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Geopolitics and Circularity

The new limits of growth

Published September 1, 2025 in Geopolitics and Circularity • 9 min read

In the final article of our series, we explore how businesses face hard planetary and geopolitical limits that make the “business as usual” growth model untenable as climate shocks, biodiversity loss, and resource constraints escalate. Circularity is emerging as the strategic operating system for competitiveness in a world where ecological and geopolitical realities define the rules of growth.

Walk through your portfolio and review your supply chains, and the new limits are everywhere.

Water risk, extreme weather, rising insurance costs, and resource constraints are no longer the stuff of future scenario planning; they’re challenges on your desk right now. According to the world’s biggest reinsurer, Munich Re, global climate disasters hit a record cost of $320bn in 2024, with weather catastrophes accounting for 93% of these impacts as the United States faced severe losses from hurricanes Helene and Milton. According to S&P Global, without adaptation, annual physical risk costs for companies could range anywhere from 3% up to 28% of the value of their real assets by the 2050s.

That’s an existential question, not a manageable margin squeeze.

The annual WEF Global Risks Report showed that leaders in 2024 ranked extreme weather events, biodiversity loss, and natural resources shortages as the most severe risks to business and society in the next decade, higher than state-armed conflicts or societal polarization. The business world’s typical extractive model of perpetual growth and expansion is running up against hard realities, from geopolitical boundaries to the natural boundaries of the planet itself.

It’s not just tariffs or energy prices. It’s also droughts slashing crop yields in California and Brazil, low-water rivers that delay transportation of goods in the Rhine or Mississippi, shortages of rare earth minerals holding up next-generation manufacturing, or growing public pressure for companies to move beyond “extract and exit” business models.

The science is clear – we are living well beyond our means. Six out of nine planetary boundaries have already been exceeded – meaning humanity is operating beyond Earth’s safe limits, risking destabilization of the systems that sustain life. Biodiversity losses alone are estimated to cost up to a staggering $25tn annually, according to the IPBES, an intergovernmental science-policy body focusing on biodiversity and ecosystems.

Business man analysed report of profit finance data graph document in his office
For corporate leaders, these are not distant projections

Climate-related damages since 2000 have already exceeded $3.6tn, doubling in just two decades. All the while, fossil fuel subsidies amount to $7tn annually (according to an estimate by the IMF), which means that we invest around 7% of global GDP into coal, gas, or oil, burning fossil fuels that are the main contributors to climate change. This is more than the required annual investments to reach net zero globally, which are consistently estimated between $3.1tn and $5.8tn per year until 2050.

Meanwhile, integrated restoration could unlock $10tn in new business opportunities and 395 million jobs by 2030, according to the WEF. The Carbon Disclosure Project (CDP) reports that water stress threatens $300bn in corporate value, with action costing just a fraction of that.

For corporate leaders, these are not distant projections. They’re present expenses embedded in operating costs, insurance premiums, capital access, and investor expectations. In some high-risk regions, insurers are pulling out altogether, making certain facilities effectively uninsurable. Without coverage, contracts are harder to secure, financing dries up, and asset values collapse. Nature-related risk is fast becoming a factor in the cost of capital, audit fees, and M&A decisions.

Blue paper boat leading among white ships
“The leaders we see thriving in this moment are those with the courage to act before the pressure hits breaking point.”

What’s the corporate leadership play? The leaders we see thriving in this moment are those with the courage to act before the pressure hits breaking point. They understand that the next era of growth is not about squeezing more out of what’s left, but creating value within the system’s actual limits. This means investing in circular systems that keep materials in use and adopting regenerative business models that rebuild natural capital. The definition of the future growth model has to go beyond short-term profit optimization. It must be built for resilience. Beyond that, it must integrate nature as a core element of value creation.

This shift is already underway. Some pioneering companies go beyond net-zero commitments and are setting science-based targets for nature, embedding biodiversity, water stewardship, and land use directly into their strategies. Global luxury group Kering, for example, has developed an environmental P&L statement to inform better decision-making internally and has adopted science-based targets for freshwater and land (SBTN).

The Landbanking Group, a start-up innovator, is going further by creating a platform that measures and tracks natural capital value over time, enabling regenerative practices to be treated as investable assets. Their system makes it possible to account for soil health, biodiversity, and carbon sequestration in the same language as financial performance, opening the door for banks, insurers, and investors to value ecosystem restoration alongside traditional assets.

This is the business case for nature-based solutions: they reduce risk, open new revenue streams, and improve long-term cost stability. Restoring mangroves in coastal zones can cut storm damage risk by up to $65bn annually, while generating saleable blue-carbon credits. Regenerative agriculture can increase long-term yields by 5–25%, insulating companies from volatile fertilizer markets and extreme weather. Wetland restoration can lower industrial water treatment costs by millions per year. These are not nice-to-haves but high-return, low-volatility investments that price nature’s services into the business model.

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This new growth model also demands unprecedented collaboration.

The shift in global accounting and disclosure standards, from the ISSB’s sustainability framework to the Taskforce on Nature-related Financial Disclosures (TNFD), is accelerating this integration. As natural capital is increasingly recognized as a measurable, reportable asset, the economics of investment change. Projects once rejected for low short-term ROI become viable when avoided losses and ecosystem-derived revenues are counted. Investors are already rewarding nature-positive companies with preferential financing terms, while insurers and lenders are beginning to embed ecosystem health into their risk models.

This new growth model also demands unprecedented collaboration. BASF’s ChemCycling initiative is a prime example of systems leadership in action. Rather than tackling plastic waste in isolation, BASF convened a coalition of waste management companies, recyclers, packaging manufacturers, and even automotive brands, creating a cross-industry ecosystem that turns hard-to-recycle plastics into new chemical feedstocks.

By sharing data, risks, and technology across the value chain, they’re not just making their own operations more resilient; they’re driving circularity at scale, setting new industry standards, and future-proofing entire supply systems against tightening regulations and resource volatility. This is how business leaders build resilience now: not by going it alone, but by orchestrating networks that are stronger than the sum of their parts.

Corporate leaders who embrace this approach are not just hedging against risk. They are redefining the rules of value creation, unlocking new sources of innovation, building trust with stakeholders, and creating resilience that spans industries and geographies. By operating as stewards within business ecosystems and recognizing the hard boundaries of our planet, they are securing the license to innovate in ways that are both ambitious and aligned with the world’s new realities.

Considering nature as an asset in a new growth paradigm will be a big part of the solution.

One big task will be to unlock the power of nature-based solutions, whether for supply chain resilience or for climate resilience in the urban space. So far, the scale of the economy’s nature-dependence is brutally underappreciated. Considering nature as an asset in a new growth paradigm will be a big part of the solution.

Growth has not ended. But the nature of growth has changed, along with the courage required to lead it. The next will be measured not just by profit or scale, but by the ability to regenerate ecosystems, keep resources in play, and create value that benefits both business and society. It’s about growing in ways that restore, replenish, and strengthen the very systems we all rely on. The future belongs to those bold enough to build this new kind of growth – innovative, resilient, and regenerative – within the limits our planet now demands.

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The questions now facing every boardroom are pressing

Epilogue: As the old economic order ends, circularity is writing the new rules

The old economic order built on endless extraction, cheap labor, and limitless growth is cracking under the weight of its own contradictions. Resource wars, fractured supply chains, and the mounting costs of climate and biodiversity collapse have made clear that the rules have changed. The boundaries are real, the costs are rising, and the business-as-usual playbook no longer works.

Across every sector, leaders are facing the same fundamental question: in a world where nature, geopolitics, and economics are converging, how do you create value that lasts? The answer, we have argued throughout this series, is not incremental efficiency. It is a deep, strategic shift toward circularity, a new economic logic that keeps resources in play, regenerates the systems that sustain us, and rewrites the rules of competitiveness for the decades ahead.

Across the five articles of our series, we have tracked a set of converging forces reshaping the foundations of global commerce: the end of frictionless globalization, the intensifying scramble for resources, the collapse of “cheap everything,” the battle for tech sovereignty, and the emergence of hard planetary limits. These are not temporary disruptions. They’re structural shifts that redefine what it takes to compete and grow.

The questions now facing every boardroom are pressing: How do we secure the materials our business depends on when global supply chains fracture? How do we remain competitive when input costs and insurance premiums climb in step with climate volatility? How do we keep innovating when geopolitical tensions disrupt access to talent, technology, and markets? How do we partner effectively to be part of new, winning ecosystems?

Circularity answers the central challenge of our time: how to grow when both geopolitical space and planetary boundaries are tightening.

Circularity is the strategic operating system for answering these questions. It’s how you turn supply chain fragility into resilience by recovering and reusing critical materials instead of relying solely on volatile global markets. It’s how you protect margins when the “cheap everything” era is over by designing products for multiple lives, tapping secondary markets, and building services that keep you connected to customers long after the first sale. It’s how you secure tech sovereignty through reclaiming rare earths, chips, and high-value components from your own products and ecosystems rather than competing in open-market bidding wars. And it’s how you navigate the new limits of growth by treating nature as a core business asset, regenerating the ecosystems you depend on, and aligning your success with the planet’s capacity to sustain it.

The leaders we see as being ahead are those acting before the pressure becomes existential. Apple’s closed-loop material recovery is a hedge against critical mineral shocks. BASF’s cross-industry ChemCycling ecosystem is redefining industrial resilience. IKEA’s shift to buy-back, refurbishment, and leasing is future-proofing its business model against resource scarcity and shifting consumer values. These are not just feel-good stories; they are competitive strategies designed for a new era of power and scarcity.

Circularity answers the central challenge of our time: how to grow when both geopolitical space and planetary boundaries are tightening. The game has changed. Circularity is how you play to win.

Authors

Julia Binder

Julia Binder

Professor of Sustainable innovation and Business Transformation at IMD

Julia Binder, Professor of Sustainable Innovation and Business Transformation, is a renowned thought leader recognized on the 2022 Thinkers50 Radar list for her work at the intersection of sustainability and innovation. As Director of IMD’s Center for Sustainable and Inclusive Business, Binder is dedicated to leveraging IMD’s diverse expertise on sustainability topics to guide business leaders in discovering innovative solutions to contemporary challenges. At IMD, Binder serves as Program Director for Creating Value in the Circular Economy and teaches in key open programs including the Advanced Management Program (AMP), Transition to Business Leadership (TBL), TransformTech (TT), and Leading Sustainable Business Transformation (LSBT). She is involved in the school’s EMBA and MBA programs, and contributes to IMD’s custom programs, crafting transformative learning journeys for clients globally.

Manuel Braun

Entrepreneur & Author

Manuel Braun is a leading expert in the domain of sustainability and resource productivity. After eight years at McKinsey, he played a leading role in building up Systemiq Ltd, a global think tank focused on sustainable systems change. He co-authored the book The Circular Business Revolution and is a lecturer in the Creating Value in the Circular Economy course at IMD. He partners with pioneering companies, investors and entrepreneurs to drive change at the interface of sustainability and innovation. Manuel holds a PhD from the Technical University of Munich and is a nature enthusiast in the professional realm and beyond.

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