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Welcome to the War Economy: Rethinking Business in a Tense World

Since 2022, the world will never be the same. Russia’s invasion of Ukraine and the consolidation of China’s power mark the end of three decades of relative post‑1989 stability. In his essay Welcome to the War Economy! David Baverez describes this shift as the onset of a war economy, where industrial sovereignty, supply chain security, and geopolitical dependencies become top priorities.

According to Baverez, major Western democracies are now exposed. Europe, in particular, faces a dual challenge: maintaining its democratic model while ensuring economic and strategic resilience. Companies and investors still operating under a “peace economy” mindset risk being caught off guard. Baverez proposes a provocative reinterpretation of ESG: rather than the usual Environmental, Social, Governance, he suggests reading it as Energy, Security, War — translating the French “G = Guerre” literally into English to reflect the new geopolitical reality.

Why this perspective is compelling

1. Geopolitics and economics are intertwined: military tensions immediately disrupt industries and trade, as seen with sanctions on Russia and Europe’s energy crisis.
2. Sovereignty and resilience are now priorities: companies dependent on global supply chains are discovering their vulnerabilities, increasing the appeal of local production and strategic resource control.
3. Investors and leaders must anticipate: in this context, understanding this new logic of risk is as important as traditional financial fundamentals.

Possible counter-arguments

Some may argue this view is alarmist: global trade remains interconnected, and economic interdependence could limit major conflicts. Diplomatic solutions could resolve tensions without radical business transformations.

But Baverez himself qualifies his argument: this is not about predicting perpetual war, but changing the economic logic, so it is about changing our own software. Ignoring these signals does not shield organizations from disruption; on the contrary, it exposes them to higher risks.

Implications for investors

For investors, this “war economy” demands a fundamental rethink of allocation and risk management strategies. Vulnerable supply chains, exposure to geopolitically unstable markets, and industrial and energy volatility require prioritizing resilience and strategic diversification over short-term returns. It is about identifying companies and sectors capable of securing production, managing political risks, and adapting quickly to economic shocks. Modern investors must adopt a long-term, multi-scenario vision, integrating not just financial fundamentals, but operational strength, industrial sovereignty, and the ability to navigate complex geopolitical environments. Thriving in this new world is no longer about traditional portfolio optimization, but about proactively anticipating fragilities and global opportunities.

Conclusion

Welcome to the War Economy! It is a wake-up call for leaders, investors, and decision-makers: the world now demands resilience, anticipation, and strategy. Rethinking supply chains, governance models, and even the ESG approach is not optional; it is essential for survival and growth in this new global order. Those who can align strategic vision with operational pragmatism will be best positioned to navigate geopolitical uncertainties and seize emerging opportunities. Ignoring this shift is a luxury few organizations can afford.