Every year, thousands of the world’s foremost leaders and business elite trek to the snow-capped mountains of Switzerland. In the Alpine town of Davos, geopolitical issues are hashed out, economic priorities are outlined and revolutionary technologies are debated on the global stage. The World Economic Forum’s (WEF) annual meeting each January is a must-attend event for anyone who’s anyone in the corporate world.

Synonymous with the event itself is engineer and economist Klaus Schwab, its 86-year-old founder. The not-for-profit organisation, created in 1971, was based around Schwab’s vision for socially responsible management, or stakeholder capitalism. This idea, which he became an evangelist for, posits that businesses should serve not only their shareholders but all of their stakeholders, including employees, suppliers and the community. This more inclusive form of capitalism has acted as a guiding principle for the WEF.

As the forum’s influence has grown over the decades, it has become a seismic event on the corporate calendar, with Schwab persuading leaders in conflict to come to the table, encouraging lively debates on emerging technologies like artificial intelligence (AI) and even tempting sceptics of globalisation, like former US president Donald Trump, to make appearances. “The World Economic Forum Schwab founded has become a vital platform for navigating the complexities of the future,” Zafar Jamati from Stone Junction, a STEM-focused press agency, told World Finance.

But in May, the WEF announced Schwab would step down from his duties as executive chairman after more than 50 years steering the organisation. At the time of publication, the forum had not revealed who would succeed Schwab, but a deadline was set to complete the change in leadership before the next Davos gathering in January 2025. Schwab’s move comes at a time when many industry commentators are questioning the relevance of the annual spectacle that is Davos. Will his departure further fuel the fire behind those who are calling its future into question, or will a successor provide a necessary breath of fresh air to rejuvenate the WEF for the years to come?

A global forum is created
Born in Ravensburg, Germany, Schwab had an academic focus to his early career, having attended the Swiss Federal Institute of Technology, Zurich; the University of Fribourg and Harvard University, where he graduated with a doctorate in engineering, a doctorate in economics and social sciences and a master’s degree in public administration, respectively. Schwab has been described as an ambitious and energetic man, and indeed, while he is a survivor of prostate cancer, which he was diagnosed with in 2005, he is still known for his penchant for climbing mountains.

The WEF has given a platform to thought leaders on the climate crisis

In his corporate career, Schwab served in top management at Swiss machine building group Escher Wyss, where he successfully managed the company’s restructuring before returning to academia to become a professor of business policy at the University of Geneva in 1972. He had a growing interest in business concepts like stakeholder capitalism, which he explored in his first book, Modern Enterprise Management in Mechanical Engineering, published in 1971. That same year, at age 33, he established the European Management Forum, the precursor to the World Economic Forum and the first two-week conference in Davos. The event, pitched at resetting Europe’s economic future, attracted around 450 participants from 31 countries, including top executives from European companies and professors from business schools in the US. The event gave European business leaders the opportunity to take inspiration from American management practices.

With the WEF, Schwab set out to build a platform where corporate leaders, academics and government officials could meet and collaborate to exchange ideas. “The legacy of Klaus Schwab is to demonstrate the value of a forum where different societal groups – governments, private business, civil society, academics – can come together to debate and solve shared global problems,” Masood Ahmed, president of the Center for Global Development, told World Finance.

Davos, particularly, has historically been a place where novel ideas could capture the imagination. In 1973, Italian industrialist Aurelio Peccei was ahead of his time when he said businesses must “reconcile economic development and environmental constraints.” And what began as a gathering of Western leaders soon forged links with the Middle East, China and beyond.

Key global events have taken centre stage at Davos: the summit saw the first ministerial talks between North and South Korea in 1989, and just a year before that it helped to avert a war between Greece and Turkey. But it is not only politics in the limelight; initiatives to combat AIDS, tuberculosis and malaria got off the ground in the Swiss resort town, and more recently the WEF has given a platform to thought leaders on the climate crisis. Davos has also served as the proving ground for the formation of other influential groups and reports, from the G20, founded in 1998, to the Gender Gap Report, launched in 2005 following a pioneering study on gender equality.

Davos under fire
Nestled in the Swiss Alps, the picturesque town of Davos was chosen as the venue for the WEF’s annual meeting as the mountainous resort represents in Swiss and German culture ‘an escape from the everyday.’ Now, the $390m-a-year business is a mecca for C-suite executives and billionaires, as well as political leaders and philanthropic celebrities.

With a mission statement of ‘improving the state of the world,’ the World Economic Forum has always had lofty goals, so it is perhaps unsurprising that it falls short from time to time. On its own website, the WEF admits to weathering criticism about being ‘a gathering of distant elites’ or ‘a futile talking shop,’ but it holds fast that its aim of gathering a diverse group of people together in conversation, including global business leaders as well as academics, activists, youth and civil society leaders, is essential. “To dismiss ‘talk’ is, in professor Schwab’s words, to discount the lifeblood of democracy,” the forum said on its website.

Yet criticism that the WEF fails to make progress on global issues like climate change and wealth inequality remain. Following the 2024 gathering in Davos – which saw 50,000 people descend on the Alpine ski resort, despite there being just under 3,000 official participants – critics said earnest discussions seen in gatherings past had been replaced by status-chasing attendees and engulfed in countless spin-off meetings and spurious sponsored events.

Davos is “no longer about exchanging ideas or forming opinions: the new Davos has become a platform for spreading ideas and pitching to clients, investors or journalists,” wrote André Loesekrug-Pietri, chair and scientific director at the Joint European Disruptive Initiative, and Joanna Gordon, executive director of the Global Agrifood Tech Alliance, for Sifted, a media brand for European start-ups that is backed by the Financial Times. The sheer number of people now attending the event means “the famous magic of Davos” is gone, replaced by a marketing exercise where “one’s importance is measured by the number of likes or selfies at the countless parties one skims,” they argued. “If you are looking for the place where leaders work together to solve the world’s problems, we now have to find something else,” Loesekrug-Pietri and Gordon concluded.

With limited tickets and exclusive spaces for priority businesses, as well as hefty membership and partnership fees, attending Davos has, undeniably, become a status symbol. The phrase ‘Davos Man’ was coined by Samuel Huntington, a political scientist, in 2004 for “an emerging global superclass” of “gold-collar workers.” In 2022, the phrase was used by Peter Goodman, global economic correspondent for The New York Times in his book Davos Man: How the Billionaires Devoured the World, a scathing critique of the global elite for profiting from inequality, and an indictment of the class of people who Schwab brings together to “improve the state of the world.”

Significant milestone
Elsewhere, there is criticism around the diversity of Davos’ attendees – the ‘Davos Man’ stereotype doesn’t come from nowhere. The 2024 gathering had the highest ever percentage of women participating: of the 3,000 attendees, around 28 percent were women, including 350 heads of state and government ministers, the WEF said. The organisation called this moment a “significant milestone in the 54-year history of the annual meeting,” but many still consider the numbers disappointing.

Schwab’s ideas continue to hold weight in the world of business

What’s more, in addition to these external critiques, the WEF has also been forced to contend with criticism in its own ranks. Much of this has centred on the decades of uncertainty around Schwab’s succession plans. Following on from the annual meeting that took place in 2023, The Guardian reported frustration among a number of current and former WEF staffers.

As a group, they called Schwab “a law unto himself” and said he was “unaccountable to anyone inside and outside the organisation.” Many at the WEF have questioned whether he would ever pass the baton. “It is insane that they don’t have a succession plan to build public confidence around,” one long-time staffer told Politico that same year.

And as frustration swirled, the WEF also had to battle with continuous conspiracies about its founder. In April 2024, just before it was announced Schwab would be stepping down, rumours emerged on social media that he had been admitted to hospital, with some even claiming he was dead. Of course, none of these claims were true, and the WEF reported that Schwab’s health was “excellent.”

A lasting legacy
Despite the criticism of Davos, Schwab’s ideas continue to hold weight in the world of business. The most influential of these is stakeholder capitalism, or the multi-stakeholder approach. While he didn’t coin the term, he, through the WEF, certainly embedded its popularity in the mainstream.

“Stakeholder capitalism is not new, although it has changed names throughout the years – communitarianism, corporate social responsibility model, broader purpose corporation,” Saura Masconale, assistant professor at the University of Arizona and associate director of the Centre for the Philosophy of Freedom, told World Finance. “The terms change but the idea stays the same: corporations have broader social obligations than just maximising shareholder value.”

But something else has changed: Schwab argued in 2021 that while companies and their shareholders have become stronger over time, the power of other stakeholders has weakened. “Today, the stakeholder concept is ready for a comeback, albeit in an updated, more comprehensive form,” he said. Masconale, an expert in environmental, social and governance (ESG) standards, agreed.

“Today, stakeholder capitalism is largely driven by only one class of stakeholders – the shareholders, who have never been as empowered, largely because of the reconcentration of equity ownership in the hands of a few large fund families,” she said.

The most recent Edelman Trust Barometer, published just before Covid-19 turned the world on its head, found that over half of people (56 percent) believed capitalism was doing more harm than good globally. A whopping 92 percent of the 34,000 respondents said companies should be speaking out on issues like automation and immigration, and nearly three-quarters said CEOs should lead these conversations.

A modern adaptation of stakeholder capitalism must respond to a new set of challenges across social, economic and health arenas, Schwab said, “and the best response to these challenges would be for all actors in society to consider more than their narrow and short-term self interest.” The problems society faces are “now more clearly global,” Schwab continued. “Economies, societies, and the environment are more closely linked to each other now than 50 years ago.”

In his new model, people and the planet are at the centre of business, with the four remaining key groups of stakeholders – companies, international community, civil society, and countries and states – contributing to their betterment. “As all of these groups and their goals are interconnected,” he wrote, “one cannot succeed if the others fail.”

Whereas shareholder primacy focuses on narrower objectives like profits or prosperity of a particular company, stakeholder capitalism, in this new guise, focuses on the interconnectivity and overarching well-being of people and the planet. However, the challenges to Schwab’s new vision for stakeholder capitalism remain the same as ever.

“Without a clear performance metric, evaluating managerial and firm performance becomes difficult,” Masconale said. “When does a manager do good? Is it when she increases profits (requiring cost cuts) or when she saves jobs (increasing costs)? While the trade-offs might not always be so stark, it is uncertain whether asking individuals to act in the interests of others is compatible with markets, which notoriously assume self-interested behaviour and ‘a benign indifference to passions’.”

Another issue is the numerous different interpretations of what ‘stakeholder capitalism’ means. “The failure to recognise those differences has been a source of much confusion and disagreement inside companies and in the public debate,” wrote Lynn Paine, a professor of business administration at Harvard Business School, in the Harvard Business Review. The recent controversy over environmental, social, and governance investing is a case in point.

“Stakeholder capitalism can be more or less than meets the eye – and more or less of a challenge to shareholder primacy – depending on which version is being considered,” Paine said. In addition to stakeholder capitalism, another of Schwab’s enduring ideas is the Fourth Industrial Revolution, a term he popularised in his book of the same name, published in 2016. Schwab outlined the technological revolution society was facing, which he believed would “fundamentally alter the way we live, work, and relate to one another,” he wrote in Foreign Affairs. “In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”

Global phenomenon
The Fourth Industrial Revolution, or Industry 4.0, was defined by Schwab as “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” Jamati, from Stone Junction, said the ideas behind Industry 4.0 have been “immensely influential” in the engineering and manufacturing sector.

“Schwab turned Industry 4.0 into a global phenomenon, sparking critical discussions and analysis across engineering, manufacturing and technology for over a decade.” Industry 4.0 is a defining aspect of Schwab’s legacy, he said. “It’s a concept that continues to shape our understanding of automation, connected systems and the future of industrial processes.”

Thanks to the WEF, Jamati said, “artificial intelligence, cybersecurity and the Internet of Things are just a few of the buzzwords that now dominate discussions. The forum’s role in fostering dialogue and collaboration on these technologies will be critical in ensuring a future that benefits all of humanity.”

With the recent explosion in AI technology, the Fourth Industrial Revolution indeed feels more prescient than ever. While Schwab said generative AI had opened up “abundant opportunities” in sectors like product design, content creation, drug discovery, energy optimisation and more, writing in 2023 for Project Syndicate, he said, “At the same time, they may prove highly disruptive, and even harmful, to our economies and societies. “Generative AI will change the world, whether we like it or not. At this pivotal moment in the technology’s development, a cooperative approach is essential to enable us to do everything in our power to ensure that the process is aligned with our shared interests and values,” he wrote, calling for urgent public-private cooperation to address these challenges.

In contrast to stakeholder capitalism and the Fourth Industrial Revolution, Schwab’s latest slogan became influential for all the wrong reasons. In the summer of 2020, Schwab launched a campaign for what he called a ‘Great Reset’ of the global economy. Writing in a WEF article, Schwab argued that the “serious long-term consequences” caused by Covid-19, including government debt and unemployment, would exacerbate climate and social crises that were already underway.

A “Great Reset of capitalism” was needed to avoid a sharp economic downturn and to “revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country, from the US to China, must participate, and every industry, from oil and gas to tech, must be transformed,” he said.

However, his vision was co-opted by conspiracy theorists. An analysis by the BBC said the WEF’s “vague set of proposals” had been “transformed by online conspiracy theorists” into a reimagining of an older conspiracy theory. Building on the ‘New World Order’ narrative that first emerged in the 1960s, they pushed an anti-establishment narrative that the Great Reset was all part of the global elite’s plan to unleash Covid-19 so they could impose lockdowns to deliberately crash the economy and consolidate their power. The WEF told the BBC conspiracy theories like these “replace reason with fantasy. They are a noisy but peripheral part of the public sphere. We encourage rationally grounded, fact-based debate.”

An uncertain future
Schwab’s five decades at the helm of the World Economic Forum have made him a giant in the corporate world – and beyond – capable of setting the agenda for the global elite and fostering discussions on complex issues. Yet after years of silence around his succession plans, his departure from the WEF comes at a time when the forum’s influence may be waning. The challenge for any successor, Ahmed told World Finance, “will be to sustain that collective spirit that Schwab created in a world that is increasingly fragmented.”

Schwab’s five decades at the helm of the WEF have made him a giant in the corporate world

The WEF’s executive board is now under the leadership of current president Børge Brende, a former Norwegian foreign minister who has been in the post since 2017, but in the absence of a successor at the time of writing, speculation continued to swirl about possible candidates. His children, Nicole and Olivier Schwab, are possibilities as they hold high-ranking positions in the organisation already, as chair of WEF’s Young Global Leaders programme and managing director of the forum, respectively. Current president Brende should also not be discounted. Other names in the hat are Christine Lagarde, European Central Bank president and a trustee of the WEF, who has long been considered a potential candidate; Salesforce co-CEO and WEF trustee Marc Benioff and former British Prime Minister Tony Blair.

Whoever Schwab’s successor is revealed to be, they will not only be tasked with revitalising the World Economic Forum and showcasing the value of the annual summit in Davos, but also with emerging from behind the shadow of a giant.