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Sustainability
Geopolitics
Sustainability and Geopolitics: Rethinking strategy in a divided world
Sustainability can no longer be separated from geopolitics. In this webinar, our experts discuss how rising security risks, disrupted supply chains, and circularity are redefining strategy for global leaders....
Sustainability can no longer be separated from geopolitics. In this webinar, our experts discuss how rising security risks, disrupted supply chains, and circularity are redefining strategy for global leaders.
As wildfires, water shortages, and resource conflicts intensify across the globe, conversations about sustainability can no longer be separated from geopolitics. This was the focus of the presentation by Julia Binder and Simon Evenett, co-hosted with IMD’s TOGETHER Community, for a webinar on how geopolitical fragmentation is reshaping the sustainability agenda.
Moderated by IMD alumnus and TOGETHER leadership team member, Diego Sperduti (EMBA 2018), the session painted a stark picture: the world is breaching critical environmental limits at the same time as governments are retreating from cooperation, weaponizing trade, and reshaping global markets. The intersection of these forces is fundamentally rewriting the strategic playbook for companies.
“This convergence is not theoretical anymore,” said Binder. “Sustainability and geopolitics now reinforce, and often undermine, each other in real time.”
Putting it more bluntly, Evenett said: “The global order appears to be falling apart.”
Businesses should pay attention not just because of environmental risk but because these pressures directly influence resource availability, supply-chain security, and the stability of operating environments.
A planet under pressure
Binder opened the discussion with a science-based reality check: the latest data from the Planetary Boundaries Framework shows that the world had crossed 7 of 9 environmental thresholds considered essential for a stable, livable planet.
And climate change, Binder pointed out, is only one of them.
“Water has now moved outside the safe operating space,” she noted for example. “That has enormous geopolitical implications. If people cannot access fresh water, tensions and conflicts escalate very quickly.”
Other breached boundaries (biodiversity loss, nitrogen and phosphorus overload, ocean acidification, and novel chemical entities like PFAS and microplastics) compound each other. Crucially, many of these shifts have happened in less than a decade.
Businesses should pay attention not just because of environmental risk but because these pressures directly influence resource availability, supply-chain security, and the stability of operating environments. “Climate is not the whole story,” she said. “It’s the tip of the iceberg.”
Collective action is possible. For instance, the global agreement that successfully restored the ozone layer “shows what is possible when the world cooperates,” Binder reminded the audience. “But today, that level of coordination feels increasingly unlikely.”
A world turning inward
If the environmental picture was sobering, Evenett’s geopolitical assessment was equally urgent. Major powers, he argued, are retreating from multilateral cooperation and recalibrating their strategies around national security and domestic control.
“The United States has fundamentally changed its view of globalization,” he said. Once a champion of open markets, it now sees interdependence as a vulnerability, especially where it benefits China. This reassessment has led to a pullback from clean energy commitments, the imposition of hefty reciprocal tariffs, and greater readiness to weaponize market access.
Europe is also feeling the strain. Elections and shifting public sentiment have weakened political support for the green transition and triggered calls to scale back or simplify key sustainability regulations. Meanwhile, a growing coalition of autocratic states openly challenges the US-led global order, forming new alliances and competing spheres of influence.
“When trust collapses between major powers, cross-border sustainability efforts become very difficult—and in some cases impossible,” Evenett said.
The consequences are profound: markets fragment, supply chains are disrupted, and the cost of capital rises as governments boost defense spending and run larger deficits. The old global business anchor (open markets, low inflation, cheap capital) no longer holds.
“We are now in a security-driven economic environment,” he said. “And businesses must adjust.”
The “Resilience Trilemma”
Binder and Evenett highlighted how sustainability and geopolitics converge in what they call a resilience trilemma:
In the past, global supply chains optimized for efficiency and cost. Today, the erosion of trust, the fear of supply disruptions, and the concentration of critical resources, from rare earths to batteries, create systemic fragility.
“Concentrated control creates dependencies,” Binder said. “And dependencies create leverage.”
The result: countries and companies are scrambling to reduce exposure, diversify suppliers, and bring key production closer to home. But these shifts come with higher costs and slower decarbonization progress.
“Security considerations now trump commercial ones,” Evenett said. “Once governments start worrying about continuity of supply, the economics of sustainability change dramatically.”
Weaponization of trade: A new normal
To illustrate how geopolitics is infiltrating everyday business decisions, Evenett offered three recent examples of trade weaponization:
- Rare earth controls. China’s new export authorization scheme for rare earth elements, which are critical for EVs, wind turbines, and electronics, sent shockwaves through global industries. While China never explicitly banned exports, the requirement for state approval introduces uncertainty and political leverage. “This is precisely how weaponization works,” Evenett said. “It’s subtle, but the threat is clear.”
- Hidden kill switches in electric buses. In Denmark and Norway, investigators found remotely activated “kill switches” in Chinese-made electric school buses. The discovery raised immediate security concerns: what happens if a geopolitical dispute coincides with disruptions to critical infrastructure? “For parents, that’s not an abstract risk,” Evenett noted. “It’s their children on those buses.”
- 100% tariffs on Chinese EVs. The US imposed unprecedented tariffs on Chinese electric vehicles, not only as industrial protectionism, but because EVs collect and transmit data that could be used for surveillance. “This is not the old logic of trade disputes,” he said. “It’s national security shaping market access.”
These examples underscore how governments increasingly scrutinize technology for vulnerabilities, creating new requirements for companies to demonstrate trustworthiness and cybersecurity integrity.
The winning business models will be the ones that offer not only sustainability, but security and resilience.- Simon J Evenett
A new business environment: Fragmented, costlier and more political
The combined forces of environmental stress and geopolitical fragmentation are fundamentally reshaping the economic landscape:
- Tariffs and export controls are breaking apart global markets.
- Industrial policies are proliferating, with nearly one-third now directly tied to national security.
- Higher defense spending is crowding out private capital, making long-term sustainability investments more expensive.
- Market access rules are shifting from cost competitiveness to security credibility.
“The anchor of globalization has moved,” Evenett said. “The winning business models will be the ones that offer not only sustainability, but security and resilience.”
Companies that can credibly guarantee continuity of service, data integrity, and freedom from political interference will enjoy new competitive advantages, supported by government incentives and growing market demand.
Circularity: From green niche to strategic imperative
Binder closed the core discussion with an argument that circular economy models, long seen as a sustainability ideal, are fast becoming a geopolitical necessity.
“Circularity helps reduce dependency on vulnerable global supply chains,” she said. “It keeps valuable materials in the system and under our control.”
In a world where rare earths, metals, and critical minerals can be weaponized, circular business models offer compelling strategic benefits:
- Reduced exposure to geopolitical shocks
- Greater supply-chain resilience
- Lower long-term resource costs
- Opportunities for local and SME suppliers
- Stronger alignment with national security priorities
Companies like Siemens, Schneider Electric, and others in manufacturing and fashion are already integrating circularity as a core strategic pillar.
But Binder cautioned that circularity still faces structural barriers, most notably the lack of reverse logistics and recycling infrastructure. “We’re trying to build circular models in a linear world,” she said. “The system needs to evolve.”
Both professors agreed that in this fragmented landscape, business leaders, not governments, will likely carry the mantle of positive change.
Regulation, trust, and the role of leadership
During the Q&A, audience questions turned to regulation, particularly the EU’s moves to soften or delay sustainability reporting requirements. Binder warned that while simplification is welcome, weakening rules sends the wrong signal.
“It creates uncertainty at a time when we need clarity,” she said. “And it undermines trust in regulation itself.”
Evenett added that poor regulatory design often stems from insufficient understanding of industry realities. “If policymakers don’t grasp the commercial implications, they create backlash. And that’s what we’ve seen.”
Both professors agreed that in this fragmented landscape, business leaders, not governments, will likely carry the mantle of positive change.
“The most compelling stories will come from companies that deliver both security and sustainability,” Evenett said. “Those examples will build trust—and they will shape public opinion.”
Take aways
The webinar closed with a clear message: sustainability strategy can no longer be separated from geopolitics. Leaders who fail to integrate the two will risk falling behind and exposing their organizations to severe shocks. Specifically, four takeaways stand out:
- Environmental pressures will intensify geopolitical tensions—and vice versa.
- Security is now a core business parameter, shaping market access, supply chains, and costs.
- Circularity is an increasingly strategic response, reducing dependency and building resilience.
- Trust is the new business currency—in supply chains, in technology, and in cross-border partnerships.
The world is entering an era defined by uncertainty and fragmentation. But for leaders who understand the dynamics at play, this moment also brings opportunities to innovate, differentiate, and build more resilient business models. As Binder put it, “The challenges are immense. But the solutions exist, and companies that embrace them will shape the future.”
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