Geopolitics Becoming a Corporate Duty of Care
Tariffs, sanctions, supply shocks. Boards can no longer treat these as someone else’s problem
Most executives still treat geopolitics as something that happens to them.
A war breaks out. A tariff appears. A sanction is imposed. A supply chain fails.
The company reacts.
That mindset is becoming obsolete.
In Europe, regulators are gradually embedding geopolitical awareness into corporate governance, even if they rarely use the word "geopolitics." Supply chain due diligence (the Corporate Sustainability Due Diligence Directive, or CSDDD), sanctions enforcement (the 2024 directive criminalizing breaches of EU restrictive measures), investment screening (the FDI Screening Regulation), critical infrastructure and cyber resilience (the Critical Entities Resilience Directive and NIS2), and financial-sector operational resilience (the Digital Operational Resilience Act, or DORA) all point in the same direction: companies are expected to understand the political environment in which they operate.
The United States has not gone nearly as far.
Yet the underlying principle is difficult to dispute.
If management has a duty to understand material risks and opportunities facing the enterprise, how can it ignore geopolitics?
A board would never accept a CFO saying, "We don't really follow interest rates."
A CEO would never tell investors, "We don't pay much attention to competitors."
Yet many globally exposed firms still have no systematic way of understanding how shifts in power, trade, regulation, conflict, technology policy, resource nationalism, or alliance structures affect their business.
This is increasingly difficult to defend.
The question is not whether geopolitics matters.
The question is whether management has an obligation to understand it.
For a shipping company, geopolitics affects routes, insurance costs, and market access.
For a technology company, it affects export controls, data flows, investment restrictions, and talent mobility.
For an industrial company, it affects energy costs, critical minerals, and manufacturing footprints.
For an investor, it affects valuation, capital allocation, and exit opportunities.
At some point, geopolitical ignorance starts to look less like a gap in expertise and more like a governance failure.
The irony is that many firms still place geopolitics inside risk functions.
That is where they look for threats.
But the greatest value often lies elsewhere.
Every geopolitical disruption creates winners and losers.
Every sanctions regime redirects capital.
Every trade barrier reshapes competitive dynamics.
Every shift in industrial policy creates new markets.
The firms that understand geopolitics earliest are often the firms that identify opportunity first.
Any debate about whether companies need geopolitical capability misses the point.
Today, boards and executive teams cannot credibly claim to be exercising proper stewardship without it.
Europe appears to be moving toward a regulatory answer.
The United States will likely continue to rely on market discipline.
Either way, the destination is the same.
In a world where geopolitics increasingly shapes enterprise value, understanding it is no longer a specialist activity.
It is becoming part of the duty of care.