Good morning, Peter Vanham here, filling in for Alan.
What are the global risks facing business leaders in the new year? It’s a question the World Economic Forum attempts to answer each year ahead of its annual meeting. And with “Davos” starting next week, the Swiss organization on Wednesday revealed its 2023 risk survey results. (Disclosure: I’m a former WEF employee.)
It won’t surprise anyone that the “costs of living crisis” and “geo-economic confrontation” top the list of short-term risks in the Davos crystal ball, alongside natural disasters and extreme weather events. Predictions about the future are hard to make, after all, so people revert to the risks they know.
But looking a decade ahead, the worry of the Davos crowd turns to what you could call “persistent ESG concerns:” a failure of climate change mitigation and adaptation, biodiversity loss, natural resource crises, large-scale involuntary migration, erosion of social cohesion and societal polarization, notably.
It may be hard to fathom, now, but this focus on ESG risks wasn’t always there. Until the early 2010s, more conventional economic risks such as oil prices, stock market collapses, and a China slowdown (ironically all risks that actually materialized in 2022) preoccupied the Davos luminaries more.
But over the past decade, worries over “E” and “S” risks grew among global business leaders, and that trend shows no sign of abating, as the WEF’s 2023 report shows. It begs the question: was last year’s ESG backlash a partisan, politically-motivated, and mostly American fad?
Without venturing into that minefield, the WEF’s Saadia Zahidi told me that the persistence of ESG risks is a sign that “ESG has to remain front and center for companies that want to help address and mitigate some of these concerns, whether on environmental or social side.”
Nevertheless, the term ESG seems to have become a “no go zone” for even my former colleagues. In the Davos agenda for next week, filled with hundreds of sessions, the term ESG is mentioned only … once. The winner of the Davos agenda bingo? “Climate,” mentioned more than 100 times.
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More news below.
Tim Cook pay cut
Apple is slashing CEO Tim Cook's compensation by more than 40% to $49 million after investor guidance and a request from Cook himself to adjust his pay. This year and going forward, 75% of the stock units awarded to Cook will be performance-based, up from 50%. Bloomberg
Southwest Chief Executive Bob Jordan is taking responsibility for the airline's meltdown last month that led to the cancellation of 16,000 flights and stranded thousands of passengers. "There are a lot of reasons that this happened, but it's on me at the end of the day," says Jordan. Southwest's board has set up a special committee to oversee company management following the debacle. Reuters
In September 2021, JPMorgan Chase paid $175 million to acquire Frank, a fintech startup geared at streamlining college students' financial aid. Now the bank is suing Frank founder Charlie Javice, claiming the startup invented nearly all of its 4.3 million customers. A lawyer for Javice says the lawsuit is "nothing but a cover" for the bank's dealmaking mistakes. Fortune
AROUND THE WATERCOOLER
Women CEOs run more than 10% of Fortune 500 companies for the first time in history by Emma Hinchliffe
Starbucks CEO Howard Schultz is annoyed employees didn’t listen to his back-to-office request—and now he’s ordering a return by Nicholas Gordon
The American middle class is bracing for its next financial blow by Chloe Berger
Exxon scientists knew almost exactly how bad climate change would be back in the 1970s while saying the opposite publicly, study finds by Associated Press
The best job in America is still in tech, and it pays $120,000 a year by Jane Thier
December’s ‘very favorable’ inflation read could signal the ‘final phase of the bear market’ and stave off a recession, experts say by Will Daniel
This edition of CEO Daily was edited by Claire Zillman.
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