Published 2019-12-18

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Swedish firms’ growing geopolitical concerns

The changed geopolitical landscape has created new global tensions, and thus both challenges to and opportunities for achieving established development goals. The importance of geopolitics to climate and environmental issues has thus gone from being an academic subject to being taken seriously by company boards, thinks Björn-Ola Linnér, Programme Director of Mistra Geopolitics.

Sustainability and climate have long been important issues for businesses. At present, however, the futures analyses that more and more companies see as essential to carry out are increasingly often about geopolitics. Six hundred top corporate executives attended the recent Hållbart Näringsliv (‘Sustainable Business’) conference, which was organised by the business daily Dagens industri and the sustainability magazine Aktuell Hållbarhet jointly. The geopolitics programme items were a major attraction.

‘Swedish business and Swedish politics are both in the vanguard of technology and policy. But that’s not enough; you also have to take into account the changed geopolitical reality we’re in right now.’ This was one of Programme Director Linnér’s messages.

In his view, the central role of geopolitics at a conference attracting people at such a high level was itself a sign that the research area has now caught on in the corporate world.

‘When we started Mistra Geopolitics, few companies prioritised being part of the programme. They were the exceptions in those days, but now geopolitics is something that interests most people.’

Companies wanting to succeed in their own sustainability work must also consider geopolitical conditions. According to Linnér, the fact that the two newspapers holding the conference pointed this out is further evidence of the subject’s topicality. For example, dependence on rare-earth minerals of a society based on electricity and renewable energy can compound conflicts, not least among weak states. This dependence can also yield new, circular business models to safeguard necessary resources that are critical in climate-change adaptation.

‘We can clearly see that the changed geopolitical landscape has generated new tensions and therefore new challenges, but also opportunities, when it comes to achieving established development goals.’

It is not only in the corporate world that geopolitics has become an increasingly important area. Ministries and government agencies are also monitoring related issues more closely. This is not least because new conflict hotspots can change the prospects of Sweden achieving global sustainability and environmental goals.

The definition of geopolitics is also changing. Traditionally, it has expressed the link between geography and politics, and questions about how countries can safeguard their natural resources have been important. Oil is a typical example of a product that has had a major bearing on nations’ political considerations.

‘Now we’re seeing global tensions increasing in areas ranging from food production to control of rare-earth minerals. At Mistra Geopolitics, we’ve researched both of these areas. But we’ve also examined how non-state actors, such as companies, have become important geopolitical participants.’

According to Linnér, examples of this shift include China’s initiatives in Africa and Brazilian President Jair Bolsonaro’s insistence on being able to utilise the country’s natural resources without outsiders’ involvement.

‘Another geopolitical shift happened when President Trump withdrew from several international agreements, such as the Paris Agreement. But when the US departs from an agreement, it opens up new roles for other actors. We don’t know what that’ll lead to; we might see support among countries wanting to protect international agreements.’

Linnér is also concerned that the climate challenge has led to the emergence of nationalist and populist sentiments, which in turn may come to have major political consequences.

‘One thing we’ve learnt at Mistra Geopolitics is that the future’s getting increasingly hard to predict. The Chinese Communist Party’s presentation of a new five-year plan can be enough to demolish companies’ planning and force countries and businesses to make completely new choices. So firms wanting to minimise their own risks have to constantly analyse the business environment.’

Conversely, companies that fail to respond to these changes risk becoming like seeds on the wind, with rising financial risks as a result, Linnér asserts.

He sees that Mistra Geopolitics has an important role to play here.

‘What we’re doing is trying to provide an understanding of various geopolitical processes, in both the short and long term. We’re doing that by working on scenarios for various tensions that may affect us in the future. One conclusion is that countries and companies can no longer just respond to geopolitics — they have to be active participants.’