Over recent months the debate about the future of globalisation, what it means for business and consumers, and how governments should respond, has been in the limelight.
What is globalisation and why does it matter to business?
Globalisation is the free flow of goods, services, people, capital, skills, and ideas around the world.
From a business perspective, globalisation has helped companies reach new customers in new markets around the world, expand their sourcing opportunities and offers a larger selection of goods and services.
Whilst the global growth opportunities are clear to see, globalisation can add complexity and increased risk to your business model, especially to supply chains. Firms often find that expansion often means increased competition, more legal challenges and greater data collection challenges.
Despite these challenges, globalisation can help firms grow and expand the scope of their business globally.
The future of globalisation?
Post-COVID pandemic, companies and countries around the world are alive to the importance of both imports and exports in the context of economic resilience. Economic securityhas become a live concern, especially with greater geopolitical challenges including climate change, regional overreliance in the supply chain, and the war in Ukraine.
Many countries are already responding to these geopolitical challenges through greater protectionism and huge state funded industrial strategies, as well as some countries creating barriers for cross border trade – essentially deglobalisation, where national interests are seen as more important than cooperation and global partnership.
Globalisation is also being challenged due to the urgent need to address the climate crisis. According to Accenture’s UNGC CEO study, supply chains account for around 60% of all carbon emissions globally. There is therefore huge pressure on businesses to make their supply chains more sustainability.
Finally, Environmental, social, and corporate governance (ESG) concerns, are also challenging businesses to act on their supply chains – this could be another test for globalisation.
It is clear businesses need to act but they cannot do so alone, together business and government must work in partnership to ensure global resilience and growth. The CBI will continue to work closely with members to support them with mitigate global risk, strengthen their supply chains and find new market opportunities.