Notes from Davos: Shared determination to tackle global challenges

On my flight to JLL’s Board of Directors meeting in New York, I had time to reflect on the past 2? days at the World Economic Forum in Davos. It was a very different experience to previous years, not least because Covid concerns had forced the meeting into May instead of its usual January slot. Views on that seemed as divided as the world is. In a random poll, it appeared that around half the delegate group would prefer that the meeting continues to be at this time of the year, whereas the other half would like to keep it in January. From a practical standpoint, I could certainly see the advantage when rushing from one meeting location to another of not having to put on a heavy coat and boots, or risk slipping over on the ice and snow. 

The main reason Davos felt different this year was the strong focus on the vital importance of tackling the major challenges confronting the world today. It was hard not to be overwhelmed. First we have the dreadful war in Ukraine. There was a sizable Ukrainian delegation and it was deeply impressive and moving to hear from them directly. We can only hope that the killing stops as soon as possible and the world comes together again to rebuild Ukraine and offer its brave people a bright future. They are defending the values most of the world holds dear. 

More broadly, the effects of that war and aftermath of the pandemic are combining to cause spiralling energy prices, a broken supply chain, risks of food shortages and spiking inflation. The implications are playing out at a rapid pace, already sharply impacting on poorer countries and communities. Still, let’s not make the mistake that this is not a massive issue for all of us. No responsible government, and certainly no democratic government, can ignore inflation rates in excess of 5%. A large and growing proportion of the population will have to spend the majority of their income on housing, utilities and food, with an increasing number falling below the poverty line. Supply chain issues and inflation, especially on food prices, need to be tackled decisively. 

As if all of the above wasn’t enough, the climate crisis is worsening and the impact on life today is already heavier than was expected only a few years ago. High temperatures and drastic extremes in rainfall are becoming widespread. The war in Ukraine creates another setback in tackling climate change. Inevitably several countries will need to use more coal in the short-term to reduce dependency on Russian gas which will further delay the journey to halve emissions by 2030. 

The silver lining is that the current situation has demonstrated how important it is to accelerate the journey to using renewable energies. Among all the doom and gloom this year in Davos, it was fantastic to hear how well some of the public and private initiatives are aligned on that topic. Most large corporates have set their own net zero targets, not all have a clear plan how to get there, but many corporate leaders participating in the World Economic Forum’s annual meeting expressed their determination to make it happen. With around 40% of carbon emissions coming from the built environment, real estate has a central role to play. We at JLL will do more than our fair share in reducing our own carbon footprint and in helping our clients with theirs. 

There should not be a single new development which does not meet the highest standards of green building. For a long time this was just the right thing to do. Going forward and not least driven by high energy prices, it also becomes a very clear financial play. Green buildings are achieving higher rents, higher sales prices and significantly lower operating costs. JLL is collecting more and more data on that around the globe and the stats are pretty impressive. 

People sometimes question whether meetings like Davos do create value. As a long term participant, I can say the World Economic Forum cannot solve all the problems that mankind is creating, but it does bring together a lot of impressive people who show the willingness and passion to work within their area of expertise to move us all forward on a better path. Hopefully I’ll not be proved wrong, but I am very optimistic that we will make great strides on reducing the global carbon footprint over the next 10 years and I’m confident that we will also find solutions for the other challenges facing the world today.