The rhetoric at Davos touched on the radical, but the familiar model of global capitalism looks set to remain the reality
It’s easy to write off the World Economic Forum in Davos as a talking shop: an annual jamboree in the Swiss mountains where business leaders get to rub shoulders with politicians and pop stars, and pontificate about the world’s big problems.
This year’s World Economic Forum event was, as ever, strong on podium rhetoric. Warnings rang out on how poverty and unemployment can create social instability; how political flip-flopping is perpetuating the economic doldrums; and how climate change threatens the very future of mankind.
Up steps the United Nations secretary-general to announce the solution: “We have to do all to save our planet, to revitalise our economy, to address all the social injustices, social inequality.” Very good Ban Ki-moon. But how?
The answer from the UN is more “sustainable development”. It’s a loose term, and not one that business is immediately comfortable with. Which is why companies have – in the two and a half decades since the Bruntland commission put the term on the map – been bending it towards safer ground. So the Davos crowd might still speak of sustainable development, but what’s really in mind is sustainable capitalism.
Governments have transparently failed to answer the planet’s big question, the logic runs. So it’s time the power of the market was unleashed. Talk of partnership is couched within capitalist orthodoxies. So we see non-profit innovators – such as the 700 Young Global Leaders behind AppBridge, an app-based educational tool launched at this year’s Davos – rebranded as social entrepreneurs.
Yet, as global capitalism creeks, confidence in market-based solutions is faltering too. It’s now official: “Capitalism, in its current form, no longer fits the world.” The words of an Occupy protestor? No, they belong instead to WEF’s very own founder Klaus Schwab.
Schwab’s critical analysis comes through in WEF’s new report on sustainable consumption. Our buying habits, and business models that support them, need to be “fundamentally recast”, the 42-page report declares.
Enter a string of impressive figures on supply-side efficiencies. Low-energy measures stand to save consumer companies $37bn between now and 2030. The market for e-waste recovery will grow to $21bn by 2020. That’s all to the good.
People want stuff
But what of the demand side? The current big idea centres on decoupling economic growth from environmental impact. That isn’t easy. About 150 million people are joining the global middle classes every year. Current supply-side efforts won’t by themselves be enough to stem that impact. Take fuel efficiency. Vehicles in the US use 14% less fuel now than four years ago, but consumers are buying more cars and are driving longer distances.
The report is much quieter on demand-side issues. Why? Because it touches on the core of consumer-led growth models. A radical shift is needed, admits Randall Krantz, head of WEF’s sustainability initiative. But there’s disquiet about where the logic of decoupling might lead. “The notion of selling less stuff is on the agenda,” Krantz says. “But the notion of less revenue is not.”
Some companies have taken the leap, such as US clothing company Patagonia, which tells consumers not to buy what they don’t need, or household goods manufacturer SC Johnson, which decreased polyvinylidene chloride from its cling film brand even though it knew quality – and therefore sales – could be hit.
As privately owned companies, they have the luxury of putting principles before profit, Krantz says. Public companies do not. And that’s the rub. Capitalism wants to become sustainable, but only on capitalist terms. A real solution will require more give and take – however uncomfortable that may be for many Davos attendees.