Brands must act to alleviate the pressure on purpose from geopolitics

The impact on resources, logistics, supply chains and public sentiment from the Ukraine war, Washington/China tensions and now the escalating Israel and Palestine conflict have been widely documented. Geopolitics is rapidly becoming an unavoidable and dominant risk to running a business.

And geopolitical issues are now having an increasing impact on corporate ESG policies. Shifting supply chain relationships, increasing energy prices and growing nationalistic sentiment are all putting pressure on carefully constructed ESG plans.

In turn, this pressure on ESG commitments is impacting companies’ ability to deliver on their purpose missions. In 2006, economist Jeffery Sachs wrote that sustainability had overtaken the Cold War as the dominant theme in geopolitics. What a different era we live in today.

Geopolitical resistance and purpose

The risks and challenges created by this increasing geopolitical turmoil are leading to a shift in priorities for businesses. A recent survey by Oxford Economics found that business perception of economic risks have changed, with geopolitical tensions now seen as the biggest threat. The outcome is that climate change (and mitigations for it) fall down the list of priorities.

With these risks not going away any time soon, companies need to start baking in geopolitical resilience at a corporate strategy level.

This means including considerations around geopolitics in ESG strategies, at conception or upon revision. That ‘G’ arguable now stands for ‘geopolitics’. The risks within this space are addressed in conjunction with other ESG commitments, not instead of them. The challenges presented through war are often intertwined with (or inflamed by) existing ESG ones. Food and water supply, race relations... they haven’t gone away, but they have evolved.

The pressure on ESG programs

Then there’s the pressure put on carefully-built, long-term relationships with international suppliers. Often, these relationships have led to a shared drive for net zero goals or improved human rights programs. With markets affected by sanctions, supply shortages or transport issues, the relationships are put under strain. So are the ESG programs they were working toward.

Operationally, brands must build flexibility into their supply chains to accommodate these sudden changes. This can mitigate against lost earnings and set the right conditions for new and innovative business approaches. Such innovation can be beneficial to both the business and its sustainable or social impact.

Heineken’s ‘Unwanted Beer’ project is exemplar. The Covid-19 pandemic left the business with millions of gallons of undrunk beer, so it looked to completely reverse its business model. Instead of selling beer, it bought the beer back off wholesalers and turned it into energy-generating biogas to be sold.

Nationalism and ESG

Then there’s the rise of nationalism. Amid geopolitical tensions, governments now tend to prioritize local environmental issues that threaten national security, like flooding and forest fires. This shift in policy could put international co-operations and collaborations aimed at addressing climate change at risk through a shift in support.

At a consumer level, Edelman’s Trust Barometer has shown a rise in the public’s expectations for chief executives to act on local issues. Meanwhile, younger generations’ purchasing power is siding, with brands acting for DEI issues closer to home.

But a preference for ESG issues to be localized makes it hard for international companies to set global policies. Domestic issues seen as important in one country can be unpopular in another.

Thus, brands must pay attention to local nuances. This means properly understanding the changing appetite for certain issues in each market. Revolt runs its annual Causes that Count survey across 5 markets, ranking the top 50 purpose-led causes by perceived importance. Information like this allows brands to navigate ever-changing sentiment at a market level and focus on relevance with purposeful action (and avoid or prepare for pushbacks).

Barrier mapping and choicefulness

Another option is barrier mapping: interrogating the issues in the way of delivering impact for a specific purpose. When tailored market-by-market this can help you strategically account for market difference from the off.

This means being more choiceful about the language used. As sentiments shift or become more firmly entrenched within or among a nation (left versus right, for example), language choice when communicating their purposes needs to be carefully considered. Poking the Bear, a recent Revolt report, looks at the polarizing nature of different causes in the US and how more centrist language can help to bring more of your audience on side. For example, advocating for minimum wage in the States was deemed more important by more people when rephrased to ‘all workers receiving a fair day’s pay for a fair day’s work’.

The hyper-local moment

In pursuit of market relevance in an increasingly nationalistic world, brands need to understand and embrace hyper-local nuances. Done right, this can lead to impactful actions at a local level that can garner a global halo effect for their business.

An example is Renault France’s Plug In campaign. To increase the uptake of electric cars over petrol, Renault needed to overcome the lack of charging stations in rural areas. Through its ‘Airbnb for plugs’ program, people were able to hire out their home charging stations for road users across the country. Renault’s global ESG priorities, activated in a hyper-local way, earned international recognition.

Brands need to be more agile in how they think and act to land the right sentiment while it is still timely. The reproductive rights work Revolt did with Favour, a birth control company, when a recent Roe v Wade ruling was overturned was testament to that: it helped educate people about the implications and demand action, and drove a 5200% increase in emergency contraception use for the brand.

With the growing consequences of geopolitics, businesses need to look at ways to reconcile the risks they bring with their ESG priorities. Those who lean in and table geopolitics across all levels of their business will benefit.