Why playing it safe over the Middle East crisis is the riskiest strategy of all
17 March 2026 - The impact of the current war in the Gulf are being felt around the world in the form of energy price hikes and disrupted supply chains. In moments like this there is a familiar reflex: to zero in on immediate economic pain and short-term security risks while delaying action that might address the underlying causes.
This reaction is so often presented as “pragmatism”, but at some point, countries and companies will need to prioritise long-term solutions, rather than continue to kick the can down the road.
The bill for years of short-term, pragmatic responses is becoming increasingly felt in energy markets, food systems, and disrupted supply chains. As a result, there is growing institutional fatalism and citizen anger at the absence of credible plans to tackle the growing systemic risks which have been agenda items at Davos for decades.
Part of the reason for this is structural. Systemic risks such as food security require collective responses across competitors, sectors, and borders. However, the multilateral institutions capable of organising such responses have been weakening for years and are now being asked to manage consequences they were never designed to deal with at this scale.
A second reason is economic. Markets have been designed – by default if not by intent – to allow private actors to bank profits while externalising costs onto societies. This has progressively made states more fragile as they compete for finite resources. They are constrained in their capacity to invest at the scale and speed required and to sustain the public goods – such as affordable and reliable food and energy, stable climate and environment - needed for a resilient economy.
For business, it remains more profitable in most markets to extract than to restore, to concentrate than to diversify, to defer than to invest.
Politicians and private-sector leaders see the risks clearly enough, but the incentives to act on them are not in place. The result is a collective loss of confidence in credible pathways to tackle systemic risks.
Action on climate change risks becoming a prime example. The story of the past decade was that policy would tighten, capital would shift, and early-acting businesses would gain a competitive advantage. Governments legislated, investors adjusted, and companies cut emissions, investing in cleaner supply chains on the expectation that stronger market and policy conditions would follow.
That clarity has since fractured, eroded by the energy price spike after Russia’s invasion of Ukraine, the rise of energy-hungry AI, and the policy reversals of the current U.S. administration.
There is still momentum in the energy transition – driven by the reduction in costs and scale of capacity in key technologies like solar and batteries – but the consensus for climate action is fraying at a time when we need it to be strong.
The businesses and investors who worked hard to transition now face a more hostile context. Many see their peers’ lack of action and the near-term costs of continued work and conclude that moving faster than today’s markets require is commercially irrational.
The retreat of serious private capital reflects this. Last year, Bill Gates made three decisions in quick succession: pivoting Breakthrough Energy away from EU and U.S. policy advocacy, reorienting his philanthropic focus towards global health, and pausing Catalyst's investment in first-of-a-kind cleantech.
This from the person who arguably built the most serious private infrastructure for market-based climate action.
And Gates is not alone. Other big players are also pivoting to focus on local-level action and resilience. When even those with deep pockets and relative spending freedom have become fatalistic about the prospects of market-based change, it may seem like the death knell for climate action.
But the underlying drivers of the energy transition are compounding, regardless of government decisions or geopolitical crises.
Most transitions follow an S-curve – slow, then very fast. The war may accelerate the transitions in energy and the associated food system or temporarily delay them, but it does not change the final destination.
Rebuilding a strategy that focuses on long-term action is possible and necessary, but it needs to be grounded in structural economics, not political optimism. It consists of actors organising themselves by sector or region to tackle shared barriers to getting big things done quickly, and philanthropic funders removing the barriers that are slowing the rollout of proven technologies. We can already see the growing business support for electrification as a key part of this change.
As UN climate chief, Simon Stiell, warned at the Green Growth Summit in Brussels this week, fossil-fuel dependence leaves economies and businesses exposed to repeated geopolitical shocks, helping explain why electrification is increasingly seen by business as an economic and security imperative, a view now explicitly backed by major European companies and investors.
“Pragmatism” will not cut it for institutions contemplating a set of deeply unattractive choices in response to the current developments in the Gulf – or whatever crisis next dominates headlines. It is a recipe for staying in a world with no good ways forward.
The wiser move is to use disruption itself - the political urgency, the supply pressure, the fracturing of old assumptions - to accelerate the changes that “pragmatism” has deferred for decades. To lean into the future rather than fighting to turn the clock back.