10 Key Takeaways from Davos 2022

10 Key Takeaways from Davos 2022

By Subhash Makhija, CEO & Co-Founder, GEP

I have just returned from a week at the World Economic Forum Annual Meeting in Davos. It was a very sober Davos. While the last two years can be summed up by 3Cs: Covid, Climate, and Conflict, today’s conversations start with 3Rs: Russia, Recession, and Rates.

During the last two years, the highest digitization took place in telemedicine, online education and video conferencing... digitization on steroids. But a consistent theme was the need for greater supply chain resiliency, end-to-end visibility, and sustainability, which reminds me of the major challenge for our clients, going forward: better measurement and management of their ESG impact.

Here are highlights from some of the sessions at Davos:

1. The Russia-Ukraine war: Ukraine must prevail

On May 23, Volodymyr Zelenskyy, president of Ukraine, addressed the Davos gathering, where he thanked the international community for rallying behind his nation. He also sought "maximum" sanctions against Russia for the invasion. President of the European Commission Ursula von der Leyen, NATO Secretary General Jens Stoltenberg and Prime Minister of Spain Pedro Sánchez called for continued cooperation with Ukraine while Federal Chancellor of Germany Olaf Scholz said Russia cannot be allowed to win the war.

2. Global economic outlook: Resilience is paramount

In a session on global economic outlook, David M. Rubenstein, co-founder and co-chairman of The Carlyle Group, predicted that even if there was a recession, it would be a “mild” one. On May 25, Gita Gopinath, first deputy managing director of the International Monetary Fund (IMF), said the Ukraine war was “a major setback” to the economic recovery from COVID-19. Kristalina Georgieva, managing director of the IMF, said the focus now should be “on building resilient people – backed up by education, health, and social protection.” One economist predicted that 90% of what will be sold in Europe will be produced in Europe.

3. Globalization: A more intelligent future

There was talk of regionalization of globalization. However, at most sessions, the consensus was that globalization would become smarter: intelligent globalization that should include the lifting of people left behind because of traditional globalization.

4. Supply chains: Facing change via multisourcing

Supply chains will get reconfigured. While speakers were split between whether nearshoring would replace offshoring or not, everyone agreed that due to geopolitical uncertainty, there will be more focus on multisourcing rather than sole sourcing.

5. Sustainability: Desperately seeking solutions

This topic had the greatest number of sessions. More companies are signing up for carbon neutrality targets ranging from years 2030 to 2050, though they admitted that they still don’t know how to get there. There is a huge need for solutions, everything from tracking scope 3 emissions and standardizing metrics and reporting to accelerating the switch to renewables and reducing waste.

6. Food and energy crises: Russian fuel alternatives must be found

Executive Director of the International Energy Agency Fatih Birol said on May 23 that to resolve the energy crisis, “the world will have to replace the oil and gas coming from Russia,” but that it “should not lock in infrastructure for fossil fuels for many years to come.” On May 25, Ukraine’s Minister of Foreign Affairs Dmytro Kuleba said there could be a multiyear food crisis if things did not change.

7. Decarbonization: Pushing for aggressive energy transformation

To decarbonize the global economy, a major expansion of the First Movers Coalition was announced by top government officials and global CEOs, including U.S. Senator John Kerry, Microsoft Co-Founder Bill Gates, Sweden’s Finance Minister Mikael Damberg, Salesforce CEO Marc Benioff, and Google CFO Ruth Porat. Executive Vice-President of the European Commission Frans Timmerman said the Mediterranean could be the center of the world's new energy supply. Vice Chair of Brookfield Asset Management Mark Carney called for energy transformation “on the scale of the industrial revolution at the speed of the digital transformation” along with “a revolution in finance.”

8. Business and entrepreneurship: Leaders actively address top-of-agenda issues

Business leaders at the annual meeting spoke about what they were doing on environmental capitalism, technology, and ESG. WEF’s open innovation platform for entrepreneurs UpLink released its 2021-2022 impact report.

9. Health in future pandemics: Preparations are happening now

There were discussions on how to prepare for the next pandemic, and how to address mental health and health equity. U.S. pharma major Pfizer announced that it would provide patent-protected medicines on a not-for-profit basis to 45 lower-income countries.

10. Work of the future: Flexibility is a must

The pandemic has fundamentally changed the working lives of people across the world, and the sessions at Davos looked at speeding up reskilling, the feasibility of a four-day week, hybrid work and diversity and inclusion.

Looking Forward

I left Davos with a clear understanding that business is facing greater uncertainty than we have experienced in recent memory. And that our mission – building resilient, cost-effective, sustainable supply chains and global procurement operations – is vital to businesses of every stripe. More now than ever.

Reference: Gayle Markovitz, "Davos 2022 - what just happened? 9 things to know", 26 May 2022, weforum.org | https://www.weforum.org/agenda/2022/05/the-story-of-davos-2022/

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