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Multinationals developing sustainability strategies need to weigh their commitments to environmental, social and governance (ESG) standards against increasingly complex geopolitical risks – a balancing act that may require significant trade-offs to operate compliantly and profitably around the world.
ESG commitments should not be made without regard to geopolitical considerations because they can potentially act as constraints against each other or even clash, leaving companies vulnerable to reputational and operational costs. These might include regulatory fines, consumer boycotts and security threats to their workforce and physical assets.
In response to customer and investor expectations and regulatory requirements, many corporates have been putting a great deal of effort into becoming more sustainable businesses, either adopting ESG strategies or setting themselves certain ESG commitments and targets. Some have begun to measure progress in achieving these goals.
Geopolitical risk has been moving up boardroom agendas in recent years but is now being prioritised due to the exacting security, political and economic challenges thrown up by an increasingly multipolar world. With the rise of great powers and regional rivalries and lingering post-Covid instability in emerging markets, companies are having to navigate ever more complex and often unpredictable geopolitical landscapes…view full article