DAVOS 2023: NO CHANGE WITHOUT A SYSTEMIC ECONOMIC CHANGE

The World Economic Forum Annual Meeting (WEF) 2023 is set to begin this week from the 16th to the 20th of January in the alpine town of Davos, Switzerland. Representatives from governments, (mainly big) business CEOs, youth leaders and civil society will gather at this international summit to showcase innovative ideas and share perspectives on tackling global challenges. Annually, Davos offers a round table where the public and private sectors can address pressing issues and provide solutions through cooperation.

The resurgence of the COVID-19 pandemic and Russia’s war in Ukraine are only two of the main factors that unleashed the instability and fragile international framework that tie into the theme of the 2023 edition, “Cooperation in a fragmented world”. However, the cost-of-living crisis topped the list of concerns among the 1200 experts surveyed. The results shown in the WEF report seem to indicate that world leaders might be more concerned about resolving short-term, more immediate problems rather than focusing on the long-term challenges represented by climate change (which however scores 4 out of the 10 long-term global risks).  The current challenge for Davos 2023 is that collective action and cooperation to address the climate crisis might be thwarted by discussions about rising energy & food prices and the supply crunch that has hit many.

This year’s annual meeting will take place during a long-standing period of economic fragmentation. In the last few years, globalization has endured a slowdown. Starting with Brexit, followed by the lockdowns during the pandemic, and the several political upheavals happening worldwide, altogether these events have slowly altered global supply chains. Leading economies have reshaped (and in some cases hampered) commercial routes, therefore leading towards a fragmented economic landscape. This sociopolitical horizon opens the future towards two possible pathways/scenarios: reinforcing business as usual or initiating a global economic change. 

“We see the manifold political, economic and social forces creating increased fragmentation on a global and national level. To address the root causes of this erosion of trust, we need to reinforce cooperation between the government and business sectors, creating the conditions for a strong and durable recovery.” Klaus Schwab, Founder and Executive Chairman of the World Economic Forum said. “At the same time, there must be the recognition that economic development needs to be made more resilient, more sustainable and nobody should be left behind”.

As the World Fair Trade Organization (WFTO), we agree on the need for a more sustainable and inclusive economic development, and we reject a "recovery" that persists in securing the interests and power of big enterprises. Now more than ever, we reiterate the need for a fundamental change of the current economic system towards a new one that puts people and the planet before profit. In the last few decades, neo-liberal globalization has dismantled most state policies regulating global trade. As a result, free trade policies have been deepening global wealth disparities and environmental degradation. In a deregulated market, small-scale producers are struggling to compete against industrial multinationals, and profits are maximized regardless of their socio-environmental impacts.

An economic development that aims not to put profit above the planet and people should focus on replacing unsustainable business practices by welcoming the growth of mission-led small enterprises that have long been providing diverse future-proof business models and solutions. Micro, Small and Medium Enterprises (MSMEs) represent 90% of all businesses worldwide and 50% of global employment (WorldBank), yet they often don’t have access to adequate funding, resources and ultimately policies to upscale their impact. Governments could play a pivotal role in regulating the market to catalyse what is now the niche Fair Trade market. Policymakers should enforce regulations that make socio-environmental responsibility, not the exception, but rather the standard conduct of any business that populates our economic landscape. 

Davos has the potential to offer the very needed discussion table to address how global economies can be developed in a more resilient, sustainable and inclusive manner. Yet, mainly big businesses and government leaders will be present, leaving little to no room for MSMEs to make their voices heard on how to truly achieve systemic change and go back to the root causes of our broken economy. Mission-led Fair Trade Enterprises are relentlessly working to bring systemic solutions to this broken economic system that has been disproportionately and greedily relying on the planet’s resources while capitalising over marginalised producers. They are proving that solutions are already there to grab; that joint efforts (of civil society, policymakers and the private sector) can lead towards the achievement of the Sustainable Development Goals and the 2030 UN Agenda.

As WFTO, we aim to facilitate their crucial role and presence in the current economic landscape, by ensuring that their small-scale solutions are showcased globally, from Global North to Global South. We believe that their growth keeps setting a powerful example to world leaders, proving with their social and environmental mission that businesses made for people and the planet, and not against them, are already functioning and are economically resilient.

Therefore, in the next few days, we will be following the discussions at Davos 2023, while urging governments to stand up, take back the lead in regulating the market and start rewarding those mission-led enterprises that put people and the planet before profit. Together with the whole global community of Fair Trade Enterprises, WFTO calls for policymakers’ swift action to facilitate systemic change and for social, environmental and climate justice to all.

Written by Lucia Gilmozzi & Shun Hei (Nathan) Lee