The Revolution Comes to Davos
It is that time of the year when billionaires across the world come together at the Swiss ski resort town of Davos to ideate on how to make the world a better place. Tim Wu of the NY Times writes why the event is becoming increasingly farcical given the ironies involved. Last week, a meme on Twitter captured the sentiment somewhat “1500 private jets have landed at Davos where the global elitists will talk about Climate Change and then come back and lecture you on why you should take the bus so you can conserve fuel”. 1500 is a new record for Davos.
“Walking around, I thought at times that I had mistakenly wandered into a business-casual Bernie Sanders rally: unrestrained capitalism has gone too far; corporate greed has endangered the planet; the time has come for radical change. On the train into Davos, a representative of Philip Morris told me that the company was “dedicated to a smoke-free future.” I blinked; she said the company had “a duty” to millions of addicted smokers.”
Indeed, the World Economic Forum released the Davos Manifesto which says that companies “must pay their fair share of taxes; treat suppliers and workers well; accept fair competition; and have “zero tolerance for corruption.””
“Unfortunately, there’s no particular requirement that Davos attendees actually sign or adhere to it. Donald Trump appears to have personally violated nearly every one of its dictates, yet he was a warmly welcomed opening speaker. Nor have the corporate attendees consistently endeavored, as the Davos Manifesto demands, to pay their “fair share” of taxes, continuously improve the “well-being” of employees, or treat “executive remuneration” responsibly.
…So why not make future attendance at Davos limited to those companies that pledge agreement to the Davos Manifesto, and lean harder on miscreants? Why not, for a start, suspend all members convicted of bribery or other serious ethical offenses? The major cigarette companies were quietly disinvited from official Davos events: Should the American sellers of opioids really be showcased at an event committed to “improving the state of the world?”
The forum’s traditional response is that Davos needs to be a neutral platform, open to contending views, and even to those who are resistant to its goals. As Klaus Schwab, the founder of the forum, says in a new documentary, “If you were a priest in a church, you would want to make the sinners come visit you on a Sunday.”
Whether this whole talk of stakeholder capitalism results in action or not, the investment management industry seems to be making hay with a boom in ESG themed funds (ESG stands for Environment, Social and Corporate Governance for measuring sustainability and societal impact of corporates). Indeed, 2019 turned out to be the year when ESG funds finally took off with a four-fold increase in fund flows to $20bn after having stagnated at $3-5bn p.a for the past six years.