Last week I attended the 2023 World Economic Forum Annual Meeting in Davos, Switzerland. Climate change—and global action (and in some cases, inaction)—was front and center on the agenda. This was, in many ways, a continuation of the important discussions held at COP27.

As I’ve reflected on my time in Davos, there are a few issues that have stuck with me.

1. Action on Decarbonization

Leading corporations are continuing to demonstrate a critical focus on reducing emissions across all scopes and scaling up green procurement. For example, I valued connecting in Davos this year with leaders of World Economic Forum-led initiatives such as the First Movers Coalition and the CEO Climate Leaders Alliance, whose members are on the vanguard of this progress and ambition.

As corporations move forward on actions required to achieve their interim decarbonization commitments for 2030, many are realizing the technical challenges they will face. These challenges include questions around transition finance, bridging supply and demand in green markets, and the limitations of common decarbonization frameworks. As we continue to move past the “low-hanging fruit,” the solutions for the next steps are out there but will require a greater level of expertise for successful implementation.

The good news is that we continue to see strong investment in decarbonization innovation, and the level of action around this makes me optimistic for the future. The hard part is convincing the broader global business community that decarbonization goals are attainable. The public sees that total global emissions continue to rise and it’s hard for the average person to understand the progress that’s being made.

Communications that maintain popular confidence in momentum towards progress are important, even as the details become more difficult to convey. At the same time, we need to remain focused on sufficient speed and scale of the actions required to meet our goals.

To learn more about the efforts of Carbon Direct around decarbonization, check out this video recorded with the support of the World Economic Forum team last year.

2. Controversy in the Carbon Markets

Many leaders raised concerns throughout the meeting, both publicly and privately, about prevailing quality and standards in the carbon markets. These concerns were underscored last week when The Guardian reported on the rampant problems with avoided deforestation offsets. Since that article’s publication, many leading voices across the industry (including my colleagues at Carbon Direct) have weighed in on the accuracy of The Guardian’s findings, on the viability of removals as a strategy, and on how to fix a deeply flawed system.

Debate aside, organizations are becoming increasingly attuned to the financial, reputational, and compliance risks associated with low-quality or questionable offsets. As climate and economic leaders, we need to address the challenges with carbon offsets to restore integrity to the process and trust in the system. Carbon removal is no longer a nice to have, or a substitute for reductions. In order to meet net zero and decarbonization commitments, organizations will need to both reduce their emissions, as well as embark on a strategy to actively remove carbon from the atmosphere.

My hope and expectation is that 2023 will be a year in which a strong institutional signal on quality and standards will be sent to the carbon markets, because well-functioning markets are mission critical in limiting global warming to below 2 degrees.

3. Energy Transition

Energy transition is at the heart of much of the work that we have to do across all of our decarbonization pathways. The tragic war in Ukraine has made transition efforts more challenging, but it has also brought more of a pragmatic focus to the work. Conversations in Davos were focused on transition in the context of energy security, affordability, and access—all in the context of just economic growth.

Energy producers are joining the conversation in a way in which they previously have not, and the United Arab Emirates’ COP28 Presidency is now coming to the center of this conversation.

A common message that I heard from leaders across Davos is that a holistic framework for action on energy transition should include the energy sector, but that we must ensure a focus on limiting new production and scaling up clean solutions.

GFANZ is pointing to the need to scale the balance of investment in clean and renewable energy to traditional energy from the 1:1 ratio where it sits today, to 4:1 by the end of this decade. This will require not only a massive change in investment priorities, but also significant growth in overall energy investment.

4. Policy Takes Center Stage

Private sector efforts are a central part of climate action, but supportive policy will be indispensable to achieving our goals, including but not limited to financing the transition. There was a lot of discussion in Davos about the U.S. Inflation Reduction Act, and its potential to be either a positive forcing function, to be protectionist, or both. My hope is that the IRA will stimulate beneficial competition across countries, essentially creating a Race to the Top in incentives for green investment.

At midweek, Ursula van der Leyen, President of the European Commission, gave a speech in which she announced the Green Deal Industrial Plan, which promises just this type of catch up by Europe with the IRA. By the end of the week, conversations had moved from concerns over protectionism to discussions about how leaders could try to take advantage, not only of green investment incentives in the United States, but also of opportunities which may now open up in Europe. This is exactly what we need to see more of from additional countries and trade blocks going forward.

5. Cooperation in a Fragmented World

The theme of the 2023 Annual Meeting was “Cooperation in a Fragmented World.” Many sessions focused on raging hot, cold and proxy wars, economic uncertainty in the 2023 outlook, and trade tensions—particularly the “great power competition” between the US and China and what it means for diplomatic efforts in the rest of the world.

The World Economic Forum’s focus on multilateral dialogue and leadership is particularly important in a complex environment such as today’s. For example, one key initiative in Davos this year, GAEA (Giving to Amplify Earth Action), will advance multilateral cooperation across the financial system in the form of public-private-philanthropic partnerships, PPPPs, to build partnerships which unlock significantly greater global funding to achieve a net-zero, nature positive future.

Finding paths for mutual agreement and action within and beyond political leadership is table stakes for advancing climate action. The intense focus among meeting participants on action, pushing past talk and pledges, and leveraging the power of collaboration and partnership to guide the way, gives me hope as we move forward into this year and those to follow.