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I am just back from four days of panel sessions, client meetings and discussions on the state of the world at this years’ World Economic Forum at Davos. It was a week where participants, having passed through the pandemic, hoped for a new start. There were four main themes: The Global Economy; Geopolitics; Climate; Technology.

On the global economy, the tone of the meeting was cautiously optimistic, with most CEOs expressing hope of a soft landing, with the U.S. flat, Europe in a shallow recession and China coming back in the second half. Economic fragility was clearly a top risk, with nearly one third of nations teetering on the verge of financial default, and others with alarmingly high numbers of citizens trapped by higher interest rates. Despite these economic headwinds, globalization remains in retreat, with re-shoring/near-shoring being the preferred option despite its considerable costs.

Geopolitics was also front and center. The Russian invasion of Ukraine was omni-present, with ongoing consequences of inflation, higher interest rates, food shortages and energy supply shifts. The U.S. felt like a more dominant power, from the muscular response to Russia’s invasion of Ukraine to the aggressive public spending on the green transition. Loud objections from Europeans about U.S. protectionism shifting jobs across the Atlantic, seemed to be another geopolitical tension impacting confidence.

China remains the great unknown of 2023, re-opening the economy in the face of slowing growth and popular fatigue with lockdowns while the geopolitical struggle with the U.S. accelerates. A question mark remained about whether in the second half of the year, China’s economy will roar back, with many observers stating such an outcome was ‘odds on’.

Climate change and sustainability was part of every conversation from ESG metrics to energy transition, with low snowfall at the start of the ski season in Europe a reminder of the urgency.

The Tech industry showed major progress on the metaverse and artificial intelligence (especially Chat GPT). The metaverse punched out of the consumer space and demonstrated viability in corporate settings. While AI had the potential to transform how frontline work is done, some argued that advances in technology would continue to outrun regulation.

Here are more takeaways from each of the panels I attended:

1. Debt Load and Sovereign Risk—The world is now $300 trillion in debt, up substantially in the past fifteen years due to the bailouts in the Great Recession of 2008 and the response to the Pandemic. That is an average of $37,000 per person in the world. Some emerging markets are in big trouble, with 60 countries in stress and one in default (Sri Lanka). This is not only a problem for emerging nations; in the UK, over one million people will have to re-price their mortgage this year.
2. �ѱ�ٲ����������—The World Economic Forum is developing a metaverse application with Microsoft and Accenture that will enable the mass population to interact with companies and government leaders; it has a global oceans hub that can be used to create ideas for COP28. Enrique Lores, CEO of HP, said that his company is establishing business services in the metaverse, including the enabling of 3-D printing of an object such as a personalized gaming keyboard with unique parts. There could be a substitute for live events; a comedy club could invite a comedian along with audience members who can interact with each other. It is unclear whether one company will establish a standard or whether it will be an open environment such as Google Android or if government will step in. 
3. Energy Picture—Markets remain tight, with refining capacity being taken offline in the U.S. Unseasonably warm weather in Europe has eased concern on supply, but Government interventions in commodity markets has made it difficult to optimize supply. The second half of the year will be challenging if China recovers and demand soars. Capital expenditure for the green transition must be blended with public private funding, including potentially public pension investing. There could be more of what the French did with nuclear energy in the 70s, where national security and energy policy intersected, driving affordability and economic development.
4. Travel Differently—The solution to climate issues is not to stop traveling as it would have a major deterrent effect on a key means of creating employment. Nor is it to return to the bad old days of the last decade, with hundreds of thousands of passengers disembarking at fragile locations such as Venice. Wealthy people must pay for the energy transition in travel with higher prices and offsets, and we see a switch to renewable aviation fuel in the next few years.
5. ����������Ա�—Shockingly, Olena Zelenska, the wife of Ukrainian President Volodymyr Zelensky, told us that Russia is putting Ukrainian orphans up for sale to Russian families, saying: “Nothing is off limits to the Russians. They are hitting our civilian areas…Unity of the West is what will bring peace back to the region. We need your tanks to fight them back in the Spring.” Ursula von der Leyen, President of the European Commission, said, “There will be no impunity for these Russian crimes. Ukraine has inspired Europe; we will always stand with you. We are in it for as long as it takes.”
6. Dual Geopolitical Divides—UN Secretary General António Guterres noted a growing North South divide, caused by different rates of vaccine distribution, rate of recovery from the pandemic, lack of financial resources and vulnerability to climate crisis. He also cited a growing divide between the U.S. and China, on matters such as data sovereignty.
7. Artificial Intelligence—One million scientists are using AI for enhancing engineering science. There are 200 million proteins; fusion biology is now happening at digital speed rather than as bench work for a graduate student on an individual protein. The U.S. AI community rarely uses Chinese AI ideas, though the Chinese are filing more patents for AI given their different view of data privacy. The EU is worried about falling behind the U.S. and China so governments are investing in basic AI research that can be used by business. Being at the forefront of the technology will ensure you have a voice in how AI is implemented. 
8. Diversity and Inclusion Goes Global—The German Government has recognized that seven million Baby Boomers will retire in the next five years. The response is to incentivize women to move from part time to full time work. This means better childcare, especially on site at companies. It also means parental leave at birth, so that fathers get involved with children earlier. Nokia has a 90-day parental leave for both sexes and a one year right to come back to the same or better job. EY is cultivating talent in Chicago, with the Entrepreneur Access Network that elevates scalable Black and Latino owned companies through a planned curriculum.
9. �ѱ�徱��—We need a code of practice on hate speech that applies across all platforms. The key question for media is how we address fake news and disinformation that is dragging down society. Brands should consider the quality of content as value to the advertiser. The consumer wants entertainment and delight so we should not be measuring attention and reach statistics alone.
10. �䰿�ձ���-19—We saw the first variant (Omicron) that escaped the vaccine, forcing providers to modify the product. We had a variant that started in the U.S., China, India, and South Africa. The disease will not disappear in 2023; we do not have sufficient immunity protection. Social distancing will disappear, and vaccine rates will decline as governments are disinclined to require compliance. The decision by China to open in time for Chinese New Year has unknown risks of disease spread. 

As always, I come out of Davos inspired and exhausted, my head spinning with ideas for ������Ƶ and our clients. I am more convinced than ever of the necessity of business continuing its role as a leading force for change on societal issues, partnering to create solutions, using ESG as its guidepost, soliciting views of consumers and employees and providing value for a broader set of stakeholders as a North Star.

Richard ������Ƶ is CEO.