Yahoo Finance’s editor-at-large Brian Sozzi speaks with World Economic Forum president Børge Brende on issues around inflation, COVID-19, and the distrust between the U.S. and China.
BRIAN SOZZI: Borge, nice to see you again here. So talk us through some of the biggest issues the World Economic Forum is hoping to address this year.
BORGE BRENDE: Thank you for hosting me. And I'm really looking forward to also hosting you in physical Davos. This week, we are doing it digitally, as last year. We have many of the key leaders of the world with us. And we have focused on rebuilding trust because there is a lot of lack of trust globally.
We are faced with a very polarized world. And if we are going to succeed in getting trade back on track, the global value chains, but also more inclusive growth, we also need countries to collaborate, at least on some of the key topics where there is common interest and should be for cooperation.
BRIAN SOZZI: Where are you seeing the biggest pockets of distrust?
BORGE BRENDE: I think today, we are seeing it between the G2, two largest economies in the world, the US and China. It's almost 50% of the whole global GDP. And we have seen lately that China and the US are challenging each other on trade. They don't look at things the same way when it comes to technology and also on geopolitical issues.
What we do hope in the years to come is that we will not see a total decoupling between these two big economies because we are all going to pay a price for that because if we then stop trading with each other, we cannot use the comparative advantages. And the global value chains have brought a lot of the wealth that we have seen during the last two decades. We have doubled the global GDP in two decades, and partly because we have also then traded with each other. And we had this win-win approach and not the zero sum game approach.
BRIAN SOZZI: And just staying on that, Borge, China's President Xi did speak virtually at the event, pledging that China will be carbon-neutral by 2060. Now, how could China and the US work together? Because to me, this seems to me like there could be some common ground here.
BORGE BRENDE: Indeed. And this is a topic where there is deep common interest. And that's also what we saw at the end of the COP26 in Glasgow. Secretary Kerry came together with the Chinese envoy. And they found some text that secured an outcome and were still on the track there. 1.5 degrees Celsius is possible to reach.
And what we have seen in the past is, for example, on the JCPOA, on the Iran nuclear deal, China and the US came together. We also seen it in other incidents, on other topics. So let's see. Let's be pragmatic about it. And we feel that our platform that's a neutral and impartial one is the right one to bring business and governments together and find those pockets where you can collaborate even in a polarized and fractured world.
BRIAN SOZZI: I remember pre-pandemic, Borge, you and I were actually in person in Davos talking about the theme of the event or one of the themes of that event at the time was stakeholder capitalism. And companies need to do more. Now we have BlackRock's CEO Larry Fink saying in his annual CEO letter, stakeholder capitalism isn't woke. Where do you see the progress being on stakeholder capitalism compared to when we last spoke?
BORGE BRENDE: I think we have seen a lot of progress here. At the COP26, we saw that global companies took the lead. They came out and pledged going net zero by 2050, some even said 2040. Together with President Biden and Secretary Kerry, the World Economic Forum launched its First Movers Coalition, where we got the big purchasers of the world, the Apples and Amazons of the world, to come together and say, we will green our supply chain. If you don't reduce your CO2 footprint, you cannot be someone that is eligible for selling to us.
And I would like to see companies more and more pushing the envelope, being on corporate governance, being on anti-corruption, being on climate and also biodiversity, really securing our planet.
BRIAN SOZZI: And with so many of these companies, I hear your point, Borge. They've put out timelines, or they want to reach X goals on climate change by 2050. That's a long time away. I mean, do you think companies should start moving up those timelines and moving quicker on these initiatives?
BORGE BRENDE: Yes. And we are seeing companies that already said that we will go net zero by 2030. Some say 2040. But we will not reach our goal if we don't get the so-called hard to abate sectors with us too. This is shipping, aviation, steel, aluminum, fertilizers. And they have a long way to go.
And here, we also will have to rely on technology breakthroughs. But we have companies now saying that their container ships in 10 years, many of them will be based on something else than fossil fuel. We also see huge developments when it comes to aviation. So I think we are at a crossroads when it comes to decoupling economic growth from growth in CO2 emissions.
BRIAN SOZZI: We're also at a crossroads, Borge, with the pandemic. And I know Dr. Fauci spoke at the event. Is there a timeline? Do you think we're moving past this? And how concerned are companies right now about the pandemic continuing beyond this year?
BORGE BRENDE: I really hope we are, that we're moving from a pandemic to something being endemic. Maybe omicron is the end of this, moving into more like a normal flu season. But we don't know. There is many people on our planet that are not vaccinated. And there can be some new variants brewing somewhere.
That's why we also say that COVID anywhere is COVID everywhere. So we have to roll up our sleeves. And we have to get more boosters and more people vaccinated. But hopefully, at the end of this year, we will be in a much better space when it comes to the pandemic.
BRIAN SOZZI: And what does the World Economic Forum view as normal? I've been seeing this a lot more lately. We will return to some form of normal as we get past omicron. But what does that even mean nowadays?
BORGE BRENDE: I think it would be quite normal if you don't face maybe the pandemic of the century. That has been very tough. It also led to $14 trillion US dollars being launched in economic stimulus. We haven't seen something like this since the Second World War.
It led to countries now being more indebted. We don't have that much ammunition fiscally anymore. We're seeing inflation is also rising. So countries need to collaborate so we get out of the woods here.
A normal situation in my view is a situation where we again can concentrate on creating jobs, also building prosperity, but also being much more conscious about resilience and being prepared for the next crisis. I think we have too many blind spots. And we have to really, really address those blind spots so we don't end up in the same way we did with the financial crisis in 2008 and now with the COVID crisis without being really well prepared.
BRIAN SOZZI: Well, I hope the next time we speak is in-person again. It's always good to get some time with you. Borge Brende, President of the World Economic Forum, we'll talk to you soon.
BORGE BRENDE: Thank you.