Davos 2024: Why isn’t climate finance at the top of the agenda?

17 January 2024 - Dr Nina Seega, Director of CISL’s Centre for Sustainable Finance, looks at what's on the agenda at Davos this year.

“A deteriorating global outlook” is how the World Economic Forum’s yearly global risks report, published ahead of this week’s Davos meeting, describes the world today.

Davos is an annual meeting of business, academic and policy leaders in Switzerland, to tackle urgent global issues and shape industry agendas. The very first meeting took place in 1971, attracting 450 delegates - today there are roughly 2,500 in attendance. The process was once called “business speed dating on steroids” by WEF Project Advisor Enno de Boer.

So what’s on the agenda this year? Climate change and environmental risks are important points for global discussion, following on from COP28 in Dubai last month. But the topic has already been singled out as one of the main factors likely to cause choppy waters ahead.

As leaders know only too well, managing these risks can only happen with significant amounts of funding, yet discussions in Switzerland are focused on theory and forecasts rather than concrete policies and numbers.

Two-thirds of respondents to the WEF’s aforementioned survey ranked extreme weather as the top risk most likely to present a material crisis on a global scale in 2024. Misinformation and social polarization were the other two risks highlighted by the report and are closely linked to how politicians and businesses will decide to respond to the climate and nature challenge.

This year is like no other. Roughly 3 billion people around the world are expected to vote in 2024, with elections taking place in countries including the EU, Bangladesh, India, Indonesia, Mexico, Pakistan and the United States.

Election campaigns may further increase misinformation and social polarization, as candidates like former U.S. President Donald Trump, who pulled out of the Paris Agreement, make claims such as the Earth’s rising temperatures will “start getting cooler.” Other politicians suggest climate science is not absolute and that action to reduce emissions can be delayed until geo-politics are calmer, interest rates lower or some other variable changes.

Whatever their personal views, however, the political leaders who are elected this year will also have to deal with the reality of the climate crisis and its impacts on people and the economy. They will have to decide whether to step up to the challenges and lead a wholesale transformation of the global economy that helps to create more sustainable lives for everyone or leave the global outlook to deteriorate further.

Real change, such as that hinted at by the Davos meeting, whose theme this year is “rebuilding trust,” will need financing.

Moving people and systems away from fossil fuels toward clean technologies and helping individuals and businesses adapt to the impacts of climate change will not come cheap.

Yet, if the right financing is not put in place, emissions will not fall in line with the goals of the Paris Agreement (to keep a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels), and many will be left frustrated if they feel only the rich can afford to adopt new technologies. A lack of support for the poorest in society will increase polarization, division and risks, encouraging more people to vote for candidates who offer simple solutions to complicated problems.

The fact that European Commission President Ursula von der Leyen didn’t bring paradigm-shifting plans to fund Europe’s clean tech industry to Davos this year raised many an eyebrow. Last year, she was bullish about potential new cash streams, but the harsh reality of anti-climate politics, wars and high interest rates have got in the way.

The leaders who are voted in this year will also have to decide whether nature should get the attention it so desperately needs and that the world pledged to give it in the 2023 Global Biodiversity Framework. Action to slow down and eventually reverse the continuing destruction of flora and fauna worldwide can also help reduce emissions and better protect communities and farms from floods and storm surges but, again, radical change will cost money.

Environmental and climate risks are very real threats to people and businesses. Times may be tough and the outlook difficult, but if all business and policy leaders have to offer the world is meagre words and gloomy outlooks, the change that they understand needs to happen won’t be forthcoming.

There was no shortage of potential ways to fund the ecological transition outlined in the Summit for a New Global Financial Pact, hosted by French President Emmanuel Macron in Paris last June and at COP28 in Dubai in December. Political and business leaders now need, as 2024 begins, to turn theories into reality.

Hard cash and innovative financing systems are what the world needs to better manage climate and environmental risks and to help fight polarisation and misinformation the world over.

The global outlook in the short term may be deteriorating, but with focus, determination and properly financed solutions, the the medium- to longer-term forecast could look rather more rosy.

First published on the Forbes website.