3 emergency levers to avert climate catastrophe: Leaders at Davos 2024

“Humanity is in crisis,” said Gim Huay Neo, Managing Director, Centre for Nature and Climate at the World Economic Forum. Speaking in a session at the Annual Meeting in Davos, Neo added, “2023 was the hottest year on record… extreme drought, extreme rainfall, heatwaves, wildfires, these effects will get worse as the Earth gets closer to and even crosses over tipping points.”

“We actually need miracles” Neo added, before asking the panel, “what levers must we pull to create these miracles?”

Texas Tech University’s Katharine Hayhoe, a climate scientist and one of the most effective communicators on the issue of climate change, argued that when we talk about environmental crises, we also connect them to the things that matter most to us: food, shelter, the natural world, and the people we love.

“We have to help people connect their heads to their hearts,” Hayhoe said. “We need to help people connect it with what they already care about and if we don’t know what that is, we have to figure it out by asking them questions and listening to the answers … If we don't know what to do, we'll do nothing.”

More challenging, perhaps, is turning the issue of climate change into something that all politicians, regardless of their political affiliations, will care about.

Bridging this gap between knowledge and practice and being responsible stewards for future generations, argued Kristalina Georgieva, Managing Director of the International Monetary Fund, will require leaders to act even when they know their actions may not please everyone. “It is the responsibility to act even if it is not popular. Face it, do it because what is the signal we send people who look up to us if we waver, or say, ‘let me calculate how this is going to affect my bottom line this year’,” she said.

But for institutions as large and influential as the World Bank, how do leaders introduce systems change in a way that ensures action on climate change is felt by communities on the ground?

“What we have is an existential climate crisis,” said Ajay Banga, President of the World Bank. “We cannot think about eradicating poverty without caring about climate. We cannot think about eradicating poverty without caring about healthcare. We cannot think about eradicating poverty without caring about food insecurity and fragility. This is the reality, we have a set of intertwined crises.”

“A sense of urgency is our only saviour,” Banga added, before outlining five key policy commitments the Bank will implement to help countries mitigate and adapt to the worst effects of climate change.

45% of World Bank financing will go towards climate efforts, Banga said. In addition, the Bank has also promised to connect 100 million people in Africa to renewable power by 2030, address a misalignment in funding to reduce methane emissions, help small nations absorb the cost of climate catastrophes, and ensure the benefits from carbon markets are felt by communities on the ground.

This sense of urgency must be met by governments, as well as international institutions, Georgieva added. With Nationally Determined Contributions falling around 50% short of where they need to be by 2030, the IMF and its partners need to “breathe in the necks of governments” and encourage them to ramp up their efforts, and redirect funds from fossil fuel subsidies and put them back into climate action.

Is it possible to base future business models on the depletion of nature and resources? “It’s absolutely the worst idea,” said IKEA CEO Jesper Brodin, and companies that adhere to this policy will fall by the wayside.

“If I look at the economic rationale it is one of the greatest myths of today, that sustainability and climate action would come at a premium,” he added. “But if you look at IKEA's total footprint and total growth since 2016 … we are at 30.9% business growth… and we are at 24.3% absolute carbon reduction.”

But this doesn’t mean the transition will be easy. “The secret sauce is leadership,” Brodin said. “Leadership to accept that responsibility to commit based on the knowledge that the alternative is absolutely unthinkable. I believe the companies in the World Economic Forum’s Alliance of CEO Leaders are the brands you will see in five, 10, 15, 25 years from now. The companies who are left in the station waiting are very close to the too-late factor.”

Businesses that survive this transformation will be those who place nature and impact at the centre of their business models, and those who incentivise long-term goals over short term needs.

“We need to introduce the notion of nature in the way we do business … the idea of producing value without looking at the immediate consequences of what we’re doing. If you don’t look after the costs you’ve started, you’re going to have to deal with them later,” said Andre Hoffmann, Chairman of Massellaz.

“The idea of a business that is completely independent of nature, I don’t think it will go very far. You need to understand how much water you need, what the water supply is, and what will happen if you don’t have it anymore.”