Dominance of environmental threats in this year’s Global Risks Report suggests financial world is finally starting to grasp the urgency of the climate crisis

As world leaders touch down on the snow-dusted slopes of Davos next week, many will have one thing on their mind: climate change.

It might sit uncomfortably next to the parking lots of private jets and champagne-fuelled networking events, but concern over climate change is fast becoming the top priority for executives at the annual Swiss summit.

That was confirmed today in the World Economic Forum’s (WEF) latest Global Risks Report for 2020, which revealed that experts and world leaders from the world of finance named environmental and climate change risks as overwhelmingly the most serious threat facing the world over the next decade.

Climate risks have topped the rankings with increasing frequency in recent years, but this year’s report marks a wholesale re-orientation of the way some of the planet’s most powerful people perceive the world’s challenges.

“Never before has one issue dominated the survey in this way, not even through the 2008 – 2009 financial crisis, when economic concerns occupied at most three out of the five top spots by likelihood, and four by impact,” Davos organisers WEF pointed out in a blog post today.

There are some signals too that business leaders understand the urgency of the climate threat, helped no doubt by the escalating wildfires in Australia and the emergence of Greta Thunberg as a figure-head for climate truth-telling. Yet trade wars and a rising tide of nationalism are making it harder for countries to respond with the level of urgency needed, experts said.

“We only have a very small window,” admitted WEF President Borge Brende at a press conference this morning. “And if we don’t use this window in the coming 10 years, then we will be faced with a situation where we are moving the deckchairs around the Titanic.”

“The next decade will prove to be a critical few years for the future of greenhouse gas mitigation and adaption to the physical consequences of climate change,” agreed Peter Giger, group chief risk officer at Zurich Insurance Group. “Transition risks are becoming increasingly apparent. The longer we wait, the more painful the transition will be.”

The explosion in awareness of climate risks in the last few years of WEF surveys is merely a reflection of the changing business world. Global climate politics may have been left in the doldrums since a dispiriting round of UN talks in Madrid last December, but the business world is fast waking up to the threat climate change poses to the global economy.

Just yesterday the world’s largest asset manager, BlackRock, announced a major shift towards more sustainable investments, only days after joining the green investor group ClimateAction 100+. The intervention came as Siemens boss Joe Kaeser published a remarkable 1,800 work open letter on the engineering giant’s controversial work on the Adani coal mine project in Australia, in which he cut a hugely conflicted figure torn between environmental concerns and his interpretation of his fiduciary duty. In the past 48 hours alone, two of the world’s most powerful media moguls – Jeff Bezos and James Murdoch – have called out climate ‘sceptics’.

Meanwhile, business leaders are not blind to the fact their future customer base are more worried about environmental threats than anything else and are making net zero pledges faster than you can say ‘CSR’. At the same time employees at corporate giants like Amazon are agitating for their companies to move faster towards a low-carbon world.

“The pressure is getting channelled to the private sector,” said John Drzik, president of global risk and digital at Marsh. “All of the stakeholder groups in business, whether investors, employees, customers or regulators, are all starting to bring more attention to this issue and I think it will focus attention in the executive suite.”

So if the seriousness, and urgency, of the threat is now widely accepted by the self-styled ‘masters of the universe’, how do we expect this year’s annual Davos gathering to change in response?

A fresh approach to Davos is already afoot. The main theme of this year’s event is sustainability, with the summit titled: ‘Stakeholders for a Cohesive and Sustainable World’. And the event itself is aiming to walk the talk, with a fleet of electric vehicles on hand to ferry delegates between venues, more vegetarian and vegan food options on the menu, and carbon offsets for all delegate travel to the event.

Meanwhile, the line-up has been given a green overhaul, with climate activist Greta Thunberg expected to be the star turn, alongside EU Commission President Ursula Von Der Leyen, who just yesterday unveiled plans for a $1tr investment blitz into Europe’s green economy. Sessions such as ‘Averting a Climate Apocalypse’ and ‘Solving the Green Growth Equation’ are billed under the ‘How to Save the Planet’ stream, one of the seven major themes for the week-long programme.

“For all the public concern, the signs that people are prepared to make lifestyle sacrifices for the sake of the planet are far from conclusive. “

But many seasoned observers will be wary of hoping for too much from Davos. Last year’s star billings were Sir David Attenborough and Greta Thunberg, both of whom made headlines around the world for blasting attendees for their role in heating the planet. And yet in 2019, global emissions were estimated to have grown 0.6 per cent. The big speeches may be inspiring, but they don’t always lead to the scale of change campaigners want to see.

And for all the public concern, the signs that people are prepared to make lifestyle sacrifices for the sake of the planet are far from conclusive. The number of people flying is climbing, the amount of meat consumed is climbing, and vehicle emissions are climbing. A report published yesterday by Deutsche Bank, targeting the executives and policymakers attending Davos next week, warned that although public awareness of the need for climate action is high, there is “much less understanding” of the economic and lifestyle trade-offs needed to tackle it.

The pull of conventionally defined economic growth remains strong, and people who are inclined to support the climate fight could swing back towards indifference or even hostility towards the green agenda if the net zero transition gets tough, the study warns. “It would be unsurprising if some countries chose to prioritise the economics over environmental concerns,” it states. “Indeed, given the global nature of climate change, at an individual level it may well be advantageous to free-ride off the efforts of others.”

It is a bleak and short termist assessment that will enrage those green business leaders and campaigners who have long argued that it is possible to decarbonise while continuing to enhance living standards. But the perception that emissions reduction requires trade offs and sacrifices remains widespread. And it is a point echoed in warnings from the WEF today, which suggested economic stagnation has been one factor in pushing environmentalism up the agenda. The last decade of limited growth has led people to believe economic risks can be weathered in a way that climate change cannot, it argued. But that assumption may not hold in the face of a global economic slowdown, which could push policymakers and central banks to pursue short-term growth boosting measures over longer-term climate action.

One way to counteract this risk is by developing multilateral solutions that bind all countries to common set of climate-friendly behaviours. That is precisely what the Paris Agreement was designed to achieve and what world leaders will be hoping to advance at the Glasgow Climate Summit later this year. But the integrity of the Paris Agreement remains under threat and while US President Donald Trump is attending Davos this year, there is little prospect he will ever be persuaded to throw US muscle behind the wheel of an international climate solution, regardless of WEF’s sobering risk assessments.

The world is changing fast, and the attendees at Davos know it. What is not clear is whether the collective nail biting on climate change will translate to real economic transformation. For all the urgent talk of an escalating climate crisis that will be on display next week, do not expect Davos 2020 to deliver a clear answer on that critical question.

This article originally appeared in Business Green on 15 January 2020.