Greta Thunberg and Prince Charles generated headlines at Davos © World Economic Forum / Benedikt von Loebell
Greta Thunberg and Prince Charles generated headlines at Davos © World Economic Forum / Benedikt von Loebell

Davos's take-home messages for procurement

29 January 2020

 “Davos is where billionaires tell millionaires how the middle class feels.”

That gag, by Jaime Dimon, chairman and CEO of American investment bank JP Morgan, captured the feeling that the much vaunted World Economic Forum no longer has its finger on the global zeitgeist – if, indeed, it ever did.

It is easy to be cynical about Davos. This year’s slogan, ‘Stakeholders for a cohesive and sustainable world’, is a laudable sentiment, even if it does gloss over the fact that the world is not very cohesive at the moment and, on present trends, not very sustainable either. 

A global institution in a world that has fallen – for how long? – out of love with globalisation, an ostentatious reunion for a resented elite in a glitzy Swiss ski resort and a marketing platform for distrusted big business, Davos is all these, but it is also an event where problems and solutions are discussed and debated. The impact of this process on the worlds of government and commerce may be hard to trace but it is genuine – and that makes it critical, for leaders in procurement and supply chains, to read the runes.

Take shipping for example. The industry got a waiver from the Paris climate change accord but anyone in the sector, a supplier to it, and a customer of it, must recognise the mounting pressure for decarbonisation. If the industry does not act, emissions from shipping could be 250% higher in 2050 than they are today. As estimated by Johannah Christensen, managing director of the Global Maritime Forum, the investment required to halve shipping’s emissions by that year could be at least $1.4tn – 87% of which, she argues, will need to be spent on onshore infrastructure.

Recognising the scale of the challenge – and the threat that governments might impose fuel levies – the International Chamber of Shipping is proposing the first ever industry-wide collaborative R&D effort. The tough new rules on ships’ sulphur emissions which have just come into effect already represent the biggest shakeup for the oil and shipping sectors for decades, but they also look like the harbinger of swifter, more dramatic change ahead.

That said, it is easy to see why climate activists such as Greta Thunberg find Davos so frustrating. At one of the summit’s biggest events, Aramco promoted itself as the world’s largest oil company. At a typical Davos, about 1,000 private jets fly delegates into Switzerland – hence the protestors’ placard “Stop (f)lying to us”. US president Donald Trump’s claim that climate change was sheer doom-mongering was greeted with polite disdain by delegates (although they all, with the exception of George Soros, expect him to be re-elected in November) and there was a consensus that action needed to be taken. Yet as City AM’s diarist Paul Barnard noted: “If we agree on the ‘what’, and are forming a consensus around the ‘when’, the ‘how’ remains hotly contested.”

The war on plastics illustrates Barnard’s point. While Davos itself did its best to discourage single-use plastics at events, the crisis is far from solved. Explorer Enric Sala told attendees: “We are in the casino at the Titanic, trying to make as much money as possible after hitting the iceberg.” Former US vice-president Al Gore predicted that on present trends, by 2050 the plastic in our oceans will weigh more than the fish.

It’s true, as Marc Benioff, CEO of Salesforce remarked, that plastics in our oceans is a challenge that has inspired governments and businesses to collaborate intensely. Yet Coca-Cola, which has admitted that it makes about 3m tons of plastic packaging a year, is standing by the single-use plastic bottle on the grounds that customers prefer them.

Eight years ago at Davos, yachtswoman Ellen MacArthur presented the circular economy, a philosophy designed to eliminate waste and keep resources in continual use, to a crowd of delegates who were more interested in what she would be doing now that she had given up sailing. At Davos 2020, the circular economy took centre stage, with Adidas, Phillis and Unilever all acting, Black Rock launching a small investment fund, with MacArthur, to advance the concept and some fashion brands, notably H&M, joining such disruptive start-ups as Rent the Runway, in offering clothes for rent. 

Will we ever apply the same logic to smartphones? As recent studies suggest these ubiquitous devices are killing the planet faster than expected, it might be helpful. Phone-shaming isn’t a thing yet but, as the information and communications technology sector has tripled its share of emissions since 2007 – and could account for 14% by 2040 – it can surely only be a matter of time. The September 2019 launch of Fairfone 3, which comes with a screwdriver so you can repair it at home, may not be a game changer in itself but it is encouraging other manufacturers to act. An iPhone made primarily out of old iPhone parts may not delight Apple’s shareholders but it could be seriously good for the planet.

The most startling talk at Davos – which didn’t generate as many headlines as those by Trump, Thunberg or Prince Charles ­– was by Yuval Noah Harari, the Israeli historian, author of the bestseller Sapiens, who warned that we are “facing an artificial intelligence arms race and whoever has enough knowledge of biology, enough data and enough computer power, will be able to hack humans with terrible consequences”.

With the media grappling with climate change, protectionism and global economic prospects, Harari’s suggestion that digital technology could create exponentially more powerful totalitarian regimes in future was probably one crisis too many. Yet don’t be surprised if, like MacArthur, he repeats the message in eight years’ time and finds media and delegates much more receptive.

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