Davos bosses sound alarm over climate, political fires

PTI, Jan 16, 2020, 11:56 AM IST

London: Business chiefs headed Wednesday into their first global gathering of 2020 insisting they are not waiting on bickering governments to fight climate change after Wall Street titan BlackRock joined a campaign pressuring companies to do more.

Ahead of next week’s annual conclave in Davos, the World Economic Forum released a survey that is portrayed as a call to arms after devastating wildfires in Australia and an inconclusive climate summit in Madrid last month.

The window to agree on decisive cuts to carbon emissions risks closing over the new decade and if the world fails to act, “we will be faced with a situation where we are moving the deckchairs around on the Titanic,” WEF president Borge Brende told a news conference.

In recent years, climate change and its likely consequences have emerged as top concerns shadowing the high-powered meeting of government and business leaders in the Swiss Alps, along with economic risks.

This time, the WEF’s “Global Risks Perception Survey” found the top five categories of concern for the next 10 years were all environmental – topped by extreme weather events and failure of governments and businesses to forestall climate change.

For 2020 alone, economic confrontations and domestic political polarization were among the shorter-term drivers of anxiety among the more than 750 executives and industry experts surveyed.

US President Donald Trump will attend Davos, after agreeing on a deal to defuse a trade war he started with China.

Also returning to Davos will be 17-year-old Swedish eco-activist Greta Thunberg, who called in the British newspaper The Guardian for an end to the “madness” of investing in fossil fuels.

BlackRock, the world’s biggest asset manager with nearly USD 7 trillion invested, said it was divesting holdings in companies that earn more than a quarter of their sales from production of electricity-generating coal.

In his annual letter to US company leaders, BlackRock chief executive Larry Fink said markets had been slow to reflect the risk of climate change to business models.

“But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” he wrote.

John Drzik, chairman of the business consultancy Marsh and McLennan Insights, said as a result of BlackRock’s action, money managers holding more than USD 40 trillion now back a corporate initiative called Climate Action 100+.

While stressing the need for a unified political response by governments, the campaign says its member companies account for two-thirds of annual global industrial emissions.

“Others will now have to respond to what BlackRock did,” Drzik told AFP at the WEF report’s launch.

“USD 7 trillion alone is meaningful but I think the scale and visibility and reputation of BlackRock just adds to the money.”

German industrial group Siemens has bucked the corporate trend by pressing ahead with its involvement in a vast coal mine in Australia. And for Extinction Rebellion, BlackRock itself “remains waist-deep in fossil fuel investments.”

Nevertheless, the needle appears to be shifting in boardrooms as CEOs are forced to factor in the likely impact of climate change on their bottom lines.

“You don’t want to be stuck with technologies and industries that are obsolete. You want to find the winners of the new economy,” Peter Giger, chief risk officer at Zurich Insurance Group, said at the WEF event.

“That’s just good business practice if you run a sustainable business with a long-term perspective,” he said.

Despite the warm words on climate action, the WEF remains dogged by allegations of hypocrisy given that many of the Davos elite prefer to jet to Switzerland aboard private planes.

The organisation said among measures it was taking were carbon offsets, encouraging the use of biofuels for planes, and offering discounted train tickets for those heading to Davos.

“It is something we take really seriously. There’s nothing worse than an organisation identifying a risk and failing to do anything about it,” WEF managing director Adrian Monck said.