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Climate Change talks in Davos

Jan 22, 2020, 4:34 PM

Even before catastrophic fires broke out in Australia in late fall, climate change was at the top of the list of priorities at the 50th anniversary of the World Economic Forum in Davos, Switzerland, this week.

But those fires - preceded by others in California - along with rising sea levels, flooding and supercharged storms, are putting more pressure on the politicians, business executives, financiers, thought leaders and others who attend to show they are part of the solution to one of the world’s most pressing challenges.

In a nod to a younger generation most at risk and demanding action on climate change, Greta Thunberg, the Swedish teenager who has become a prominent environmental activist, is scheduled to appear. In a column this month in The Guardian that she wrote with other environmental activists, they demanded an end to investments in fossil fuels.

“Anything less than immediately ceasing these investments in the fossil fuel industry would be a betrayal of life itself,” they said. “Today’s business as usual is turning into a crime against humanity. We demand that leaders play their part in putting an end to this madness.”

Daniel Yergin, the oil historian and a regular attendee at the Davos forum, agreed that “climate is going to loom larger than ever before.” And Ian Bremmer, founder and president of the political risk firm Eurasia Group, said: “These issues are becoming more real, more salient every day, whether you are talking about Venice or California or Australia or Jakarta. These are real events with enormous direct human and economic costs.”

But an overriding question as the Davos gathering gets underway is: Will all the talk matter?

Mr. Bremmer, who plans to attend, said the forum could help force change because it brings together big players, like chief executives of banks, money management firms and hedge funds, who are rethinking their investments. Gradually — some say too gradually — financial firms are directing money away from oil companies and others associated with carbon-dioxide emissions blamed for environmental damage.

Financial institutions “see the future coming, and they are changing the way they invest,” Mr. Bremmer said. “That is going to require multinational corporations to act differently; it will lead to new corporations that will do better.”

While thinking on climate change may be shifting, by some metrics the corporate elite that always makes up a large contingent at Davos still has a lot of work to do. According to a study published in December by the Davos organizers, only a quarter of a group of 7,000 businesses are setting a specific emissions reduction target and only an eighth is actually reducing their emissions each year.

If so, they are making a major strategic error, according to Mark Carney, the departing governor of the Bank of England who planned to be in Davos. Companies that work to bring their emissions to zero “will be rewarded handsomely,” Mr. Carney said in a recent speech. “Those that fail to adapt will cease to exist.”

Some people in the financial industry said that environmental issues were being given greater weight in investment decisions despite setbacks like President Trump’s decision to pull the United States out of the Paris agreement on climate change. The president, who shunned the gathering in Davos last year, said he would go this time.

The number of people who are talking about fossil fuels as a real concern “has increased dramatically over the last 12 to 24 months,” said Jeff McDermott, chief executive of Greentech Capital, an investment bank focused on low-carbon technologies. “They are both looking at the risks of high-carbon companies and industries as well as the returns available from low-carbon alternatives.”

A Guest Editorial