Russia’s war in Ukraine has started geopolitical tensions in nations across the globe. It has become almost impossible for nations to be nonpartisan in this conflict. As Russia made new diplomatic connections due to the trade block it received from the war in Ukraine, the Russian government has been busy making new alliances with nations that have been opposing the Western powers. It is becoming harder to ignore the geopolitical risks it could pose if it keeps on going without a clear resolution between the USA and Russia.
This geopolitical risk can be analyzed from a financial point of view or a national security point of view. But in both views, it is from the perspective of one nation. The biggest risk it could pose is a halt in the development of sustainable energy and the usage of sustainable environmental products. This perspective is from a global standpoint.
The cost of sustainable products and the initial cost of creating sustainable energy products is still considerably higher than the traditional products. As nations and investors focus on their national security concerns, and for a good reason, the spotlight is moving away from ESG and impact investing. The longer the geopolitical tension lasts, the further the spotlight could move away from sustainably focused investing and projects.
The only silver lining in this conflict is that it has brought energy independence to greater importance and it could boost the development of renewable energy production around the globe. However, this path still puts a lot of pressure on the governments and their policy-making powers.
This is why ESG and Impact investing is essential for a sustainable future for humanity as it reduces the government’s hand in this space. As investors adopt the importance of the impacts that businesses have on the local and global space, the profits of these companies are directly connected to the positivity these businesses will have on society.
