Nestle CEO pooh-poohs global warming fears
Nestle CEO Peter Brabeck-Letmathe claimed in Davos Friday that global warming is not really a problem. He didn't use those exact words, but he said as much in a number of amazingly iconoclastic comments he made on a panel at the World Economic Forum devoted to potential obstacles to global growth.
Brabeck-Letmathe said, among other things, that today's warming is not unusual compared to periods before the year 1000, for example, when "Greenland really was green." He also said that around 1830 there was a warming period when the glaciers in Switzerland, which Al Gore's movie An Inconvenient Truth depicts shrinking rapidly, were even smaller than they are now. He asserted that villages now emerging from underneath the shrinking glaciers demonstrate how much smaller they were in earlier times.
He suggested that such facts were deliberately left out of the movie by the distorted selection of time periods in the display of charts and graphs. "Anybody can use statistics to prove their case," he said.
The tone of his remarks was in stark contrast to those of other CEOs on the panel and elsewhere in Davos, who are openly acknowledging the gravity of the climate crisis. Michael Dell, for example, now talks enthusiastically about the work being done by Greenpeace. This isn't merely because such companies are seeking to score marketing points, but also because increasingly their executives share the concerns of environmentalists.
Even the Financial Times' Martin Wolf, who was attempting impartial moderation, was impelled before the session ended to invite anyone from the audience to contradict Brabeck-Letmathe's strident and arrogant-sounding statements. Someone did, but too politely, it seemed to me.
Later, I ran into Vinod Khosla, the longtime Silicon Valley venture capitalist now focusing on energy-related startups. I related Brabeck-Letmathe's onstage comments to him and asked what he thought. "You should tell him to see his proctologist so he can find his head," said Khosla, "and you can quote me."
Carbon footprints in the snow
Fortune's Robert Friedman writes:
Climate change is in the air here in Davos, and not just because it has started snowing again. Last night I moderated a dinner discussion about whether markets can save the planet. Nearly 100 people showed up, including London mayor Ken "Congestion Charge" Livingston, former Virginia Governor Mark Warner, former U.S. Kyoto Treaty negotiator Stuart Eizenstat, Britain's boyish environmental minister David Miliband, wellness entrepreneur Steve Case (yes, that Steve Case), and Yale University professor Dan Esty, author of the recently published "Green Is Gold."
The question before the assembled guests: Are market mechanisms, like Europe's cap-and-trade system for carbon emissions, capable of making a significant difference in reducing or slowing the pace of global warming. The consensus, agreed upon before the soup hit the table: No. But are governments any better at solving the problem?
For 150 years, companies have been polluting the atmosphere without having to pay the social costs, and governments have stood by idly. Now, in the last year, thanks largely to Hurricane Al (as in Gore), the winds are changing in the U.S., as they have in Europe. California Governor Arnold Schwarzenegger, who couldn't come to Davos because he broke his arm in a ski accident last month (a melting snow pack, one California Democrat joked), has endorsed a radical carbon-reduction plan in his state. The U.S. may never sign the Kyoto Treaty, as Eizenstat argued after dinner, but companies like GE and Wal-Mart have gotten religion, and green has become the new black. Esty argued that government needs to prod business with incentives, regulations, and taxes, to push the process forward. Frances Beinecke, head of the Natural Resources Defense Council in the U.S., said the developed world, which developed most of the problem, should figure out a way to help developing countries find ways to reduce emissions without strangling growth. And Miliband, on the fast-track for British Prime Minister, said government clearly had to lead the way--in Britain's case, by committing to reduce carbon emissions by 60% by 2050.
That's a long time away, maybe too long for the sake of the planet. But as Financial Times economics columnist Martin Wolf pointed out, humans don't like to take action until disaster strikes. That was a disonant note for the Davos crowd, which prides itself on optimism. Nick Francis, who runs a group in Australia called EasyBeingGreen dedicated to taking immediate actions to improve energy efficiency, jumped up from his chair, got in Wolf's face, and accused him of crimes equivalent to genocide.
It made for good theater, one of hundreds of such moments here this week. I'd like to think all this talk will do some good when the collective power represented at Davos descends from the mountain. But I fear it may add up to nothing more than carbon footprints in the snow.
Fear of Flying
Flying by jet may become uncool. I'm concluding that based on early signs I've picked up this year at the WEF in Davos. When you fly, you become a polluter. And for the first time, that reality may be sinking in.
Last night at a meeting of top journalists and leaders of media companies, I talked to Peter Gabriel, the rock musician and social activist. I was struck by how he started talking, spontaneously, about his worry that global understanding could wane as people fly less.
Gabriel says a number of his friends are starting to take significantly fewer trips by airplane because they’ve come to believe that flying is environmentally irresponsible. The energy used per passenger mile by someone in a jet is generally far higher than in any other form of transportation.
Gabriel was the second person I've talked to in Davos this week who, out of the blue, brought up the notion that flying may wane. An environmental activist CEO who lives in London separately told me, unprompted, that he is convinced flying may significantly diminish within five years as people get more and more worried about global warming.
Gabriel, who has devoted much of his career to promoting world music, has a specific concern, even as he sympathizes with the desire to fly less. Music is a bridge to cross-cultural understanding, and encourages our interest in learning more about others, something he believes is deeply important. He is concerned that our perception of others and sense of all being in this world together could change for the worse if we travel less. But it sounded to me like he believes it could easily happen.
This would be a major new development in the galloping trend of environmental awareness in the age of global warming.
Why is Al Gore not at Davos?
Fortune's Nelson Schwartz writes:
This should be Al Gore's year in Davos. After all, the former veep has been here in the past and in 2007, his signature issue, global warming, is at the center of the Davos agenda. Indeed, CEOs like Duke Energy's (DUK) Jim Rogers have been all over Davos addressing the topic. Rogers is chairman of the Edison Electric Institute, the U.S. power industry's trade association, and he wants electric companies to "have a seat at the table, rather than be on the menu" when policymakers sit down to decide how deal with CO2 emissions and rising temperatures.
But Al is nowhere in sight. Why? According to a top Democrat and former Gore campaign aide I spoke to here, the organizers of the World Economic Forum didn't want Gore to come and steal the show from Davos founder and impresario Dr. Klaus Schwab. So I asked Dr. Schwab why Gore wasn't here, and he told me to "Ask Al." Mr. Vice-President, care to comment? UPDATE: Gore spokesperson Kalee Kreider tells The Peak that: "Former VP Gore wasn't able to attend because he has a very firm book deadline for his new book 'The Assault on Reason' which is coming out in May. We informed the organizers in Davos of this several weeks ago."
Whatever the reason for his absence, it is too bad he couldn't make it. Gore's film, An Inconvenient Truth, has been cited again and again during the numerous workshops and forums on the issue. And Gore's passion on the issue would be a useful antidote to the well, hot air, coming from leaders here who say all the right things about climate change but offer very little in the way of actual policy prescriptions.
Can governments slow climate change?
Nandan Nilekani is cofounder and CEO of Infosys, the Indian business process outsourcing company. He is a former FORTUNE Asia Businessman of the Year and on the advisory board of the Fortune Global Forum that will be held in New Delhi, October 29-31. He is writing a daily blog at Davos, which is being cross-posted here. Nilekani's first entry:
This year it is clearly about climate change and sustainability. But as is common with such complex topics there is as much confusion as clarity. At Davos there is a consensus that developmental models impacting the environment need to be rethought in the context of global development, especially in the case of India and China. Today, 70% of the world's carbon emissions originate from the US and Europe. The carbon emission per capita in the US is 24 tons per annum, whereas it is 4 tons in China and 2 tons in India. Everyone agrees that if India and China achieve the same standard of living as the US, we will need more than one planet for all of us to live together.
Given the fact that 70% of the world's carbon emissions are from the US and Europe and people of India and China want a better standard of living, we cannot then deny them development. So, it is very clear that we have to fashion a new kind of development model, which is less injurious on the environment. While there is agreement on this, the question is who does what and who pays for what? It is also clear that there is a role for government and there is a role for business. For government, there are basically five responsibilities.
The first is to create regulations to encourage the right kind of behavior. For example, having fuel emission standards for automobiles or mandating that x - percent of petrol should be bio fuel and so forth.
The second way that governments can make a difference is by creating global grading systems for different kinds of emissions so that less efficient organizations pay more. This essentially puts a price on environmental degradation.
The third way governments can achieve this is by having taxes on those forms of activities that they believe are harmful to the environment.
The fourth role of government is to give subsidies to those forms of behavior which they think is good for the environment.
Finally, governments have to support the technological development so that new innovative ways are coming up to develop carbon efficiency technologies.
Companies in turn have to work to become more innovative, more efficient, more environmentally friendly, and have to reduce their consumption of energy, water, or plastic, you know they have to make more things biodegradable and so forth, that is up to companies to do.
So there is a role for company, there is a role for government, and often in the conversation the lines are blurred as who does what.
The other issue is who pays for all this? Developing nations believe that they should not retard their growth because of a problem created by someone else. They want adequate compensation for the cost of inventing and implementing sustainable growth.
So the key issue at Davos is, "will we be able to out of all this create a framework as to not only what needs to be done but who does which part of it and most importantly who pays for it?"
Of global warming, security, and robot toilets
Fortune's David Kirkpatrick writes:
The overriding issue obsessing this year's WEF is global warming and energy.
And with the weather worldwide seeming designed to remind us that man is perverting nature's balance, it was somewhat reassuring to arrive in Davos to find a healthy snow falling. I drove up from Munich where I'd been attending another conference, and where, like New York, the weather has been springlike all winter. Temperatures there of 60 degrees fahrenheit have not been unusual in recent weeks.
Security in Davos is a favorite topic of attendees, and this year it has reached new heights of absurdity. What drives so many of us crazy is that the hordes of machine-gun-toting Swiss soldiers who yell instructions whenever we're trying to go somewhere hardly ever speak English. I was seeking yesterday morning to register and was barred from walking down the street which would take me to the registration building. I was flummoxed, and became even more so when another rider in the van I was in, who spoke a modicum of German, told me that the soldier gesticulating wildly seemed to be saying that there was no way I could get to registration. Luckily I found my way eventually, after being forced to walk the wrong way for many blocks.
I've been coming here quite a few years, but for all the intellectual and sensory stimulation from amazing people and places, one thing has struck me every year - the toilets in the Congress Centre - the main hall where WEF sessions take place. After you use a toilet, a little robotic mechanism pulls the entire seat through a sort of squeegee with soap and water at the back of the toilet. It's a good symbol of the tidiness of the Swiss, so evident here in so many ways, sometimes to a maddening degree.
Finally - a tiny sign of economic stability - the price of a lunch at one of the many WEF sessions over lunch has remained stable for at least 5 years, albeit at the high price of 90 Euros.
Can Claudia Schiffer save the world?
Fortune's Nelson Schwartz writes:
It was a classic Davos moment - a mix of awesome financial and CEO power, celebrities, and just enough has-beens and hangers-on to remind you who the real power players are. The place was the Belvedere hotel Wednesday night, and the setting a party for Germany's Focus magazine.
In one corner stood JP Morgan Chase's Jamie Dimon chatting with his lieutenants. In another corner of the room, there was Michael Dell and Blackstone's Steve Schwarzman. Lakshmi Mittal wasn't far away. Meanwhile, supermodel Claudia Schiffer stood on a small podium like the Queen receiving visitors, who did everything but curtsy. Last but not least, onetime AOL cofounder Steve Case wandered around the room, looking slightly lost.
Schiffer was trailed by a team of photographers and aides, while even jaded reporters from the world biggest media outlets scrambled to grab shots of themselves and her on their cell phones. Acting nonchalant, I asked her where she was living these days, and she told me Notting Hill in London. I told her I lived in London, in Hampstead, and that we should hang out. She didn't take me up on the offer, but she did say that she would be at the nightcap Thursday night for Young Global Leaders and asked if I would be there. You bet I will.
Energy a big risk next year
In a video on our Web site, Samuel DiPiazza, the global CEO of PricewaterhouseCoopers, talks from Davos about some of the issues facing CEOs in the global economy. He mentions regulation and retention of key talent, but says that rising energy and commodity prices are a new addition to the list of things that CEOs say could "limit their potential in the next year or two."
You can see the video here.
Let it snow
Fortune's Nelson Schwartz writes:
The Swiss may be known for their precision and efficiency, but not their high spirits.
But in the ski shops and stores of Davos this morning, the natives were as close as they come to ecstatic. Not because of the beginning WEF conference and its hordes (although they're always good for business), but because it finally snowed last night, blanketing the streets and surrounding mountains, and making the place look like Switzerland instead of Wales.
And Davos without skiing would be like Hawaii without sun. One WEF organizer told me she was bummed by the snow because she feared it would take away a bit of the urgency of the climate change discussion that's at the center of this year's agenda, but everyone else is ready to finally hit the slopes.
The Russians are coming! The Russians are coming!
Fortune's Nelson Schwartz writes:
Although it hasn't quite reached the proportions of last year's India Everywhere PR campaign (free iPods pre-loaded with Bollywood music), the Russians this year are bulking up their once-limited profile in Davos this time around, with both top biznessmen (i.e. oligarchs) and goverment leaders represented.
Dmitry Medvedev, the deputy prime minister, is representing the Kremlin, while tycoons like Oleg Deripaska of aluminum giant Rusal and oil oligarch and Faberge egg collector Victor Vekselberg are making the rounds. "The Russian presence has increased dramatically," says William Browder, manager of Russia-focused Hermitage Capital. Browder made headlines last year after the Russian government refused him entry following a routine trip from his then home in Moscow, a likely result of his shareholder activism.
But Browder and anyone else interested in schmoozing the Russians will have plenty of opportunities at a party tomorrow night where the vodka will flow, as well as a big dinner on Friday night. What makes the Russian tycoons different is how powerful they are back home, yet not very well known outside. I ran into the potash king of Russia last night, Dmitry Rybolovev. In classic oligarch style, he lives in Geneva, has his company hq in Moscow, and mines the potash in the Urals. Sure enough, it's his first time in Davos. Maybe this year's conference will make the likes of Rybolovev more prominent.
Climate change and hot air
Fortune's Robert Friedman writes:
At 8:15 this morning I was standing on a heated platform outside the Congress Centre in Davos, Switzerland, being interviewed by CNN International's Richard Quest about climate change, when the lights went out.
It was an omen of sorts for the first day of a conference where environmental issues have risen to the top of the agenda, and where the 2,400 participants are all looking over their shoulders at their carbon footprints in the freshly fallen snow. It took a lot of fossil fuel to get these captains of industry, government, and media up the mountain by car, bus, train, and helicopter. The World Economic Forum is doing its best to run a carbon-neutral conference by offsetting the damage through environmentally friendly projects, but it sure takes a lot of carbon to hold a forum in which enough hot air will be emitted to melt what little snow Davos has seen this winter.
When the TV lights went out - a pulled plug, not a power failure, it turned out - I was talking about President Bush's State of the Union address, in which, after six years of doing nothing about the problem, he was finally talking about reducing America's gasoline consumption. A good goal, sure, but the hard part is figuring out how to get there, and the Bush administration hasn't shown any vision. Indeed it has opposed regulations and taxes that might change consumer behavior or corporate practices. And all the while the country's CO2 emissions have climbed steadily higher.
In his speech last night, Bush talked about market solutions as the way forward. That's like relying on the military alone to get us out of the quagmire Bush created in Iraq. Several speakers at a session this morning titled "Making Green Pay," including Yale professor Daniel Esty, made the point that climate change was the result of market failure and that regulation was required to turn things around. A vote on the question showed that the audience, lots of them businessmen, overwhelmingly agreed, 71% to 29%. Just how much pain the Davos crowd is willing to endure to bring about meaningful reductions in greenhouse gases remains to be seen. That question will surely stay in the air here -- at least until the lights are turned out in the Congress Centre a few days from now.
Climate change will dominate Davos
Fortune's Nelson Schwartz writes:
There's almost no snow in Davos this year.
At any other Swiss ski resort that wouldn't be news, but when the powers that be gather later this month for the World Economic Forum in Davos, the bare Alps will be a not so subtle reminder of what's likely to be one of this year's hottest issues: global climate change. Global warming has simmered as an issue in the past but expect it to come out it into the open at the 2007 conference, which will feature some of the the biggest names of Big Oil, like BP's John Browne and Shell's Jeroen van der Veer, as well as automobile industry heavyweights like Carlos Ghosn of Nissan and Renault.
The 2007 conference's title is typically bland: "Shaping the Global Agenda, The Shifting Power Equation." But this year's confab could be the most intense since the 2003 conference, which was dominated by the impending war with Iraq. Besides climate change, other hot-button issues include the continuing violence in Iraq and rising tensions between the West and Iran, not to mention North Korea. All are set to be the focus of sessions but global warming alone is skedded to have 4 parleys, including one on the sensitive topic of whether hurricanes and other disasters can be linked to CO2 emissions, featuring the CEOs of insurance giants St. Paul Travelers and Zurich Financial Services. And Sir Nicholas Stern, who recently authored a much-talked about UK report on the phenomenon, will be discussing the "Security Implications of Climate Change." Not to be outdone, the Forum's Young Global Leaders group is hosting a "Climate Change Nightcap" in an igloo on the lawn of the snazzy Steigenberger Belvedere hotel. Only in Davos.
Last year, Iraq seemed to be strangely absent from the agenda. But with President Bush's call for more troops and the approaching U.S. presidential election, that's unlikely to be repeated. John McCain is set to attend this year, as he has in the past, so it'll be especially newsworthy to see what he has to say on both topics. McCain has always been one of the most approachable and candid Davos figures; with him now eyeing a run for the White House in 2008, it'll be interesting to see if his straight-talk shtick has been replaced by a more cautious public stance.
Of course, the most interesting parts of Davos are the happenstance encounters in the buzzing hallways of the Congress Center, not to mention the after-midnight bull sessions with the likes of Bill Clinton and Bill Gates. 'The Peak' will feature those, along with just enough of the wonky side to make you feel like you, too, have made it up the mountain - even if there's no snow. We'll have daily files from Jan. 24 to 28 from myself, Robert Friedman and David Kirkpatrick of Fortune, as well as more updates next week.
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