January 23, 2020 / 1:27 PM / in 3 months

Breakingviews - Do-gooder one-upmanship fuels optimism at Davos

An electric-powered Microlino car of Swiss Microlino AG drives through Davos, Switzerland January 22, 2020.

Davos, Switzerland (Reuters Breakingviews) - For once, society may tangibly benefit from the do-gooder optimism among global elites at Davos. Corporate chiefs are brimming with purpose. Enterprises ranging from Russian aluminium smelters to Dutch ice cream makers are high on stewardship and sustainability - themes of this year’s confab. But they’re also making pledges to which they can, and should, be held accountable.

Fighting climate change has been a matter of urgent concern for years, of course, but executives at the World Economic Forum are adding actions where once words sufficed. Unilever said it’ll decrease environmentally unfriendly wrapping by 14% each year by 2025. Ahead of the confab, its Swiss rival Nestlé earmarked $2 billion to push the development of sustainable packaging.

Every industry is getting in on the bandwagon. Global fashion leaders have set sustainable materials as a priority. H&M Chief Operating Officer Helena Helmersson urged Davos attendees to “discuss less…get more stuff done.” The Swedish retailer is testing out a rental-clothing service.

It’s easy to dismiss the talk as exercises in branding. Yet many companies are setting specific, measurable goals. Adidas hopes to nearly double the number of shoes made from recycled plastic to 20 million. As part of En+’s environmental, social and governance presentation, the Russian aluminium firm said it would spend $850 million to modernise power plants to reduce greenhouse gas emissions. 

Some executives were amused by the sudden sustainability mantra. This week, the menu at the main Congress Hall featured vegetarian and alternative protein sources. Zurich Insurance chief Mario Greco told Breakingviews it was a “discovery year” for many Davos attendees. He has already seen the damage from climate change for years given the long-term risks insurers must manage.

The efforts dovetail with the woke capitalism push. Salesforce.com boss Marc Benioff declared that capitalism as we know it “is dead”. Of course, all this altruism can also be used to deflect an activist investor or poor performance.

But the Davos crowd also sees it as good business. Standard Chartered touted what it calls Opportunity 2030 – a $10 trillion investment prospect in clean water and other sustainable infrastructure. One way to test whether the optimism is warranted is to have companies report back on the progress they’ve made at future Davoses. That would ensure this isn’t all just talk.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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