EXPLAINER: What are the key climate themes in Davos? | bizness magazine

PETER PRENGAMAN, Associated Press

DAVOS, Switzerland (AP) — While the COVID-19 pandemic and Russia’s war in Ukraine will be the focus of the World Economic Forum, which brings together business and government leaders, there will also be climate change. It attracted the attention of the whole world in a subtle and destructive way.

The accelerating rise in temperature, the ferocity and costliness of major weather events, and their impact, especially on people in developing countries, have transformed the issue from a science to an area affecting all aspects of life, including (or perhaps especially) business and economics.

Of the approximately 270 panels from Monday to Thursday, one third is devoted to climate change or its direct effects. US climate envoy John Kerry, Ugandan climate activist Vanessa Nakate and Alok Sharma, president of last year’s COP26 international climate conference, are among the climate leaders expected in the Swiss resort town of Davos.

At the forum’s first face-to-face meeting in two years, the climate panels are as diverse as the issue. They range from fighting “environmental anxiety” to helping debt-ridden countries finance their transition to renewable energy. Here are some broader topics that may come up:

Political cartoons of world leaders

Political cartoons

ENVIRONMENTAL, SOCIAL, GOVERNANCE

Several groups will be discussing an investment approach that takes into account the environment and other key factors. Known by the acronym ESG, it has become a force by investing trillions of dollars in companies that meet certain criteria.

When it comes to climate change, ESG can make a big difference. For individual investors, down to firms and government agencies that analyze 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 associated with 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 discouraging investment and doing little to curb greenhouse gas emissions?

Viewpoints sometimes coincide with political lines. In the US, many Republicans are calling them “wake-ups,” while many on the left, especially environmentalists and activists, argue that greater accountability and transparency can lead to real change.

Many managers of some of the world’s largest mutual funds argue that ESG is essential for risk assessment. Just last week, Tesla CEO Elon Musk said the approach “has been used as a weapon by bogus social justice campaigners.”

ENERGY TRANSITION AND CLEAR ZERO

The world’s leading climatologists are warning that significant reductions in greenhouse gas emissions this decade are needed to minimize warming and avoid the most devastating effects on the planet. This will require major changes in the way business is done, from the way products are made to the way they are transported.

Several discussions will look at areas where businesses have successfully transitioned the majority of their energy portfolio to renewables, the role of finance and government in driving or sanctioning change, and strategies for holding businesses accountable. Despite heightened business consciousness and promises, emissions are on the rise worldwide.

“Shifting the climate debate from ambition to results” is the title of one of the discussions, summing up the daunting task.

The sessions will cover sectors such as the decarbonization of shipping and aviation, renewable energy transition plans and implementation challenges in countries such as China and India. Strategies will be discussed to ensure that major changes are inclusive and people-friendly in historically marginalized countries that are experiencing the most severe impacts of climate change.

An important thrust of all discussions will be to define what “net zero” is—and what it is not—when considering the commitments of companies and countries. Switching from fossil fuels such as coal and oil to renewable energy sources such as solar and wind can reduce emissions and move a company closer to the goal of removing as many emissions from the atmosphere as it does.

But switching to renewable energy is often only a small part of a company’s plans. Many rely on balancing their carbon footprint by investing in reforestation or other projects. While this is better than nothing, experts point out that reliance on carbon offsets does not mean a change in business practices.

WAR IN UKRAINE AND THE FUTURE OF ENERGY

At the conference, much attention will be paid to the war between Russia and Ukraine. When it comes to climate change, the conflict raises two central questions: How should countries respond to energy shocks due to cuts or shutdowns of Russian oil and gas? Will the war speed up the transition to renewables or help fossil fuel companies maintain the status quo?

Since the war began, there has been no shortage of business, environmentalists and political leaders trying to influence the answers to these questions, which will be carried over to Davos.

“Energy security and the European Green Deal” is one of the topics whose participants are expected to argue that the way forward is to move away from fossil fuels. But European countries, some of which are heavily dependent on Russia for energy, are also trying to find other sources of natural gas and oil to meet short-term needs.

While no meetings explicitly talk about doubling fossil fuel use or expanding production or exploration, if the past few months can be taken as a benchmark, those views will certainly be present.

Peter Prengaman is the Associated Press director of global climate and environmental news. Follow him here: http://twitter.com/peterprengaman

The Associated Press’ climate and environmental coverage receives support from several private foundations. Learn more about the AP Climate Initiative here. AP is solely responsible for all content.

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