Sober Mood at Davos as Business Leaders Ill-Prepared to Pivot and Adapt in A Post-COVID World

Over the course of five days, world business and political leaders during the World Economic Forum’s Davos Agenda engaged in a deep - and virtual - dive into an economy in crisis, soaring unemployment and debt levels, growing income inequality and climate change.

Given that daunting set of problems, was the prevailing mood one of resolve or despair? Judging from Deloitte’s annual resilience report, it could be the latter—or at least a whole lot of worry.

Worry takes center stage at Davos

In a survey of 2,260 private- and public-sector leaders in 21 countries, Deloitte found that most global business leaders still do not feel confident leading through disruption, and even more believe their organizations are ill-prepared to pivot and adapt.

More than six in 10 organizations expect to see either occasional or regularly occurring disruptions of the current scale going forward, and climate change is seen as the top threat in this regard, Deloitte found. Yet more than two-thirds of the leaders who Deloitte surveyed don’t have complete confidence in their organizations’ ability to pivot and adapt to disruptive events.

The executives’ view of the top societal challenges facing their companies captures the essence of a disruptive 2020: After climate change, they named health care issues and prevention; gaps in education, skills, training; income inequality and distribution of wealth, and systemic bias and inequality as the top five concerns.

Not panicking and keeping the long view seems to be the key. Deloitte’s survey found that more than 85 percent of leaders whose organizations have successfully balanced addressing short- and long-term priorities felt they had pivoted very effectively to adapt to the events of 2020, whereas fewer than half of organizations without that balance felt their organizations adapted well.

Questions over measuring the shift to stakeholder capitalism

The Davos Agenda marked the launch of WEF’s “The Great Reset” initiative, which is all about the long term, according to Professor Klaus Schwab, WEF’s founder and Executive Chairman, who said: “The pandemic represents a rare but narrow opportunity to reflect, reimagine and reset our world.”

Schwab launched his latest book, Stakeholder Capitalism, during this week’s event. The book calls for a more inclusive, sustainable and resilient global economy post-COVID in the face of challenges like rising income equality and short-sighted exploitation of natural resources. That means, he writes, finding “measures of success that allow us to move beyond a myopic focus on GDP and short-term profits.”

Whether that shift from short-term profits is taking hold in a broad way is still to be determined, but WEF has developed a set of Stakeholder Capitalism Metrics to help companies measure not just on profit but on “Principles of Governance, Planet, People and Prosperity.”  

That might elicit a groan from the sustainability practitioners already lost in a sea of voluntary standards. The good news is, the five leading voluntary framework and standard-setters - CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council, and the Sustainability Accounting Standards Board - have said they are all behind the effort to work towards a single, coherent, global ESG reporting system and have contributed to the Stakeholder Capitalism Metrics.

Agreement on how to measure progress will be welcome in a world where business leaders have to contend with a lot more than how to keep their companies financially afloat. The Davos Agenda summed up those challenges in its seven themes, which range from environmental sustainability worldwide to building a more inclusive, sustainable job market for all citizens.

Poverty and inequality pose systemic challenges

Bill Gates took to the virtual stage to underscore that after falling for two decades, extreme poverty has risen by 7 percent during 2020, wiping out advances on ending hunger and poverty by 2030. That widening socio-economic gap along with deeper racial and gender inequalities was the focus of another sobering assessment on the state of global equality that Oxfam delivered during the Davos Agenda.

Among the recommendations that WEF advocated during the Davos Agenda to tackle surging poverty included a “people’s vaccine,” allowing for everyone to get inoculated in the coming months, not only the wealthy; taxing extreme wealth to invest in a more sustainable and just future for all; and expand access to healthcare and social welfare programs to prevent more people from falling into poverty.

“You cannot negotiate with physics” - Greta Thunberg delivers her message

The presence of so many world leaders didn’t impress everyone. All that talking is so much hot air, long among the criticisms that have come from youth climate and social justice activists. And what would Davos be without an appearance by Swedish climate activist Greta Thunberg, who shook up the staid gathering with her unflinching assessment in her remarks in 2019 when she said “our house is on fire,” and again in 2020.

This year, once again, in a video message on YouTube, she once again made clear her disappointment in the leaders at Davos for what she sees as “lame” commitments and lack of progress on climate change.

“Targets like net zero emissions 2050. Targets that equal surrender…We understand that the world is complex and that change doesn’t happen overnight. But you’ve now had more than three decades of blah, blah, blah. How many more do you need? Because when it comes to facing the climate emergency, the world is still in a state of complete denial…But I assure you this. You cannot negotiate with physics,” Thunberg said.

Image credit: U.S. Department of Defense/Wiki Commons