The overwhelming majority of business leaders are still bullish on globalisation, even as protectionist policies, geopolitical tensions and pandemic-induced disruptions drive a retreat from the multilateral trading system, according to a large-scale survey carried out by Standard Chartered.

The bank polled over 3,000 business leaders across 20 markets in Africa, Asia, Europe, the Middle East and North America on the global flows of capital, trade, technology and people, and their economic and sustainability implications.

In spite of recent warnings from bodies such as the World Trade Organization (WTO) that rising fragmentation is damaging trade flows, almost nine-tenths of respondents said they believe globalisation is succeeding.

However, a deeper look into the figures, released by the bank as part of a new whitepaper titled Resetting Globalisation: Catalysts for Change, reveals varying degrees of confidence about global trade’s positive impact. The results, Standard Chartered says, show that if globalisation is to succeed, its priorities must be “reset” towards fairer and more environmentally conscious practices.

“To make globalisation work better for all, and more equitably for smaller markets and businesses, we need to build a more inclusive and sustainable model of global trade,” says Michael Spiegel, the bank’s global head of transaction banking, who challenges claims that the multilateral economic order is in decline.

“We must dispel the idea that ‘global’ trade is over,” he says. “There is much evidence to the contrary: despite a challenging macroeconomic and geopolitical environment, with protectionism, friend-shoring and re-shoring climbing up the agenda, trade continues to cross borders, pointing to the pragmatism of global connectivity.”

Globalisation’s winners and losers

The impact of 75 years of globalisation has been profound and multifaceted. Economically, it has been a catalyst for rapid growth, lifting millions out of poverty, particularly in developing countries. At a societal level, it has facilitated the exchange of ideas and values, leading to a more interconnected world.

But it has not been without its drawbacks. From environmental degradation to the erosion of local cultures and industries, the overwhelming majority of global trade contributes negatively to the United Nations’ Sustainable Development Goals, as uncovered in a 2022 study by Coriolis Technologies.

What’s more, the benefits of the globalised economy have not been equally distributed – a complaint that has been at the heart of populist political rhetoric in recent years and spurred trade wars between major economies.

With the outlook for world trade looking less than rosy – WTO economists now expect it to grow by just 0.8% this year, less than half the amount they predicted in April – recalibrating the system to ensure it continues to deliver on its promise of shared prosperity has become an urgent priority.

Last month, WTO director-general Ngozi Okonjo-Iweala called for the supranational body’s members to “seize the opportunity to strengthen the global trading framework by avoiding protectionism and fostering a more resilient and inclusive global economy”, adding that the world’s poorest countries depend upon the survival of the open trading system for economic development.

Her comments were echoed in the findings of the 2023 edition of the Hinrich-Institute for Management Development Sustainable Trade Index. Published in late October, it found that “slowbalisation” driven by geoeconomic fragmentation risks jeopardising the gains achieved from open trade, making it harder for countries to harness the positive elements of the globalised market while mitigating the negative.

A mixed scorecard

Setting the world onto a path of responsible and sustainable globalisation will be no mean feat, as illustrated by the disparity in views uncovered by Standard Chartered’s study.

While respondents were confident about the role of globalisation in promoting economic growth, only 62% believe it has been good for all economies, although experiences vary. Among business leaders in Europe, this figure falls to just 55%, while those in South Africa – a major beneficiary of trade openness – were most convinced about its positive impact on all nations, with 71% of respondents agreeing with the statement.

As growing wariness of being overly dependent on cross-border suppliers leads to new trade policies, 83% of those quizzed by Standard Chartered say globalisation has helped build more resilient supply chains. Business leaders based in countries that rank highly on the FM Global Resilience Index, cited by the bank in its report, are more confident still. In Switzerland, which the index says has the world’s fourth most-resilient supply chains, nearly 91% of business leaders feel globalisation has helped.

The most notable division in opinion revealed by Standard Chartered’s research relates to the sustainability aspect of globalisation.

Overall, 86% of business leaders agree global trade allows for sustainable development, but they were evenly split about whether markets should keep sustainability in mind when it comes to trade. Business leaders in markets that are particularly vulnerable to climate change, such as Malaysia, Nigeria, the UAE, and Vietnam, were more likely to agree with the statement. By contrast, only 39% in Switzerland and 43% in the UK – the world’s first and fifth least vulnerable markets to climate change – agreed.

Despite numerous studies showing the transition towards more ESG-friendly practices in trade will require significant investment, the majority – 59% – of those polled said they would not prioritise sustainability over economic gains. Once again, though, this global figure masks divergent perspectives among emerging and developed markets, with 46% of respondents in Nigeria, 45% in Kenya and 44% in China saying they would trade in higher returns for more responsible investments, compared to just 25% of respondents in Switzerland, 32% in France, and 34% in the US.

Looking ahead, the bank says, the future of globalisation hinges on the ability to forge a new path that reconciles economic growth with sustainable and equitable practices.

“With a deliberate intent, globalisation can be leveraged as a force for good,” says Marisa Drew, chief sustainability officer at Standard Chartered. “For instance, sharing of knowledge and more sustainable business models coupled with innovative technologies and solutions can help us accelerate both adaptation and transition efforts to mount a credible defence toward climate change effects.”

The idea of a more balanced approach to globalisation, while conceptually appealing, faces several formidable challenges in practice, from varying priorities and levels of capacity among nations to ingrained industrial and geopolitical interests. Reconceiving global supply chains to balance economic, environmental, and social objectives will be a monumental task, but also – if the growing body of research released by industry players is to be believed – one that is becoming increasingly urgent.