There was an interesting if somewhat ad hominem article in the Financial Times in June pronouncing that Davos is dead – the World Economic Forum (WEF) killed off by Covid. The article was written by Felix Marquardt, a self-described recovering jet-set conference addict, “former global schmoozer” and author of The New Nomads, a book that argues that the WEF’s efforts to sort out the world’s problems up a “magic mountain” in Switzerland over a few days is a “quick fix that does more harm than good”.
We disagree with this diagnosis, which is: the programme reflects the recent pivot towards a new corporate vision focused on environmental and social activism. Klaus Schwab, the WEF’s founder and executive chairman, issued a new Davos Manifesto last year to mark its 50-year anniversary.
“Progressing cooperation to tackle climate change”, accelerating the technologies of the “Fourth Industrial Revolution” – also the title of Schwab’s personal economic manifesto, published in 2016 – will be the focus of 2022. “The pandemic has brought far-reaching changes. In a world full of uncertainty and tension, personal dialogue is more important than ever. Leaders have an obligation to work together and rebuild trust, increase global cooperation and work towards sustainable, bold solutions.”
Schwab’s global philosophy of stakeholder capitalism is now in the ascent. He credits this, in part, to the “Greta Thunberg effect”, bolstered by Cop26 (filled with many of the same jets and foreign security teams). Conferences such as Davos will become the new debating platforms for the green economy agenda. Boosted by large sponsorship and revenue from attending delegates, an event like Davos can help pivot companies, banks, private equity firms and service providers to “tackle today’s environmental and social challenges”.
A good example of this trend – repurposing the corporate conference circuit as a platform for environmental corporate activism – is the Schwarzenegger Climate Initiative, which is based in Vienna and hosts a yearly Austrian World Summit, now in its fifth year. This boasts of being “one of the largest environmental gatherings in the world and provides a platform for global decision makers committed to preserving a healthy planet”.
Model behaviour
So what is the new Davos Manifesto? According to Schwab, there are now three models of capitalism to choose from. The first is shareholder capitalism, as embraced by most Western corporations, which holds that a corporation’s primary goal should be to maximise its profits. The second model is state capitalism, which is essentially communism, with the state running the economy as in various emerging markets such as China. Then there is the third way which is the new corporate gospel creed of Davos: stakeholder capitalism.
This is a model, says Schwab, that he first proposed back in 1971, and advocates “private corporations as trustees of society, and is clearly the best response to today’s social and environmental challenges”. His theory is that the fiscal pressures to boost short-term results has “caused shareholder capitalism to become increasingly disconnected from the real economy”.
Finally, Schwab argues, executives and investors have started to recognise that their own long-term success is “closely linked to that of their customers, employees, and suppliers”. The US Business Roundtable, America’s most influential business lobby group, are one group that have now embraced this theory of stakeholder capitalism. This has led to the rise of so-called “impact investing” which is clearly another trend as “investors look for ways to link environmental and societal benefits to financial returns”.
That is the Davos pitch anyhow. But is this really window-dressing for another agenda, not the least – with the cost of a “strategic partner” badge costing $628,000 – making a lot of money for the WEF? The real question to be asked is whether Davos is about discussing such worthy issues or is it really a behind-the-scenes business-card-swapping opportunity, as well as a VVIP capital-raiser behind closed doors?
The challenge is that with people travelling less and such VIP conferences going increasingly virtual – which may be the case this year for many sessions – you can’t network with fellow global citizens if you’re sitting at home watching a livestreamed event.
“The more I talk to people, the more I think people see it as a networking opportunity, rather than a learning experience,” says Sir Martin Sorrell, a huge fan of Davos and one of their highest-profile regular speakers and delegates. Sorrell, founder of S4 Capital, worth £4.5bn in just four years, ranks high in our Davos Top 100.
The original purpose of the WEF, going back to 1973, was more to inform, educate and debate key issues. “If I look back with rose-tinted spectacles, the media and entertainment group would meet and have a very nice dinner somewhere and somebody would make an interesting speech on a relevant topic and then there would be a discussion,” says Sorrell. “Then the following day you were locked in a room for an intense conversation on a range of subjects. You might have Rupert Murdoch and his wife there or you would have Sumner Redstone.”
One regular Special Delegate insider estimates there are around half the number of sessions this year as before the pandemic when it was “very intense” and there were “so many sessions in the preliminary programme, about a hundred. I think they’ve sort of tried to focus it more this year because of the health protocol and the assumption that there will be fewer people there and there will be more virtual.”
Will the A-listers and heads of state show up this year? Regulars who usually host or attend the VIP opening dinners (sometimes people say they can “only attend the main course”) and set the agenda include David Rubenstein, co-CEO and founder of the Carlyle private equity group. In 2018, at Davos, he predicted correctly that the world economy was most at risk from a “black swan” event that nobody can predict, from another 9/11 to global pandemic or conflicts involving China, Iran and Russia.
Post-Covid credibility
Any conference as successful as Davos will have its critics. According to Felix Marquardt, the pandemic has “exposed the contradictions of the WEF as a project and its terminal lack of legitimacy and credibility in the post-Covid era”.
His theory – “as an addict in recovery” – is that the organisers are “unable to come to terms with this because, just like others in the throes of active addiction, they are in denial”. He bases his theory on the fact that he was an adviser to a number of global leaders and a Davos cheerleader. He also “used to do a lot of drugs” (he has now been clean for seven years).
He worked for heads of state (including dictators), people running for political office and CEOs of multinationals. Marquardt’s assessment: “I flourished in Davos and other global power circles because the adrenaline high of having so much proximity with fame and wealth was a form of drug in itself.”
I don’t buy this diagnosis, although it’s fair to say that the WEF is a total ego circus. No social tribe is more rootless and nomadic than the global “elite” who assemble in Davos each year. For many years, the British were well represented. When I last went to Davos, the British comprised 283 delegates, second only to America, with 797 delegates.
Part of Davos’s difficulty in the future will be justifying the pharaonic fees that the summit’s 120 strategic partner companies pay for membership of this pro-globalisation club whose bible is the Economist. In short, many CEOs will struggle to justify the expense to shareholders. What shareholders increasingly see when they see coverage of Davos is overpaid corporate CEOs and FTSE executives hanging out with celebrities like Amal Clooney or Bono at Cossack parties hosted in vast chalets by Russian oligarchs.
Sorrell defends any criticism that celebrities attend such events like Davos to virtue signal. “Sometimes it is because they genuinely have a passion. I think people want to get exposure for their causes. There are some who will do it for virtue signalling reasons, but there are other people who do it because they’re genuine. It’s often difficult to figure out who’s who and which is which.”
Fringe benefits
One regular who is a genius at getting stars to attend his Davos parties is Matthew Freud, who works with Bank of America and Pepsi. He understands the egos and mentality of Davos elite better than most. Davos Man will always want to go somewhere that is more exclusive and not just a regular session that anybody with a white badge can gain access to. So he has set up at the summit’s fringe his Davos Club at the town’s golf club, which works in just the same way that power and debate works at political conferences, such as the Conservative Party conference.
In 2020, Freud threw a party hosted by CEO Brian Moynihan and former Apple designer Sir Jony Ive at the Davos Club at the golf club. Guests included Tony Blair, Ivanka Trump, John Kerry, Google’s Sundar Pichai, Jaden Smith, Priyanka Chopra and Lily Cole. According to one report: “Magician David Blaine entertained guests by sewing his mouth shut.”
In short, the real action on the global elite conference circuit, including Davos, is now on the club fringe – such as a cosy dinner hosted at the Chesa Grischuna restaurant 20 minutes away in Klosters – not in the main conference centre. At Cop26, Freud even managed to get the WEF to use his facility there because he has an uncanny gift for finding the best locations in both Davos and Glasgow.
At Davos, the best dinners are hosted by the likes of the Wall Street Journal and CNBC. Another A-list dinner is hosted by Lally Weymouth and Joseph “Yossi” Vardi, the Israeli entrepreneur.
“They invite the top people, the top media people, the top CEOs and government people, and they have about 30 guests,” says one regular VIP guest. “The form is they go around the table and you say what’s worrying you most. You know what’s going to happen next year?”
Yes, there are some critics who will say that the Davos global elite consensus, such as the Great Reset, shows how the liberal pro-globalisation, pro-capitalist, free trade, free-movement-of-people political consensus – for so long the creed of the UHNW global citizen community – has been turned on its head by the retreat from globalisation and the pandemic.
Value for money
So has Davos peaked? My theory is that founder Klaus Schwab’s annual Davos Circus for the HNW global and CEO corporate class is threatened not so much by a wave of anti-elitist politics but because many CEOs are simply reluctant to be seen travelling to such an expensive junket and photographed next to George Clooney. In some ways, the WEF has become a victim of its own success. The truth is that the major political forces that have shaped the world in the last few years – Covid, Trump, Brexit, immigration, the rise of populism – have not chimed with the Davos elite political consensus.
Any “pay to play”, invitation-only club will be superseded in the end by a similar jet-set club where it is genuinely invitation-only and you don’t need to pay well over $600k to participate as a special delegate. The cast will move on.
While heads of state don’t pay to attend, many attendees may have difficulty in justifying the expense or can’t see the value of spending $71,000 to be an official delegate. Yes, that’s to walk around in the snow with a “non VIP” badge hidden under your Lora Piana scarf.
The real issue that will determine whether Davos will survive – and my prediction is that reports of its death are greatly exaggerated – is whether the price is really worth it in terms of potential quarantine time, travel, and schmoozing value? No CEO, VIP or head of state wants to be subjected to a 10-day hard quarantine, or even a five- or two-day travel restriction.
In the court of King Klaus
The key to understanding the Davos appeal is that a fear of being left out is part of the success of Davos. While networking and ego-massaging by rubbing shoulders with the global elite and celebrity eco-activists is part of it, the real appeal is not about sitting through earnest conference debates on energy security or climate change.
In short, Davos is about having (usually buying) a platform. Now that this is something that can be done virtually, without polluting the planet with private jet travel, it may be that the WEF will have to think hard about its future model.
I once went to the Klosters chalet of the late gold-mining billionaire Peter Munk, a Davos veteran, and reported on it for Spear’s when I was the editor there. The triple-A-list dinner was one of the most sought-after weekly invitations for the Davos elite.
“If you put up x million, or you are the FT expert and you give coverage, you become a panel member,” Munk said. “It’s not because you are smarter than anybody else. But anyway, it is a phenomenal place.”
So Schwab is now a king who also, with his wife, Hilde, loves receiving heads of state. Let’s hope they keep coming to Klaus’s Davos court.
