The two ESGs
For a decade, ESG meant environmental, social, and governance: a lens for how capital judged companies. That conversation has not gone away. But a second, more consequential ESG has taken its place at the center of trade and investment work: Economics, Security, and Geopolitics.
The three used to sit on separate desks. They now work as one braided force, and it decides which projects land, which corridors grow, and which jurisdictions get left off the shortlist.
The shift is measurable. UN Trade and Development, in its Trade and Development Foresights 2026, judged that geopolitical risk had "definitively replaced" trade-policy disputes as the dominant source of instability for the global economy, a turn that hardened in late February 2026 when conflict in the Middle East put energy flows and the Strait of Hormuz back at the center of the outlook. The corporate world has already repriced it: nearly three-quarters of CEOs have localized some production in the country of sale, and just over half are reorganizing supply chains to serve a specific regional bloc, according to the EY-Parthenon 2026 Geostrategic Outlook, published in December 2025. The Munich Security Report 2026 went further still, describing a world of "weaponized interdependence" in which the open use of economic coercion has become ordinary statecraft.
The era when economics ran on its own logic, and security and geopolitics were someone else's brief, is over.
For a trade commissioner posted overseas, this is the new shape of the day job. Below is what each letter now means in practice, and what to do about it this year.
Eis for Economics, but the rules have changed
The base case used to be efficiency: capital and production went wherever they were cheapest and most productive. That logic still operates, but it is now filtered through a second screen.
The McKinsey Global Institute's September 2025 study of foreign direct investment, The FDI shake-up, finds that since 2022, roughly three-quarters of greenfield FDI announcements have gone to "future-shaping" industries and the resources that power them (AI infrastructure, advanced manufacturing, energy and mining), up from about half before 2020. And the deals are getting bigger. Megadeals over $1 billion are about 1% of cross-border projects but now account for roughly half of total greenfield value, up from under a third five years earlier.
Share of greenfield FDI announcements going to 'future-shaping' industries: AI infrastructure, advanced manufacturing, and the resources, energy and mining that power them. Source: McKinsey Global Institute, 'The FDI shake-up' (Sept 2025).
The pipeline is concentrating into a small number of very large, very contested projects in a handful of strategic sectors. Winning one can remake a regional economy; missing the cut means watching a competitor capture the suppliers and the political win. The economics of investment attraction have become winner-takes-most, which raises the stakes on every other letter in the new ESG.
Sis for Security, the screen on every deal
Economic security has moved from the foreign ministry to the investment-promotion office. Governments are now using export controls and local-content mandates as standard tools. EY-Parthenon, in that same December 2025 outlook, calls this the return of "state interventionism." The Munich Security Report 2026 frames it as a turn toward "strategic protectionism," with control over the chokepoints of the global economy, from financial clearing systems to rare earths, treated as an instrument of leverage.
Security now shapes flows in ways that show up directly in the data. McKinsey's March 2026 trade update found that US–China trade fell by around 30% as tariffs took hold, pushing more than $165 billion of trade off that single corridor; the United States replaced roughly two-thirds of the gap with imports from other sellers. Advanced-economy firms, especially in Japan, South Korea, and Europe, pulled investment closer to home, while flows into China dropped. Semiconductors and data-center equipment alone drove about a third of all global trade growth, much of it moving deliberately between aligned economies.
Share of CEOs taking each action in response to geopolitics. Source: EY-Parthenon 2026 Geostrategic Outlook (Dec 2025).
For trade and investment professionals, due diligence has a second dimension. Commercial viability is half the test. The rest is whether the project survives export controls and screening regimes, and which side of the security line your jurisdiction sits on for that investor.
Gis for Geopolitics, a new map of who trades with whom
The throughline across all the 2026 research is that geopolitics is now redrawing the map faster than economics alone ever did. McKinsey's "geopolitical distance" measure (how politically aligned trading and investment partners are, derived from UN voting records) has been shrinking since 2017, and in 2025 it kept falling even as trade overall grew. Investment and trade are increasingly flowing between friends.
The realignment is not universal, and that is the nuance practitioners can exploit. It is concentrated in the largest advanced economies and China, while emerging economies have largely kept trading across the geopolitical spectrum. ASEAN expanded trade with both the United States and China at once, becoming China's top export market in the first half of 2025 even as it shipped finished goods to America. US import data for 2025, reported by Business Standard and Open Magazine, shows India now supplying more than a third of US smartphone imports (about 36%, up from roughly a tenth a year earlier) as China's share fell from 82% to 49%. Brazil supplies around three-quarters of China's soybean imports, and the Gulf states have pulled investment from every direction at once. EY frames the year around four "spheres of engagement" (North America, Asia-Pacific, Europe, and the Middle East), each with its own logic.
Share of US smartphone imports by source country. As tariffs and screening took hold, China's share roughly halved and India's more than tripled. Sources: US import data via Business Standard and Open Magazine (2025); McKinsey Global Institute, geometry of global trade 2026 update.
The opportunity here is real. If your jurisdiction sits outside the US–China fault line, geopolitical neutrality is an asset you can market. If you sit inside it, alignment is the asset.
The realization gap
The practical consequence of the new ESG is that announcements have become less reliable. Historically, 60 to 80% of announced FDI projects were built. In a world where economics, security, and geopolitics can each independently kill a deal, that ratio is unlikely to hold, and the project-level record since 2024 is consistent with a lower one. McKinsey notes that three of the top 20 EV projects have already been put on hold, including one in Canada worth about $10.5 billion and one in Mexico worth about $5 billion. In clean hydrogen, only around a tenth of the announced project pipeline reached a final investment decision in 2024, and more than 50 projects were canceled between 2024 and mid-2025, with some of their sites reassigned to data centers instead.
That is the frame a practitioner needs when reporting pipeline value to a minister or a board. The teams that can read those three forces will protect their credibility, and their pipeline, when projects wobble, because they will have priced the wobble in before it happened.
"McKinsey notes that three of the top 20 EV projects have already been put on hold, including one in Canada worth about $10.5 billion and one in Mexico worth about $5 billion."
The argument has a limit worth stating. Its evidence comes mostly from the largest advanced economies and China. If emerging economies keep trading across the geopolitical spectrum through the next few years of trade and FDI data, then for most jurisdictions security and geopolitics are intermittent constraints rather than the standing screen described here, and the case for rebuilding a practice around all three weakens.
What this means for the profession
The trade commissioner used to be able to specialize, chasing markets and leaving the security file to somebody in another building. The new ESG ends that. Anyone shaping economic growth now needs a working fluency in security policy and geopolitics, because those forces sit upstream of every economic decision they are trying to influence.
That is uncomfortable, because the profession still tends to learn in silos. The practitioners who read Economics, Security, and Geopolitics as one lens are the ones who see the shifts coming. Whether that reading pays is testable this year, and the agencies still carrying stalled EV and hydrogen projects in their announced pipeline figures have to decide what to tell a minister who asks whether those projects are coming.
Sources & method
Every statistic in this piece traces to one of five current, credible sources, and quotation has been kept minimal. Figures were verified against the primary publications rather than secondary summaries.