A New Chapter for Climate Action, was one the highest level sessions, with Al Gore, the Prime Minister of Norway, Erna Solberg, the Prime Minister of Bangladesh, Sheikh Hasina, the CEO of HSBC, Stuart Gulliver and others. One the best catchphrases actually came from the moderator, the New York Times Foreign Affairs editor Thomas Friedman, who called climate change as a “black elephant”, a cross of a “black swan” – an event with low probability and very high impact – and an “elephant in the room” – a problem sitting right in front of us. HSBC’s Stuart Gulliver made a strong case for a carbon price and the growth in the green bonds market, but highlighted that there still a huge gap between the billions raised by the green bonds and the trillions needed. The panel also saw one of the most direct disagreements, between Al Gore – who was also promoting his latest film “An Inconvenient Sequel: Truth to Power” – and the Prime Minister of Bangladesh, Sheikh Hasina, who was passionately defending a new coal power plant being built in Bangladesh.
Other sessions included Climate Change: COP Out? with economist Lord Stern, the UNFCCC Executive Secretary, Patricia Espinosa and the Greenpeace Executive Director, Jennifer Morgan. The main theme was the Paris Agreement implementation: financing, the rulebook, opportunities and partnerships. Energy’s Clean Transition with the bosses of Iberdrola, Rusal and Total, plus Nur Bekri, China’s Minister of the National Energy Administration and the always energetic Christiana Figueres who was very critical to coal: “There is no space for any new coal”. Iberdrola’s CEO Ignacio Sánchez Galán made a strong case for electrification using renewables, to be later challenged by Rusal’s CEO Oleg Deripaska saying that renewables are “an excuse to use more coal.” The CEO of Total, Patrick Pouyanné, made once again a case for a carbon price at around $20 per tonne, as in the UK, so that there is a quick transition from coal to gas.
At The Return of Carbon Markets session a bearded José Maria Entrecanales, CEO of Acciona, confounded the cameramen and all when candidly said that “we need to bring ambassadors completely out of our business, we are not very well trusted” to communicate climate change issues. The session started with the economist Lord Stern arguing for a carbon price – around $50 a tonne – otherwise “we are subsidizing damaging activities”. The session was also attended by the CEOs of Lafarge – the second largest CO2 emitter in the world – and S&P, as well as Catherine McKenna, Minister of Environment and Climate Change, Canada.
The session Strategic Update: The Future of Energy also discussed how to move to a low carbon economy with the CEOs of Enel, China Guodian and Saudi Aramco and others, including the Executive Director of the International Energy Agency, Fatigh Berol, who said that electric cars will only slow down oil demand, which will still be pushed by trucks, planes, ships and the petrochemical industry. “One third of the oil demand growth today comes from Asian trucks”, he said. More excitingly, the CEO of Saudi Aramco, Amin H. Nasser, confirmed that Saudi Arabia is taking a strong position in renewables with up to 10GW by 2023.
Another optimist point was made by Unilever’s CEO, Paul Polman at the “Advancing the Sustainable Development Agenda” session: “Thanks to the clear direction of the Paris Agreement, we now have 2,000 companies with an internal price on carbon, $34 trillion in assets asking for a price on carbon.”
Oxfam once again grabbed the headlines with its annual report An economy for the 99 percent where it says that just 8 men own same wealth as half the world. The report has been criticized by “pedants” at The Economist for instance, but it still explains why public anger with inequality is already creating political shockwaves across the globe. Inequality has been cited as a significant factor in the election of Donald Trump in the US, the election of President Duterte in the Philippines, and Brexit in the UK, says Oxfam.
As a sort of response, the WEF published a new report called The Inclusive Growth and Development Report 2017 offering a new policy framework and corresponding set of
policy and performance indicators. The report also presents an “Inclusive Development Index” (IDI), which offers an alternative measure of national economic performance beyond gross domestic product (GDP) per capita.
China’s President Xi Jinping also spoke about the issue: “Inequality in income distribution and uneven development space are worrying. Over 700 million people in the world are still living in extreme poverty.”
Once again and despite water crises being one of the most important global risks identified by the WEF themselves, there was not much specific discussion about water. Except for two analogies to defend globalization, President Xi Jinping for instance did not explicitly mention water. The new UN Secretary General, António Guterres did mention water scarcity: “if one looks at the interconnection of the global megatrends — population growth and movements of people, climate change, food insecurity, water scarcity — we see how they are more and more inter-combined, enhancing each other and creating situations in which more people are displaced or tension, conflicts can emerge.”
However the actor Matt Damon was the champion of water in Davos, attending a Press Conference and the session An Insight, An Idea with Gary White, CEO of Water.org. One of the issues discussed was how to raise awareness about water issues when most of the people in the West take readily available drinkable water for granted. Water.org has already raised $17 million, being leveraged to more than then $200 million, but $200 billion is needed in investments. Gary White and Matt Damon announced a major new $1.2 million partnership with Stella Artois to help provide clean water to 3.5 million people.
The food sector accounts for 70% of water withdrawal, as confirmed by the Shaping the Future of Global Food Systems: A Scenarios Analysis report also launched in Davos.
“In 30 years’ time there will be more plastics in the ocean than there will be fish”, said Paul Polman. This was later discussed at the Press Conference: More Plastics in the Ocean than Fish: a Solution?
_ Press Conference: How Are Leading Social Enterprises Creating Impact at Scale with practical examples of investments in education, by the startup Geekie for example, and others.
_ Investing in Peace discussed how private investment can help building peace in countries such as Colombia. President Juan Manuel Santos was enthusiastic about the new Colombian prospects and welcomed investments by companies such as Nestlé, to the pleasure of its Chairman Peter Brabeck-Letmathe.
_ Creating Profit through Purpose with the CEOs of Procter & Gamble, Tata Consultancy, EY and others.
_ Ending Corruption: The Recovery of Trust, with the Minister of Finance of France, Michel Sapin, the Managing Director of Transparency International, the Chairman of Deloitte and others.
_ Issue Briefing: The Sixth Great Extinction, with the Director General of WWF, the CEO of Impossible Foods and others. The panel discussed the WWF’s Living Planet Report 2016 which argues that we have entered a mass extinction of biodiversity.
_ Norway has launched a $400 million fund launched to stop tropical deforestation and boost farming. The fund is expected to help forested countries meet their commitments under the UN Paris Climate Agreement and contribute to a number of Sustainable Development Goals such as: poverty reduction (SDG 1); zero hunger (SDG 2); decent work and economic growth (SDG 8); climate action (SDG 13); sustainable water management (SDG 15); and an end to land degradation and biodiversity loss (SDG 16)
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DISCLAIMER: Unfortunately, we were not physically in Davos as you probably were not there either. This article is based mostly on public information and some insights. Yes, we once again missed the canapés and the -20°C temperatures, but the WEF makes most of the preparatory documents and debates available online. In the article have provided all the hyperlinks we could find! In case you were there or have any insights or comments, please let us know: firstname.lastname@example.org
PS Strangely this year the list of delegates and the full programme were not made available on the WEF website, but you can have an idea of who was there here.