World Economic Forum Looks to Lagarde as New Leader After Founder’s Unexpected Exit

Klaus Schwab’s unexpected departure from the World Economic Forum, the influential organization he founded and led for over fifty years, has shaken up meticulously devised plans to transition Christine Lagarde into a leadership position, according to sources close to the discussions.

Initially, Schwab, 87, aimed to stay until early 2027, timed with the conclusion of Lagarde’s term as president of the European Central Bank. However, he left last month amid allegations of financial misconduct and conflicts with the Forum’s board, which he has denied.

Following Schwab’s resignation, the board still considers Lagarde as the top choice and has started internal discussions about the appointment. However, Lagarde has over two years remaining in her ECB term and has previously expressed her dedication to seeing it through.

This situation places the WEF at a critical junction without evident leadership. The organization needs to find someone capable of reforming its culture to address past allegations of sexism and bullying from Schwab’s era while ensuring that CEOs continue to provide membership fees, a source of hundreds of millions in annual revenue.

The new leader will also need to uphold the significance of the WEF’s flagship annual summit in Davos, a vital gathering for global financial and political elites.

Lagarde, who began her career as a lawyer, has previously held the roles of managing director at the International Monetary Fund and France’s finance minister—the first woman to hold both positions. She was appointed as ECB president for a non-renewable eight-year term in 2019.

Currently, former Nestle Chairman Peter Brabeck-Letmathe, 80, is leading the board on an interim basis. The board includes prominent figures like BlackRock CEO Larry Fink, IMF head Kristalina Georgieva, former US Vice President Al Gore, and Lagarde herself. An insider has mentioned that the board is eager to expedite the appointment process.

Neither the WEF nor the ECB has made a comment regarding the situation.

The WEF is also considering appointing Philipp Hildebrand of BlackRock, a former head of the Swiss National Bank, to ensure robust Swiss representation within the organization. This potential move would likely be viewed favorably by the Swiss government, which is concerned that Schwab’s exit could indicate wider changes and weaken the Forum’s ties to Switzerland. Hildebrand, BlackRock, and the Swiss government have all declined to comment on this matter.

A Prolonged Farewell

For more than fifty years, Schwab has been the foundation of the organization he established in 1971, which now operates from a modern stone-and-glass facility in Cologny, overlooking Lake Geneva. He skillfully balanced his WEF responsibilities with his role as a professor, and later as an honorary professor, at the University of Geneva.

It wasn’t until his mid-80s that Schwab began publicly discussing his gradual withdrawal from daily management, despite long-standing concerns among staff regarding his continued leadership.

In May 2024, Schwab officially announced his intention to reduce his active involvement, removing “executive” from his title as chairman and handing the CEO role to WEF President Borge Brende, a former Norwegian foreign minister. By April, he declared his plans to retire, yet intended to stay until early 2027, aligning with Lagarde’s ECB term conclusion.

That month saw a contentious internal struggle when the board informed Schwab of a complaint concerning alleged financial misconduct and the initiation of an investigation. The Wall Street Journal first reported on this situation. Sources familiar with Schwab’s tenure at the Forum, seeking anonymity, provide details regarding this internal conflict.

Just before this, Schwab had been cleared of allegations in a previous harassment inquiry, which stemmed from a similar complaint lodged in the summer of 2024, at which point he indicated he would resign if an investigation moved forward.

In the aftermath, Schwab emailed board member Thomas Buberl, CEO of AXA, threatening legal action. The board members stood firm, not taking his threats seriously, leading to Schwab’s resignation.

Investigation

The turmoil within the WEF marked an unfortunate exit for the seasoned leader.

The Forum has not commented on the specifics of the investigation but maintains it will be “thorough and objective.”

Switzerland’s regulatory body for foundations and charities has also been reviewing the situation but has yet to find grounds for any action. They stated that the board is “taking necessary measures to investigate the allegations.” The watchdog may intervene if they conclude the investigation is lacking in thoroughness.

Schwab has denied any wrongdoing, asserting that he and his wife, Hilde, have always upheld the “highest professional, financial, and ethical standards.”

In response to inquiries, he remarked that they “reject the allegations raised in the email of April 16, 2025, from an anonymous source. We feel that the Audit and Risk Committee and the Board of Trustees of the World Economic Forum overreacted in terms of timing and regarding the mandate for the new investigation without prior in-depth discussion.”

This upheaval comes at a significant moment for the WEF, which has been promoting issues like diversity and inclusion as part of its stated mission to “improve the state of the world.” Yet, with the Trump administration actively working to dismantle DEI efforts, many businesses are pulling back on these initiatives.

Some long-standing executives attending Davos have voiced frustration over the overwhelming number of DEI discussions at the event, wishing for a return to the traditional networking and deal-making that characterized its historic significance.

Despite these challenges, none of the WEF’s approximately 900 partners have withdrawn funding thus far. This funding is pivotal for the Forum, as membership and partnership fees represented 271 million Swiss francs ($324 million) in the last financial year, accounting for over 60% of total revenue.

“The question is always how strongly the personal brand is tied to the corporate brand,” says Johanna Gollnhofer, a marketing professor at Switzerland’s St. Gallen University. “The organization is clearly navigating a crisis, trying to protect its brand. The investigation it initiated exemplifies this effort—sending a message that even if our founder has gone off track, you can still trust us as an organization.”

© 2025 Bloomberg

Follow Moneyweb’s detailed finance and business news on WhatsApp here.