As global elite gather at the World Economic Forum, moving to counter climate change competes with economic fears
A viewing of the virtual reality film ‘Collisions’ at the annual meeting of the World Economic Forum in Davos (credit: WEF/ Michele Limina)
By Alex Pashley
It is the first major meeting of politicians and business leaders since 195 nations struck a landmark deal to limit carbon emissions in Paris in December.
Thousands of luminaries have come to a Swiss ski resort to unpack the opportunities and challenges of the future. ‘Mastering the Fourth Industrial Revolution’ is the theme meant to guide high-powered panel sessions.
Among talk of robotics, 3D printing and nanotechnology, the Paris agreement should merit mention. It aims to radically shrink the usage of fossil fuels, which the world consumes for 87% of its energy. Innovation is crucial to neutralise carbon emissions in the next half-century.
As the forum nears its end, here’s what we conclude.
1. Market turmoil dominates
A global selloff of stocks has crowded out much discussion of a new global warming pact at the World Economic Forum. Markets have plunged more than US$4 trillion in value since 1 January – the worst start in yearly trading since the 2009 financial crisis – on weak Chinese growth and low oil prices. Opinion is divided on the impact of cheap crude on climate plans. Benchmark prices of $30 a barrel are “very detrimental for any [clean energy] policy”, according to Total chief Patrick Pouyanne. But analysts Climate Home asked are not worried.
2. Climate action is the smaller conversation
A climate change-induced disaster was named the greatest threat to the global economy in 2016, in a WEF survey ahead of the event, but that wasn’t fully borne out in discussions. Cutting carbon is an “issue for mainstream business, but of course not everyone is paying attention,” says Paul Simpson at UK-based CDP. How to revive the reeling oil sector is the core issue – not reacting to low-carbon regulations signalled by Paris. Nigel Topping at We Mean Business sees a more “workman-like mood” on tackling climate change compared to previous years. “It’s less a call to action, and more a how do we do it”, he says.
Ban Ki-moon, Secretary-General, United Nations, New York addresses the forum (Flickr/ WEF/ Valeriano Di Domenico)
3. People are fatigued after 2015’s bumper year
Last year saw the Sustainable Development Goals, the Sendai framework to lessen natural disaster risks and the Paris climate agreement. It was a year of unprecedented preparation and focused diplomacy. That was inevitably going to fall back, says Yvo de Boer, the UN’s former climate chief between 2006-10. “In a way it is very understandable. People want to take a break from climate having invested so heavily in the Paris process.”
4. But businesses are pressing on
The media may be fixated on frothy markets, but business leaders are looking forward to implementing Paris’ conclusions. Cities, regions and corporates are ready to hold governments to their commitments, says Sandrine Dixson-Decleve of the Prince of Wales Corporate Leaders Group. Sessions showed intent to ramp up finance for environmentally-friendly investments. Even the head of America’s largest private employer, Walmart, said taking climate responsibility was good for business.
5. Oil and gas companies, not so much
Five European giants including BP and Total may have backed Paris’ 2C target and supported carbon pricing. Ten joined the Oil and Gas Climate Initiative (including Saudi Aramco and Pemex) last year too. What isn’t clear is their strategies to meet the rhetoric, says CDP’s Simpson. It’s even worse from US companies, who have shown a “vacuum of leadership” at Davos. But Topping says we are seeing the “beginnings” of the industry’s acknowledgement of a transition to a low-carbon world. Shareholder pressure will make not having a plan for 2C impossible.
6. The low carbon transition might not be orderly
Sustainable business groups are “struggling” to win the battle that you can act on climate and not risk economic growth, said Helen Mountford of the New Climate Economy Initiative. Volatile commodity prices bolster the case to invest in less risky renewable energy ventures, and costs are tumbling. Start preparing early for an “orderly transition”, HSBC Group chief executive Stuart Gulliver urged fossil fuel companies. What could be dangerous to financial stability is some “binary moment where everybody effectively abandons the oil and gas and mining companies. It’s certainly not workable for a lot of the emerging economies,” he said.
(Flickr/ WEF/Benedikt von Loebell)
7. Financial regulators are on the case
Michael Bloomberg named a crack team to get companies revealing their climate risks. Top executives from Brazilian bank Bradesco, commodities giant Unilever, French insurer Axa and the Singapore Exchange join the initiative. It follows Bank of England governor Mark Carney’s warning last year that global warming could hit financial stability. He’s “not exactly a Greenpeace member,” said UN climate chief Christiana Figueres, “coming out quite clearly and saying wake up.”
8. Investors are circling an opened-up Arctic
A council of investors, businesses and independent experts launched the Arctic Investment Protocol, a WEF initiative to target responsible investment in the polar region. As ice caps melt to open up untold resources, the group estimates $1 trillion is needed in infrastructure. It somewhat vaguely talks about “balancing economic benefits with environmental and climate goals” – but if members like Statoil think that legitimises oil drilling, Greenpeace has other ideas.