DAVOS – While the COVID-19 pandemic and Russia’s war in Ukraine will be the focus of the gathering of business and government leaders at the World Economic Forum, so will climate change. It has captured the world’s attention in an unmissable and devastating way.
The acceleration of rising temperatures, the ferocity and costliness of major weather events, and their impact, particularly on people in developing countries, have transformed the topic from a scientific one to one that affects every aspect of life, including (or perhaps especially) business and economics.
A third of the around 270 panels from Monday to Thursday deal with climate change or its direct effects. US climate ambassador John Kerry, Ugandan climate activist Vanessa Nakate and Alok Sharma, president of last year’s international climate conference COP26, are among the climate leaders expected in the Swiss resort of Davos.
At the forum’s first face-to-face meeting in two years, the climate panels are as diverse as the topic. They range from addressing “environmental fears” to helping indebted countries fund a transition to renewable energy. Here’s a look at some more general topics that are likely to come up:
ENVIRONMENT, SOCIAL, GOVERNANCE
Several bodies will wrestle with an investment approach that takes the environment and other key factors into account. Known by the acronym ESG, it has become a power, with trillions of dollars being invested in companies that meet certain criteria.
When it comes to climate change, ESG can be important. From individual investors to corporations and government agencies analyzing how companies operate, disclosures and public statements are of paramount importance. They can be the basis for assessing a company’s emissions, environmental impact and financial risks related to climate change.
They are also controversial and raise questions: should certain declarations be mandatory? Should they be standardized and regulated, and by whom? Or has the ESG movement already gone too far, ultimately hampering investment and doing little to curb greenhouse gas emissions?
Viewpoints sometimes fall along political lines. In the US, many Republicans are calling them “awakened,” while many on the left, particularly environmentalists and activists, argue that increased reporting and transparency could lead to real change.
Many managers from some of the world’s largest mutual funds have argued that ESG is essential to risk assessment. Just last week, Tesla CEO Elon Musk said the approach had been “armed by fake social justice fighters.”
ENERGY TRANSITION AND “NET ZERO”
The world’s leading climate scientists have warned that a significant reduction in greenhouse gas emissions this decade is needed to minimize warming and avoid the planet’s most devastating impacts. That requires major shifts in the way business is done, from how products are made to how they are transported.
Multiple panels will look at areas where companies have successfully transitioned much of their energy portfolio to renewable energy, the role of finance and governments in incentivising or mandating change, and strategies to hold companies accountable. Despite increased awareness and corporate commitments, emissions are rising around the world.
“Moving the climate debate from ambition to implementation” is the title of a panel that summarizes the enormous challenge.
Sessions will cover sectors such as shipping and aviation decarbonisation, plans for the transition to renewable energy and the challenges of achieving them in countries like China and India. Strategies will be discussed to ensure that major changes are inclusive, and consider people in historically marginalized countries who are feeling some of the most intense impacts of climate change.
A key trend in any discussion will be figuring out what is – and isn’t – “net zero” when looking at company and country commitments. Shifting from fossil fuels like coal and oil to renewables like sun and wind can reduce emissions and bring a company closer to its goal of removing the same amount of emissions from the atmosphere as it puts in.
But switching to renewables is often only a small part of corporate plans. Many rely on offsetting their carbon footprint by investing in forest restoration or other projects. While it’s better than nothing, experts note that reliance on carbon offsets does not constitute a change in business practices.
WAR IN UKRAINE AND THE FUTURE OF ENERGY
Russia’s war in Ukraine will feature prominently at the conference. In terms of climate change, the conflict raises two key questions: How should countries respond to energy shocks by reducing or being cut off from Russian oil and gas? And will war accelerate the transition to renewable energy or help fossil fuel companies maintain the status quo?
Since the war began, there has been no shortage of corporations, environmentalists, and political leaders trying to influence the answers to these questions being carried over to Davos.
“Energy Security and the European Green Deal” is a panel where participants are expected to argue that the way forward is away from fossil fuels. But European countries, some of which are highly dependent on Russia for energy, are also scrambling to find other sources of natural gas and oil to meet near-term needs.
While no sessions explicitly advocate doubling fossil fuel reliance or expanding production or exploration, those stances will certainly be in place if recent months are any indication.
Peter Prengaman is the Associated Press’ global climate and environmental news director. Follow him here: http://twitter.com/peterprengaman
The Associated Press’s climate and environmental reporting is supported by several private foundations. Learn more about AP’s climate initiative here. The AP is solely responsible for all content.
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