AG INSIGHT | 24/01/2024
A mountain to climb: did Davos deliver the climate and environmental progress required?
Ben Pummell, Strategic Communications Manager at the Aldersgate Group, looks back on the World Economic Forum Annual Meeting at Davos and what it means for global climate action.
Last week almost 3,000 leaders from international governments, business and civil society descended on Davos for the World Economic Forum’s Annual Meeting. Against a backdrop of heightened geopolitical uncertainty, economic challenges and increasing climate risk, the talks understandably centred around rebuilding trust.
Given the crucial role that ambitious climate and environmental policy has to play in addressing these challenges, particularly economic malaise and energy security, it was welcome to see the topic highlighted as a priority in many circles. But did the gathering deliver the partnerships and initiatives that are required to accelerate global delivery after COP28?
A welcome sense of continued business leadership certainly emerged, led by the Alliance of CEO Climate Leaders, a group including major corporates such as Nestle, Microsoft and Unilever, calling for renewed collaboration. Crucially, their new report highlighted the need for supply chain decarbonisation, active business advocacy for progressive climate and environmental policy, and ongoing consumer engagement.
Ambitious businesses have an immense opportunity to drive positive change by embracing this comprehensive approach, so recognition from sector leaders represents important progress. Sparking this collaboration is perhaps the most valuable element of the Davos talks, which provide a platform to highlight climate and environmental measures as part of wider macroeconomic discussions, with less political pressure than the formalised COP process.
The impression from the summit was clear: decarbonisation and nature restoration remain a core priority for businesses and governments, despite some backlash to ESG policies, particularly in the United States. Though there are challenges around the language used (specifically the term ESG), as the FT suggests, this can be overcome by making clear the economic benefits of sustainability to stakeholders that remain sceptical.
A number of high ambition corporate commitments underlined this, with the First Movers Coalition for Industry growing to almost 100 companies, and the First Movers Coalition for Food launching with 30 initial partners. Both of these initiatives provide a powerful demand signal for low-carbon technologies and sustainably produced commodities, both in hard-to-abate industrial sectors and agriculture.
A cross-sectoral perspective was also evident in new schemes garnering significant international support, with France, China and the US joining the Transitioning Industrial Clusters initiative. This will help industrial clusters to drive economic growth, employment and the energy transition across several nations. It was a welcome recognition of the business consensus that joined-up policy and a place-based approach can act as a powerful driver of economic growth while reducing emissions.
The summit further provided an important opportunity to get into the details of business issues that often escape attention in the media, most notably in the publication of Transforming Energy Demand, a report from the World Economic Forum and PwC on demand reduction and energy efficiency. Mitigation is often the most discussed element of decarbonising the economy, but demand reduction plays its own crucial role, so engagement from senior figures from across the economy on this issue a good step forward.
That’s not to say that mitigation, and international collaboration, was not present in the energy sector. In fact, a new Network to Mobilize Clean Energy Investment for the Global South was launched during the talks. This should offer a useful platform from which to raise awareness about the clean energy requirements of the Global South, building on the climate finance guarantees agreed at COP28.
Given the finance sector’s strong presence in Davos, progress in this area was expected, with investment needed to both mitigate and adapt to climate change. The Giving to Amplify Earth Action initiative announced new commitments to unlock billions of dollars to finance climate and nature solutions. It also confirmed the launch of an accelerator to drive public-private partnerships in the climate space, which could deliver tangible progress in the coming years.
From a nature perspective, there were a number of promising steps forward. The key highlight was the news that 320 businesses and financial institutions registered as early adopters of the Taskforce on Nature-related Financial Disclosures (TNFD) disclosure framework. This will help to embed nature at the heart of the operations of some of the world’s largest companies, and further understanding of human impact on ecosystems and biodiversity.
The Aldersgate Group has since published a report calling for a roadmap towards making such disclosures mandatory in the UK. In the paper, we call for the Government to support this process by addressing barriers such as low board-level understanding, organisational capacity and a lack of access to data. By tackling these issues, governments can enable businesses to adopt the disclosure framework, and put the economy on a path to mandatory measures.
The World Economic Forum’s trillion trees platform also saw over 100 companies committing to conserve, restore, and grow 12 billion trees. If delivered effectively and transparently, this could make an important contribution to worldwide nature restoration.
Despite a challenging context, Davos demonstrated that climate and environmental measures remain a high priority in boardrooms and governments across the world. Businesses must now continue to demonstrate this consensus on lowering emissions and restoring nature in their actions moving forward.
Some progress has certainly been made, but more is required at pace to get back on track for global climate goals. Leaders must ensure that this consensus leads to concrete delivery plans from international governments that provide the necessary certainty which enables businesses to decarbonise. While in the private sector, as outlined by the Alliance of CEO Climate Leaders, more ambition is required, alongside a holistic approach that encompasses delivery, positive advocacy, supply chain decarbonisation and work to drive consumer behaviour change.