What are the key climate issues in Davos?

While the COVID-19 pandemic and Russia’s war in Ukraine will be the focus of gathering the World Economic Forum from business and government leaders, climate change will also be. It has attracted the world’s attention in unprecedented and devastating ways.

The acceleration of rising temperatures, the severity and cost of major weather events and the impact, especially on people in developing countries, have shifted the problem from science to something that affects every aspect of life, including (or perhaps especially) business and economics.

Of the approximately 270 panels Monday through Thursday, a third are on climate change or its direct effects. US climate envoy John Kerry, Ugandan climate activist Vanessa Nakate and Alok Sharma, president of last year’s COP26 international climate conference, are among the climate leaders expected in the Swiss resort of Davos.

At the first personal meeting of the forum in two years, climate panels are as diverse as the topic. They range from combating “eco-anxiety” to helping indebted countries to finance the transition to renewables. Here’s a look at some of the broader topics that are likely to emerge:

ENVIRONMENTAL, SOCIAL, GOVERNANCE

Several panels will struggle with an investment approach that takes into account the environment and other key factors. Known by the acronym ESG, it has become a force, with trillions of dollars invested in companies that meet certain criteria.

When it comes to climate change, ESG can be important. For individual investors all the way to companies and government agencies that analyze how companies work, disclosures and public declarations are paramount. They can be the basis for assessing a company’s emissions, environmental impact and financial risks related to climate change.

They are also controversial and raise questions: Should some declarations be mandatory? Should they be standardized and regulated and by whom? Or has the ESG movement already gone too far, ultimately hampering investment and doing little to curb greenhouse gas emissions?

Perspectives are sometimes political. In the United States, many Republicans call them “awake,” while many on the left, especially conservationists and activists, say increased reporting and transparency could make a difference.

Many managers of some of the world’s largest mutual funds argue that the ESG is essential for risk assessment. Just last week, Tesla CEO Elon Musk said the approach was “armed with fake social justice fighters.”

ENERGY TRANSITION AND NET ZERO

Top climate scientists have warned that significant reductions in greenhouse gas emissions over the decade are needed to minimize warming and avoid the most devastating consequences for the planet. This will require major changes in the way businesses are done, from the way products are manufactured to the way they are transported.

Several panels will look at areas where companies have successfully shifted much of their energy portfolio to renewables, the role of finance and government in stimulating or enforcing change, and strategies for maintaining business responsibility. Despite the increased awareness and promises of business, emissions are increasing worldwide.

“Moving the climate debate from ambition to fulfillment” is the title of a panel that summarizes the huge challenge.

The sessions will look at sectors such as the decarbonisation of shipping and aviation, the transition plans for renewables and the challenges to achieve them in countries such as China and India. Strategies will be discussed to ensure that major changes are inclusive and to take into account people in historically marginalized countries who are experiencing some of the most intense effects of climate change.

An important point in all discussions will be to identify what is “net zero” and what is not when considering promises from companies and countries. Moving away from fossil fuels such as coal and oil to renewable energy sources such as solar and wind energy can reduce emissions and bring the company closer to the goal of emitting the same amount of emissions from the atmosphere as moisture.

But the transition to renewables is often only a small part of the company’s plans. Many rely on balancing their carbon footprint by investing in reforestation or other projects. Although better than nothing, experts note that dependence on carbon offsets is not a change in business practices.

THE WAR IN UKRAINE AND THE FUTURE OF ENERGY

Russia’s war in Ukraine will be widely discussed at the conference. As far as climate change is concerned, the conflict raises two main questions: How should countries react to energy shocks from reducing or cutting off Russian oil and gas? And will the war accelerate the transition to renewable energy or help fossil fuel companies maintain the status quo?

Since the beginning of the war, there has been a shortage of companies, environmentalists and political leaders trying to influence the answers to these questions, which will be transferred to Davos.

Energy Security and the European Green Treaty is a panel where participants are expected to argue that the road ahead is far from fossil fuels. But European countries, some of which rely heavily on Russia for energy, are also struggling to find other sources of natural gas and oil to meet short-term needs.

Although no session explicitly substantiates the arguments for doubling the dependence on fossil fuels or expanding mining or exploration, if the last few months are a guide, these views will certainly be present.

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