It took five decades for global elites to put climate change at the center of the World Economic Forum, the annual gathering in Davos, Switzerland, that’s meant to shape the future and solve planet-sized problems. This year, with rising temperatures and cutting emissions finally dominating the agenda, it seemed almost no one could stop talking about it.
“Something which was largely on the periphery of finance has come into the mainstream,” Mark Carney, a Davos regular and the governor of the Bank of England, said at the Bloomberg Climate Forum. “These issues have moved very swiftly from being corporate social responsibility issues or more niche issues within finance to fundamental value drivers.”
The calls for action didn’t come primarily from young activists like Greta Thunberg, who returned for her second consecutive year of speeches and planned a climate strike Friday to mark the end of the event.
For the first time, environmental issues made up the entire top-five risks ranked by the World Economic Forum’s members.
How to address climate questions took the center of debates, with alarms sounded by powerful people. “Climate change is becoming an investment risk,” BlackRock CEO Larry Fink said in remarks this week. “This is becoming a dominant theme with more of our investors.”
Fink fired the starting gun last week by sending a letter to investors in the roughly $7 trillion asset-management firm declaring the arrival of a “fundamental reshaping of finance.” Now BlackRock plans to adopt climate considerations in its strategy and press for more companies to embrace environmental benchmarks.
But the lack of global standards on what makes businesses environmentally responsible remains a palpable concern. Even BlackRock is likely to remain invested in coal, and a common complaint among executives at Davos was that they can’t be the ones setting the standards.
“I say to our clients, ‘I don’t want to be the sharp end of the spear,’ ” enforcing industry standards, said Michael Corbat, chief executive officer at Citigroup Inc. “You should set those, you get proper buy-in, and we will be here to support you.”
Standards are hard to find. The international community failed to agree on rules to set up a global carbon market at COP25, the annual United Nations climate conference held in December. That left governments, financial institutions and companies scrambling to figure out how much emissions are worth and how much to voluntarily pay for offsetting their toll on the climate.
With no rules for a global carbon market, the European Union is determined to protect its own, which has been working for over a decade. The region is targeting carbon neutrality by 2050 and is considering imposing taxes on imports linked to high carbon dioxide emissions as part of a strategy to force trade partners to become greener.
“There is no point in only reducing greenhouse-gas emissions at home if we increase imports of CO2 from abroad,” European Commission President Ursula von der Leyen told a Davos audience. “It is a climate issue, but it is also an issue of fairness toward our businesses and workers — we will protect them from unfair competition.”
U.S. Treasury Secretary Steven Mnuchin told a closing panel that a carbon tax would be a “tax on hardworking people” as he bet on technological advances to help tackle environmental challenges.
Other Davos attendees, including the U.K.’s Prince Charles, voiced support for a carbon tax. German Chancellor Angela Merkel said reducing emissions could be a “matter of survival” for Europe. But a carbon tax also could test Europe’s ties with China just as the leadership in Beijing faces pressure to set ambitious climate targets in its next five-year plan. At the same time, there was talk at Davos about how China’s fractious relationship with the U.S. would challenge any effort to rein in emissions.
“The trade war and the U.S. withdrawal of the Paris Agreement took away the pressure on China almost entirely,” said Ma Jun, the director of the Beijing-based Institute of Public and Environmental Affairs, one of the country’s top climate groups. “This is a moment of confusion and of different opinions.”
President Donald Trump’s speech here included swipes at unnamed environmental alarmists. “We are clean and beautiful and everything’s good,” he told an audience that included Thunberg and other young climate activists. “We must reject the perennial prophets of doom and their predictions of the apocalypse.”
Mnuchin questioned the 17-year-old activist’s authority to talk about economic issues. “After she goes and studies economics in college,” he said, “she can go back and explain that to us.”