The purpose of the World Economic Forum is to improve the state of the world. Though dominated by global leaders, some motivated by geopolitical interests, the forum does drive economic policies that affect family office enterprises and investments in the short to medium term. Below are the four themes discussed at Davos 2024 and how family offices can apply them.:
Tackling climate change and building new energy systems
This year’s most urgent theme dealt with tackling climate change, specifically achieving carbon neutrality by 2050, but global leaders also emphasised proactively creating a positive impact, referred to as “regeneration,” rather than simply avoiding a negative one.
For the family offices, the main takeaway from this theme should be to consider their role in helping achieve this. This could be through further maximising their impact, exploring more opportunities in impact investing, coordinating philanthropic efforts with investment strategies, and possibly encouraging collaboration across generations to contribute to a more equitable and sustainable future that benefits the planet.
A new model for growth
The second theme discussed was how government, business and civil society can unite around a new economic framework. Key leaders addressed the economic headwinds brought on by inflation and the slowing economic growth rate and what affects this has had.
A consideration for family offices based on this is to prepare for the uncertain economic conditions in the coming years through a focus around building business resilience into their everyday operations and long-term strategies around core areas. Looking ahead, this likely means more projects with external partners that bring specific expertise family offices don’t have internally, and are able to help safeguard operational structures and assist them manage the shifting financial and non-financial needs.
AI opportunities and threats
Perhaps the most popular theme at Davos proved to be around recent developments in AI. From healthcare practitioners to regulators and Sam Altman, meetings focused on how we can use AI to benefit everyone, while ensuring that any risks were controlled.
In terms of how family offices can approach AI, our recent insight advised family offices to think of AI as a sophisticated tool used to solve specific problems rather than see it being used as a goal in itself. Family offices should consider the problem they want to solve and assess whether AI is the most effective tool, and gain context through exploring various AI use cases that may optimise their operations, whether to assist with data aggregation, portfolio management or client engagement.
Global cooperation and security
Finally, the main topic of discussion was how leaders worldwide can efficiently manage security crises, including full-scale conflicts such as the war in Ukraine and the escalating situation in the Middle East, while also working to address the underlying structural issues that lead to fragmentation. However, there was as much discussions around the upcoming US Elections, which is certain to play its own part in how 2024 goes down from a global economic perspective.
For the future-focused family offices, geopolitical instability presents opportunities to explore new jurisdictions for both growth opportunities, off-setting risk and potential operational benefits. The volatile nature of global politics and associated risks are also a reminder to put structures in place to ensure a lasting legacy. One of the best places to start is to develop strong governance structures, and incorporate social fitness with its focus around building relationships as the bedrock underlying this.
To sum it up
The World Economic Forum’s annual meeting at Davos is the largest event where global leaders in business and politics can share ideas, making it a prime event to get insight into matters that will have a direct effect on family offices worldwide. Led by Klaus Schwab, notable for also coining the term “The Fourth Industrial Revolution” around how the ongoing technological revolution will impact our lives, the agenda sets the tone for the year ahead across political, societal, economic, and technological industries. How proactively family offices react to these factors highlighted at Davos, on both an immediate and longer term, has the potential to set the tone for their year ahead too.