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Fortune
Fortune
Alan Murray, David Meyer

Davos CEOs are confident a bad economy won't stall climate initiatives or digital transformation

Bill McDermott, CEO of ServiceNow. (Credit: Uwe Anspach—picture alliance via Getty Images)

Good morning.

The Inflation Reduction Act is a hot topic in Davos this week, not because it will have any impact on inflation (it won’t), but because for the first time in the 50-year history of this forum, the U.S. has catapulted ahead of Europe on climate policy. “The U.S. incentivizes, Europe regulates,” one European-based CEO said yesterday. And while European reporters grilled U.S. government officials on whether the IRA’s climate subsidies were a form of protectionism, the speculation on the sidelines was that the EU would soon enact similar subsidies of its own.

More broadly, the conversations with business leaders here reinforced my belief that climate has lodged itself firmly, and immovably, into the strategies of most global companies. I sat down yesterday with George Oliver, CEO of Johnson Controls, who shares that view. His company sells systems for buildings and sits at the pivot point of the two transformations that are dominating business conversation here—technology and sustainability. With buildings accounting for as much as 40% of the carbon released into the atmosphere, he says the opportunity to reduce carbon emissions through smart use of technology—and ultimately eliminate them by changing energy sources—is huge.  

Will climate investment be slowed by a coming recession? Here’s what Oliver said:

This has been the discussion all week. If there is an economic slowdown, is this going to change the commitment that CEOs have made to decarbonization? It hasn’t yet. I don’t even think it has changed the pace…I think there’s a recognition that time is critical, and there is a lot to get done.”

Later in the day, Bill McDermott, CEO of ServiceNow, similarly said he sees no sign the technology transformation is slowing, either:

“This bad economy thing is total nonsense as it relates to digital business. Ninety-eight percent of the people out there have a digital-first strategy…End-to-end digital transformation is the big idea. These guys will never cut their budget for digital transformation if it delivers business impact…Every country, every industry, every company and every human being in the world is going for digitalization. And that is a sensational opportunity to change the paradigm of business.”

Accenture CEO Julie Sweet echoed that theme. “CEOs generally recognize the need to change more, not less,” she said. Her company released research this week that shows a small group of companies are going even further, “raising the bar and changing the game in their industries. They are the ‘reinventors’seeking to reinvent every part of their company on a continuous basis through technology and new ways of working.” You can find the Accenture study here.

More from Davos here. Other news below.


Alan Murray
@alansmurray

alan.murray@fortune.com

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