Sustainable Strategies: Leading Through Climate and Trade Shifts

Abstract

The world trading system of the mid-2020s is vastly different from the rules-based multilateral system that was established after World War II. Competition is being reshaped by two seismic shifts: the mainstreaming of climate policy into trade law, and a structural shift in supply chains due to geopolitical fragmentation. Sustainability is not a subset of corporate social responsibility for business leaders; it is the main topic on which competitive advantage is won or lost. Since 2015, trade-related climate measures have grown by more than 300%, with the European Union's Carbon Border Adjustment Mechanism (CBAM) coming into force in 2023 and driving a strong rise in climate measures covering trade. Since 2015, trade-related climate measures have more than tripled, with a significant acceleration since the implementation of the European Union's Carbon Border Adjustment Mechanism (CBAM) in 2023 [4]. At the same time, according to the Global Risks Report 2024 by the World Economic Forum (WEF), failure to act on climate change and natural disasters is among the top five most dangerous risks to the world economy over the next decade [2]. All of these macro-level changes are demanding organizations to reimagine sourcing, production, logistics, and governance – simultaneously.