As the dust settles on the World Economic Forum (WEF) Annual Meeting in Davos, it’s time to take stock of the green decisions and announcements made by some 50 heads of state and 2,700 business leaders.
Even with a global energy crisis, cost-of-living, recession risks and the ongoing war in Ukraine, climate conversations were still very much on the agenda this year. So, what are the key takeaways within this space, and what do they mean for business?
1. Businesses cannot let climate change slip down the priority list
Davos 2023 was yet another reminder that climate consideration remains both a business and reputational consideration. One of the headline moments came from United Nations Secretary-General Antonio Guterres, who criticised companies for setting “dubious or murky” benchmarks and criteria for emission pledges. He stated that consumers, investors and regulators are being misled “with false narratives” that are “feeding a culture of climate misinformation and confusion.” It was a strong warning to business that the world is watching.
The WEF echoed the urgency in their 2023 Global Risks Report, which found that environmental issues such as natural disasters and resource exploitation account for half of the top 10 risks facing the world. Understanding these pressures, and communicating action around them, will be an imperative in 2023.
2. Energy transition, finance and technology are the green themes for 2023
Green energy transition, green finance and green technologies were recurring themes at Davos, indicating where businesses might want to focus communications on for the year.
They are also topics that bring optimism and solutions to the climate challenge. It was promising to see the WEF, supported by 45 partners, launch a new commitment to unlock $3 trillion each year in the form of Giving To Amplify Earth Action (GAEA) from public, private and philanthropic sources to reach net zero, reverse nature loss and restore biodiversity by 2050.
A new study also reported that the world has in its grasp “a new growth and development story driven by investment and innovation in green technology, boosted by AI”. It argues that in the next five years – a crucial period if net zero targets are to be achieved – more than half the tipping points (the point at which small changes become significant enough to cause a larger/more important change) for key green technologies will have been met. Showcasing progress and achievements in these areas will be a powerful message in 2023.
3. This could be the year of landmark climate legislation
US-Europe relations were somewhat strained thanks to new packages targeting green economic growth. On the one hand, there was keen praise from businesses for US President Joe Biden’s ‘huge’ green package, The Inflation Reduction Act, which includes subsidies aimed at luring companies to invest in technologies from electric vehicles to hydrogen power. The support is a sign of businesses welcoming stronger government intervention when it comes to tackling climate change, but the Act has ruffled feathers in Europe with concerns that it could result in protectionism.
Later in the week, Europe offered up its own package. European Commission Chief, Ursula von der Leyen, said Brussels would pass legislation to help speed up the granting of licenses and permits for green tech firms through the Net Zero Industry Act.
The impact of legislation change could be profound for businesses that are navigating supply chain, packaging, energy and innovation roadmaps. Staying close to the evolving picture will be imperative.
4. Scepticism still reigns outside of the echo chamber, and business must listen to the wider conversation
Understanding the climate conversation from a holistic point of view is incredibly important when it comes to communicating progress, investment and action. There remains widespread cynicism and scepticism from many groups towards corporate commitments, which businesses will need to hear – and navigate.
Agnes Callamard, secretary-general of Amnesty International, expressed this strongly. In her words: “I saw, I heard people talking about innovation, about doing this and doing that, but at no point have I come across economic or corporate leaders who are thinking that maybe the principles that are driving our businesses need to be rethought.”
Alongside macro debates over topics such as carbon reduction or energy innovation, the daily decisions of leaders and those in the public eye continue to be under scrutiny too. Much was made of the fact that one in 10 business leaders reportedly travelled to Davos on private jets in 2022, with criticism coming from Greenpeace amongst others. Cynical audiences want to see purported corporate value on sustainability lived and breathed in every decision a corporation makes.
Keeping an external outlook on the climate conversation and ensuring behaviour matches words will only boost credibility and authenticity.
5. Ambitions for clearer standards in the carbon market
Ngozi Okonjo-Iweala, director-general at the World Trade Organisation (WTO), used her speaking slot to call for a shared global price on carbon. Currently there are around 70 national carbon pricing schemes worldwide, she noted, which naturally results in fragmentation.
Building on this thinking, a new report, The Voluntary Carbon Market, found that less than a quarter of 137 global companies surveyed in the fourth quarter of 2022 plan to use carbon credits and half say they aren’t buying credits because of a complex web of standards, varying definitions of carbon credit quality or a lack of market transparency. Of course, some of these structures lay outside of the direct control of corporates. Adhering to the best possible standards available will be crucial for businesses – and communicating the journey as standards and legislation evolves will also be vital.
by Olivia Crawford, Account Director, Sustainability
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