Reflections on Davos: Business as usual no longer exists

Compared to a year ago, the world seems a somewhat different place. Right before the start of the gathering in Davos, WEF released its annual Global Risks Report, effectively a survey of some 1,500 global leaders across business, academia, government and others. Last year, the cost of living crisis topped the near-term concerns, alongside nature risks and geo-economic confrontation. This year, the tone is different. “Misinformation and disinformation” tops the near-term fears, with “societal polarization” not far behind.

In a year in which some 4 billion persons are eligible to vote in an election, conversations at Davos struck a markedly more geopolitical tone. Among the first to open this year of elections, Taiwan has already gone to the polls to vote through a third term of the ruling government, while the US election will take center-stage later in the year. Markets remain undecided on the outcome, while discussion on geopolitical conflicts have seeped their way into the Davos formal and informal nightcap discussions.

One thing remains unchanged. While perception of near-term risks have shifted, nature risks top the ten-year outlook. Extreme weather events, critical changes to Earth systems, biodiversity loss top the list of concerns. And with good reason. Last year was, once again, the warmest year on record. At a nature dinner organised by Lombard Odier to kick off the week in Davos, Professor Johan Rockström reminded the audience that it is now inevitable that the world will overshoot the key 1.5°C target, with a best outcome likely seeing increases to at least 1.7°C or 1.8°C in coming decades, before we have a hope of returning to the 1.5°C target.

On the Promenade, a central road running through Davos, the sustainability billboards have largely disappeared. Instead, discussion on how to tackle transitions to net zero and, increasingly, a naturepositive economy, have moved from the billboards to the panel discussions and the fireside encounters.

Virtue-signalling is no longer the name of the game; figuring out who has the right strategy and the right partnerships to quickly adopt cleaner, greener and more efficient business models that can disrupt entire industries is the new game in town. A lone billboard that still declares “sustainability is just a few steps away!” feels eerily out of place – inside the improvised meeting rooms that transform a skiing village into a meeting place for the global who’s who it is all too clear that these transitions will be far from easy, but may allow those with the right strategy to leapfrog forward.

Outside, the billboards have not disappeared altogether. Replacing the proclamations of net zero commitments are the new signs advertising each business’ respective breakthroughs in artificial intelligence. A year ago, the sudden emergence of generative AI was already the word on the snowy street in Davos – in 2024, AI and discussions on its myriad of disruptive effects was on the agenda everywhere. The succession in advertising focus from sustainability to AI is perhaps a sensible one: one represents the challenge, whereas digitally-enabled optimisation and innovation may well be a central part of the solution.

Besides AI, the wooden interiors of the Davos chalets and meeting rooms perhaps provided an appropriate setting for the other topic that ascended up the WEF agenda: nature. From sessions on risks to the global food system, to a heavily over-subscribed “Nature Positive Dinner”, WEF participants sought to come to grips with the inevitable and increasingly clear realisation that for all the maladies and opportunities facing the global economy – that economy is vitally dependent on the ecosystem services provided by natural capital, the world’s single most productive asset.

The solutions too are beginning to emerge. Recognising the not-so-hidden value of nature is but the mere step; encouraging markets to adequately value and allocate capital to its preservation and restoration is the much greater challenge. Shortly before Davos, the TNFD announced an initial cohort of 320 businesses had signed up to its much-awaited framework aiming to drive disclosure of nature risks and opportunities. In other roundtables, financial institutions looking to engage on nature recognised that allocation capital to nature-based solutions at scale in fact requires us to reconsider asset allocation – with nature emerging as a new asset class.

At Lombard Odier’s own “re-nature” dinner, speakers and the audience explored opportunities to put theory into action, highlighting investment opportunities around the development of regenerative value chains. Coffee is a USD 225 billion example, dominated by production from tropical monocultures, often characterised by falling yields and degraded soils, and with as much as half of all coffee production at risk of climate change. Transforming extractive models to ones based on agroforestry and rewilding, and a shortening of value chains to consumers, may be part of the solution, to begin to drive more capital to nature at speed and scale.

So in the end, has Davos 2024 changed the world? Perhaps that would be too high an expectation. The world is moving quickly, and perhaps the business community assembled at Davos is struggling to keep up. But in a year where concern over misinformation and societal cohesion are rife, this year’s theme of “Rebuilding Trust” appears well-chosen. According to the Edelman Trust Barometer released right before the event, global levels of trust in institutions and leaders has been on the decline, but businesses today are more trusted than government leaders. With innovation and new global challenges facing business leaders and investors, maintaining that trust requires a balancing act.

To investors, there are plenty of takeaways. Transitions to a decarbonised economy are accelerating. Parallel concerns over energy security, energy affordability, and clean energy all point to only a single solution of a further ramp-up in investment in new energy systems. Transformation of value chains to more regenerative alternatives will drive investment to new technologies, business models, and nature-based solutions. AI will accelerate all of these transitions, enabling solutions that outcompete existing alternatives in terms of efficiency, environmental impact, and financial returns. The transition is in motion, and investors on board the Davos trains appear to be on board.