“See you in Davos” still works as a kind of secret handshake between members of the world’s elite. To enjoy the World Economic Forum, held every year in Davos since 1971, you need to be happy to pay £12.80 for a Davos bottle of water, be on trend (Macron is in; Merkel and Trudeau are out) and turn a blind eye to such absurdities as a sign advertising both A Day in the Life of a Refugee exhibition and drop-off zones for limousines.
The past decade has not been kind to the Davos elite. Despite their collective wisdom, they failed to anticipate the 2008 crash, Brexit or Donald Trump’s election. Yet this year, perhaps chastened by dramatic evidence that the rest of the planet does not share their worldview, the 3,000 movers and shakers at the summit had something to focus on – could they save the global economic system?
So what did we learn?
1. Many of Europe’s top CEOs – 15 of whom attended a backslapping dinner with Trump the night before his speech – are fervently hoping that the US president’s thinking on corporate tax and regulation inspires similar policies in Europe.
2. The campaign to reinvent capitalism has taken a small step forward. Campaigners and consultants, who have long argued that companies need to look beyond profit and recognise their social responsibilities, have a powerful new ally: Larry Fink, founder and CEO of Blackrock, an investment firm that manages $6.3trn in corporate assets. In January, he wrote to all the companies Blackrock owns shares in, urging them to ensure they “serve a social purpose”. Joe Kaeser, CEO of Siemens AG, echoed Fink’s concern as he reflected on Industry 4.0.
Social purpose also provoked one of the most intriguing discussions at Davos, with Indra Nooyi, CEO of PepsiCo, saying: “Finance and accounting has trumped strategy excessively. The whole world is ratio and accounting driven.” People pore over figures – even if they’re not directly compatible – and, Nooyi warned, “a bunch of number crunchers put out a spreadsheet and think that is strategy”. She did not gloss over the difficulties of initiating long-term change: “If you are doing something truly strategic, it invokes criticism. You are accused of being Mother Theresa.”
3. The world’s CEOs are more optimistic about the global economic outlook than they were at Davos 2017, where they anxiously pondered the consequences of an unexpected Trump presidency. Christine Lagarde, managing director of the International Monetary Fund, predicts several years of global economic growth and says that, short of a major political crisis, the chances of a new recession are low.
4. Billionaire financier George Soros is really angry. In the most wide-ranging speech of the World Economic Forum, he lambasted Trump, praised Nordic social policies as technological disruption looms (“They protect the workers, not the jobs”) and tore into Google and Facebook which, he argued, “effectively control over half of all internet advertising revenue”.
Soros warned that, in alliance with authoritarian states, the data-rich IT monopoles could create “a web of totalitarian control the likes of which not even Aldous Huxley or George Orwell could have imagined”. He did, however, also predict that, ultimately, a combination of taxation, regulation and Margrethe Vestager, the EU competition commissioner would break these monopolies.
5. Climate change is still on the agenda. The US may have withdrawn from the Paris climate accord, but the issue remains a focus for many governments and businesses. President Emmanuel Macron announced that France would shut down all coal-fired power stations by 2021. Marc Benioff, the CEO of the B2B cloud computing company Salesforce, has, with his wife Lynne, pledged $4.5m to a new partnership, The Friends of Ocean Action, to tackle plastics, over-fishing and acidification.
Yet the most telling contribution on the environment came from Thomas Buberl, head of insurance giant AXA, who warned that a global warming of 3-4C degrees would be uninsurable. That is why, Buberl said, his company will no longer insure projects in coal or the sand tar sector and was divesting from coal.
6. #MeToo matters in supply chains too. While the hashtag was inspired by allegations of sexual misconduct by Hollywood producer Harvey Weinstein, Winnie Byanyima, executive director of Oxfam International, argued that the imbalance of power between the sexes, starkly illustrated by recent scandals, would never be righted as long as women remained economically unequal to men. “Female labourers, such as domestic workers, garment makers and employees assembling smartphones in developing countries are the bottoms of the supply chains of big business” who are subjugated by social norms that “justify their exploitation”. Byanyima urged CEOs at Davos to use their factories – and the way they source their products – to empower women.
7. Globalisation is at a crossroads. For almost a decade now, the growth in international trade has roughly matched global growth. The strong correlation between trade and growth has given way to a focus on the disruptive consequences of globalisation – such as American steelworkers losing their jobs to Chinese companies where people work seven days a week for a comparative pittance.
Macron admitted that “globalisation is in crisis”, while India’s prime minister Narendra Modi warned against protectionists who “want to save themselves from globalisation and to change the natural flow of globalisation”. In contrast, America’s commander-in-chief became salesman-in-chief in a speech extolling the virtues of “America first”. Yet even Trump reached out to the Davos plutocrats he had vilified on the campaign trail, saying: “America first is not America alone.”
8. Silicon Valley is worried. Soros wasn’t the only speaker to castigate the tech industry. British prime minister Theresa May accused companies of still shirking their responsibilities when it came to “harmful and illegal online activity”. Alphabet, Google’s parent company, had to dodge questions about whether it had become too big. Cloud computing tycoon Mark Benioff even likened technology to tobacco: “Technology has addictive qualities we have to address, product designers are working on making them more addictive – and we need to rein that back.” Google and Facebook are easy targets but they seem, to many politicians, policy makers and rivals, to be the “robber barons” of the 21st century.
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