From 1/16 to 20, 2023, the World Economic Forum (WEF) Annual Meeting will be held in Davos, a resort town in the Swiss Alps. This meeting is known as the “Davos meeting,” after its host city. According to President Børge Brende, the main themes this time are three: escaping the economic slump caused by the pandemic, transitioning to renewable energy, and the future of globalization. Leaders from around the world and across industries will gather to discuss these issues.

While the WEF, particularly the Davos meeting, is praised for wielding significant influence over global challenges because it brings together prominent figures from around the world, it is also often derided as a “rich man’s club” that seeks to steer the world according to the views of those with power and wealth. This article explores the reality of the WEF, the problems lurking within it, and organizations that could replace it.

Venue of the Davos meeting with the Alps in the background (Photo: World Economic Forum / Flickr [CC BY-NC-SA 2.0])

What is the WEF?

The WEF’s origins date back to 1971. German-born engineer and economist Klaus Schwab founded an independent, non-profit organization in Geneva, Switzerland, the “European Management Forum.” Its initial purpose, as the name suggests, was to provide a venue for Europe’s business leaders to exchange views on management practices. Over time it began inviting people from outside the business world, and its agenda expanded to include politics, the environment, health, and more. In 1987, the forum changed its name to the “World Economic Forum,” and in 2015 it was recognized by the Swiss government as an organization with the same rights as an international institution. Today, the WEF states its mission as “committed to improving the state of the world,” and in addition to holding the Annual Meeting (“Davos meeting”), it publishes reports such as the Global Gender Gap Report (※1) and the Global Competitiveness Report (※2).

Let’s look at the main organizational structure of the WEF. The WEF has a Board of Trustees to oversee and guide its activities, comprising about 30 trustees selected from representatives of organizations chiefly in business, government, and international institutions. Currently, in addition to founder and Executive Chairman Schwab, members include the Director-General of the WTO, a Senior Minister in the Singapore government, and the Chief Executive Officer (CEO) of the food and beverage company Nestlé, among others, with some trustees drawn from civil society organizations. There is also a Board of Directors and an Executive Committee, and across the WEF as a whole, more than 700 people are employed.

Supporting the forum’s activities beneath that are member companies from around the world, divided into two categories: “Partners” and “Members.” Partners consist of about 100 global companies, each contributing about US$125,000 annually to the WEF. Members comprise about 1,000 of the world’s top companies, most of which have annual revenues exceeding US$5 billion. They pay an annual membership fee of about US$34,000. The CEOs of these Partner and Member companies have the right to attend the Davos meeting, but in addition to annual dues, they must pay a participation fee of about US$48,000 or more to attend. In this way, the world’s major corporations occupy a central place in the forum.

Klaus Schwab (Photo: World Economic Forum / Flickr [CC BY-NC-SA 2.0])

Problems of representation

Focusing now on the WEF’s Annual Meeting—the Davos meeting—let’s examine the reasons WEF is criticized. A key problem with the Davos meeting is that it lacks diversity among attendees and fails to reflect the views of the world as a whole. Let’s look at the characteristics of participants in turn.

First, as for participants’ economic level and status, many hold power or wealth. According to one analysis, in the 2020 Davos meeting, government officials such as presidents and ministers, and corporate CEOs, accounted for 86% of attendees. Even limiting the count to “billionaires” with assets of US$1 billion or more, as many as about 120 attended. It’s no surprise that there’s even a label—“Davos Man”—to describe the wealthy who attend. By contrast, participants invited from so-called civil society organizations, including researchers and activists, made up only about 5% of the total. Taken together, it’s clear that the Davos meeting is primarily a venue for discussions among the wealthy and powerful.

Participants also exhibit regional characteristics. In the same 2020 meeting, of roughly 3,000 attendees, about 1,200 were from Europe and about 700 from the United States. Meanwhile, the combined total from Africa and Latin America was only 236, not even one-tenth of all participants. These regions are where issues such as poverty are particularly concentrated worldwide. With so few attendees from Africa and Latin America, what kind of discussions can meaningfully advance solutions?

Gender imbalance is also evident. For many years the Davos meeting has been plagued by criticism that the number of women is strikingly low. As a remedy, the WEF introduced a quota system in 2011. It asks the roughly 100 Partner companies of the WEF to include at least 1 woman in their delegation of 5. Whether thanks to this policy or not, the proportion of women participants rose from 17% in 2010 to a record high of 24% in 2020. However, for an organization that publishes the Global Gender Gap Report, these numbers are hardly satisfactory—and in any case, a target of at least 1 woman out of 5 delegates is far from gender equality.

The WEF proclaims its mission as “improving the state of the world,” but when most of the participants are men representing individuals, corporations, or countries with enormous wealth and power, one must ask: improvement for whom?

Opening plenary of the 2018 Davos meeting (Photo: GovernmentZA / Flickr [CC BY-ND 2.0])

A convenient meeting

When participants share similar backgrounds, their interests naturally align, creating the risk that they choose to discuss only the topics they care most about and push processes and debates in ways that are convenient for them. Three illustrative stories follow.

First, consider the contrast between attendees’ modes of travel and the topic of climate change. Not a few attendees arrive at the Davos meeting by private jet. It is difficult to obtain exact numbers of flights, but according to the WEF, there were 270 Davos-related flights in the first three days of the 2019 meeting. Meanwhile, some estimates put the total for the six-day meeting at as many as 1,500. Compared to commercial aviation or trains that carry many people or goods at once, private jets impose a far greater burden on the environment. There are even data showing that flying for just about one hour can emit roughly as much carbon dioxide as an average person emits in a year. Of course, some participants use lower-impact transport such as trains, but the environmental footprint of an event that draws many ultra-wealthy people is likely substantial.

In response, the WEF says it aims to offset emissions by requiring participants to purchase carbon credits (※3) for carbon offsetting (※4). But this neither actually reduces the amount of carbon dioxide emitted, nor is it clear that the carbon offsetting system itself functions effectively. Even though environmental issues are on the conference agenda, the persistence of such practices suggests that participants are turning a blind eye to what is inconvenient for them. Unless the wealthy and major corporations—those who emit the most CO2—squarely confront emissions reductions, real solutions cannot be expected.

Next, consider taxation issues for the wealthy and for corporations. At the 2019 Davos meeting, a statement by Dutch historian Rutger Bregman sparked controversy: “No one talks about the real issue—tax avoidance and the rich not paying their fair share. It feels like being at a firefighters’ conference and no one’s allowed to talk about water. (…) We have to talk about taxes. Just taxes.” In a setting like the Davos meeting that draws so many ultra-rich, it’s hardly surprising that taxes rarely make it onto the agenda. As the Panama Papers, the Pandora Papers, and a leak from a major Swiss bank show, tax evasion and avoidance by the wealthy are rampant, depriving the world of resources needed to solve myriad problems.

Rutger Bregman (second from right) at the 2019 Davos meeting (Photo: World Economic Forum / Flickr [CC BY-NC-SA 2.0])

Finally, an example of how the WEF approaches solving global problems primarily through companies. In 2022, one of the key events at the meeting was a one-on-one conversation between Albert Bourla, CEO of Pfizer, and Schwab. In it, Bourla said Pfizer would provide vaccines such as for COVID-19 to low-income countries at no profit, and Schwab praised him. But we should pause to consider whether such praise is truly warranted.

The pharmaceutical industry has been repeatedly accused of prioritizing its own profits over stopping the pandemic. For example, to maximize its profits, Pfizer reportedly prohibited some countries, via contract, from trading surplus vaccines with other countries. And because increased vaccine production would undermine exclusive profits, it resisted the realization of generic vaccines that other pharmaceutical companies could produce. Moreover, not only Pfizer but drug companies generally receive substantial public funding for R&D, yet they hoard the profits generated by high-priced sales. In 2021, it was reported that nine new billionaires were created in connection with COVID-19 vaccine development. Big pharmaceutical companies have exacerbated vaccine inequity and contributed to economic inequality. As of January 2023, the first-dose vaccination rate in high-income countries had reached 72.8%, while in low-income countries it was only 30.0%. Entrusting so much of the response to a global challenge like a pandemic to profit-driven corporations is a problem in itself—and the WEF can be seen as actively encouraging that approach.

Setting the global agenda

Another concern is the tendency of the WEF to present a vision of how the world ought to be and to push for its realization from the top down. Two aspects warrant attention here: the agendas promoted at the meeting itself, and long-term network building.

First, consider agendas put forward at the meeting. Because the Davos meeting gathers highly influential figures in politics and the economy from many countries, the debates there tend to have a degree of global impact. This allows the meeting to introduce concepts and policy directions intended to change how the world operates—and to encourage their adoption.

The IMF Managing Director and the Saudi Finance Minister in a dialogue themed on the Great Reset (Photo: International Monetary Fund / Flickr [CC BY-NC-ND 2.0])

For example, at the 2021 meeting, Schwab sought to introduce the concept of a “Great Reset,” reviewing and resetting every system in the world in light of the pandemic. He argued that the key was shifting from “shareholder capitalism,” in which companies prioritize shareholder profit, to “stakeholder capitalism,” in which companies engage with governments and civil society in shaping society and consider the interests of all stakeholders. In Schwab’s framing, governments are merely one stakeholder among many. While this may sound like an inclusive social system at first glance, some argue that it risks undermining democracy. Ideally, governments should address national and global problems by listening to the people and resolving them through democratic processes. But stakeholder capitalism as envisioned by Schwab appears to weaken government power while amplifying corporate influence; and when it comes to civil society, critics point out that the actors centered in practice would be foundations led by ultra-wealthy individuals who receive WEF invitations.

Next, consider agenda-setting through network building. In 2004, Schwab founded within the WEF a community called “Young Global Leaders.” It is a network for next-generation leaders—primarily those in their 20s and 30s—including young politicians, innovators, and activists, to exchange ideas and build connections across sectors. Since its inception, more than 3,800 people are said to have participated, but there are aspects that raise concerns. This can be gleaned from Schwab’s own statement in 2017, in which he claimed that more than half of the members of the cabinets of Canada, Argentina, and France were participants in the WEF’s Young Global Leaders program, and that he was “proud that we penetrate the cabinets,” he said. Whatever Schwab’s intent, his words suggest an ambition to expand the WEF’s influence. By bringing future national leaders into Young Global Leaders early in their careers, Schwab and the WEF can be seen as seeking to exert some form of influence over domestic politics in various countries down the line.

Thus, through introducing concepts about how the world should operate and through network-building among the powerful, Schwab and the WEF appear to be setting agendas with an eye to reshaping the world to their advantage.

Protests against the WEF (Photo: Philip McMaster / Flickr [CC BY-NC 2.0])

Another world: the World Social Forum

While there is a risk that the elite-centered WEF shapes a world for a subset of wealthy people and large corporations, there is also a forum that challenges it: the “World Social Forum” (WSF).

Around 2000, some economists were already holding an anti-Davos meeting to counter the Davos gathering, and Brazilian activists Oded Grajew and Chico Whitaker sought to organize this movement formally and hold a conference. With the help of eight organizations, including Bernard Cassen, then editor of the French monthly Le Monde diplomatique, the Brazilian Association of NGOs (ABONG), and the Association for the Taxation of financial Transactions for the Aid of Citizens (ATTAC) advocating the Tobin tax (※5), the first World Social Forum was held in January 2001 in Porto Alegre, Brazil. With the slogan “Another world is possible,” the forum meets every January to coincide with the Davos meeting. The host city is not fixed; in addition to Porto Alegre, where the forum was born, it has been held in Mumbai, India; Nairobi, Kenya; Montreal, Canada; and elsewhere. Since its founding, the WSF has helped organize regional social forums around the world, such as the Asia-Pacific Social Forum, the Southern Africa Social Forum, and the Mediterranean Social Forum.

Whereas the WEF is by invitation only, anyone who wants to can participate in the WSF. In 2022, about 30,000 people took part, but in the past participation reached as high as about 150,000. Open participation means that, unlike the Davos meeting which skews toward higher-income groups, a variety of people—from grassroots social movements and labor unions to leaders of international organizations—gather and deliberate together. That said, analyses indicate that about 80% of participants come from around the host region. Given that the WSF emphasizes participation by lower-income groups, this is perhaps unavoidable. All the more reason why rotating the host city and establishing regional social forums around the world are important.

Because the host cities are often in relatively low-income countries, participation is open rather than by invitation, and the venue changes each time, the WSF can be said to be more representative than the WEF. With more than half of the world’s population living in poverty, identifying issues that should be addressed globally with a focus on low-income groups, and working toward solutions from the grassroots in a bottom-up manner, is more democratic and more likely to lead to genuine solutions.

Final day of the 4th World Social Forum held in Mumbai (Photo: Claudio Riccio / Flickr [CC BY-NC-SA 2.0])

So how has the WSF translated its activities into impact? In fact, it is said that the WSF has not historically led major initiatives on its own. However, by leveraging its strength in bringing together people from different levels, it has contributed to global movements. For example, the anti-war demonstrations against the U.S. invasion of Iraq in February 2003 saw more than 10 million participants worldwide, and the 3rd WSF held in January that year is said to have contributed to organizing those protests. Precisely because the WSF gathers a diverse range of participants beyond the wealthy and large corporations, when there is a problem that needs to be solved globally, the networks it has built can be mobilized for large-scale coordination.

Conclusion

We have examined the reality and problems of the WEF and the WSF that could take its place. Given that the WEF is composed of a very small, wealthy segment of society, it is questionable whether it is truly working to “improve the state of the world,” or whether it serves as a venue for the pursuit of the wealthy’s interests. The WSF, by contrast, can surface issues from the grassroots and work toward solutions. Of course, there are criticisms of the WSF as well. And given that media attention tends to focus on the WEF, where wealth and power are concentrated, coverage of the WSF itself is limited, raising doubts about how much impact can be achieved without broader attention. But one thing is certain: the world will only improve when people of all socioeconomic backgrounds, ages, and genders from across the globe—not just a select few—actively participate in the debate.

※1　The Global Gender Gap Report measures and ranks gender gaps across countries in four dimensions: politics, economy, education, and health.

※2　The Global Competitiveness Report measures and ranks countries’ competitiveness based on factors such as technological readiness, business sophistication, and innovation capacity.

※3　Carbon credits are “credits (emissions allowances) issued for the reduction or absorption of greenhouse gases such as CO2 achieved by corporate actions such as forest conservation, tree planting, or introducing energy-saving equipment, which can then be traded with other companies.”

※4　Carbon offsetting is the idea that “for greenhouse gas emissions such as CO2 that are unavoidable in daily life and economic activity, one first makes efforts to reduce emissions as much as possible, and then compensates for the remaining emissions by investing in activities that reduce greenhouse gases in amounts equivalent to one’s emissions.”

※5　The Tobin tax is a tax on foreign exchange transactions. It was originally intended to curb exchange-rate volatility caused by short-term speculative activity, but today it is also seen as a potential source of funding to address poverty, environmental issues, and other challenges.

Writer: Nao Morimoto

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