The 2012 World Economic Forum Annual Meeting kicked off today with a markedly sombre tone.  Economic imbalances and rising inequality threaten to reverse the gains of globalization, according to the WEF report Global Risks 2012, released earlier this month, while the past year's global economic turmoil, spiraling debt crisis and social upheaval are surely weighing heavily on the minds and agendas of global leaders gathering in Davos.

The theme for this year's meeting is, appropriately, "The Great Transformation: Shaping New Models."  There is a recognition that our current system for economic and global governance is broken, and systemic change is required.  As Nick O'Donohoe, CEO of Big Society Capital and member of the WEF Global Agenda Council on Social Innovation argues in a WEF blog post, this is the right moment to unleash a new model of social and economic progress. "Harnessing the power of social innovation must be front and centre in the transformative process underway."

Davos has often been criticized for its pro-corporate bias, lambasted as a purveyor of neoliberalism at the expense of broader society, and as an elitist gathering of "fat cats in the snow", as U2 rock-singer Bono once eloquently put it. This year, "occupy WEF" protesters are camped out in igloos surrounding the security enclosures, protesting what they see as the hypocrisy, in that those whose decisions’ led to recent crises are now posing as the solution to these problems.

However, this year’s meeting opens with a debate subtitled "Is 20th century capitalism failing us in the 21st century?" It seems forum organizers and at least some of the year’s 2,600 delegates from business, government and civil society are willing to ask big-picture questions as they search for solutions to the myriad global crises at hand.

“It’s a fairly enlightened type of person that goes to Davos,” says Don Tapscott, renowned author and business strategist, who has been attending Davos  for 15 years. At least for the most part, he concedes. "It’s people who understand that business cannot succeed in a world that's failing."

It seems an appropriate venue for business leaders, policy-makers, entrepreneurs and nonprofit representatives to rethink the relationship between economic and social challenges.

Social finance blurs the lines of business and philanthropy to seek shared value for all stakeholders. Similarly, the WEF was founded on the precept that business cannot operate in a vacuum: that it has a duty to all stakeholders, to its community beyond its shareholders.  The multi-issue, multi-stakeholder approach recognizes that, as founder and chair Klaus Schwab puts it, "economic progress without social development is not sustainable, while social development without economic progress is impossible."

While the private sector plays an important role as a source of wealth creation, it is supported by the public sector and people everywhere, many of whom have recently turned on the financial sector with anger after the economic crisis and due to growing income disparity. However, shrinking government resources and social unrest have underscored the need to utilize financial tools and social entrepreneurship to support public and nonprofit institutions in addressing society’s greatest challenges, for the benefit of all stakeholders. (Note: A new article by Antony Bugg-Levine outlines the importance of financial innovation in funding social enterprises.)

The themes of social innovation, social finance and social entrepreneurship are likely to manifest themselves in numerous discussions amongst delegates this week. In a blog post earlier this month, Hilde Schwab, co-chair of the Schwab Foundation for Social Entrepreneurship (a WEF partner), said that “2012 shall be the year of the heroes of social entrepreneurship". The Foundation sent a delegation of 30 social entrepreneurs to Davos to participate in this week’s meeting.

Among specific agenda items that stand out on the official 2012 WEF Annual Meeting Program [PDF] is a session on global development, which will address promoting private sector involvement in development; a brainstorming session focusing on the responsibility of business towards society; how business can collaborate and lead in creating value for all stakeholders; and what new models are needed to meet these challenges and expectations. The agenda also includes a conversation with strategy expert Michael Porter on transforming the role of business in society by creating shared value and an IdeasLab on shaping new models of development, including a session on investing with social impact.

It will be interesting for those of us engaged in social finance to watch what comes out of these and other discussions this week, and throughout the year. With regional and issue-based summits conducted year-round, and 72 multi-stakeholder groups that advance knowledge and collaboratively develop solutions to the most crucial issues on the global agenda, Tapscott argues that the WEF has evolved from a "think-tank" to a "do-tank".

This year, the Global Council on Social Innovation (which, in addition to O’Donohoe, includes prominent individuals such as Jacqueline Novagratz, founder and CEO of Acumen Fund; Katherine Fulton, president of the Monitor Institute; and Johanna Mair, Editor of the Stanford Social Innovation Review, to name a few), will focus on developing a toolkit for policy-makers to encourage social innovation. Let’s hope they break some ground in 2012.

Photo credit: http://www.flickr.com/photos/worldeconomicforum/346750115/

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