• SI Debate

SI Debate: Resilience as an investment imperative

The closure of the Strait of Hormuz during the Iran conflict illustrates once more how the world has shifted to a new reality. Investors need to shift along with it. Societal resilience now belongs at the centre of investment strategy – and it can go hand in hand with sustainability objectives.

Authors

    Head of Investment Solutions
    Head of SI Thought Leadership and Climate & Biodiversity Strategist

Top keywords

Summary

  1. Critical dependencies often only come to the forefront during turmoil
  2. Resilience spans security across energy, critical resources and climate
  3. Double materiality underpins incorporating resilience into investments

When the Strait of Hormuz effectively closed in March and early April, it disrupted oil and liquefied natural gas flows on which billions of people depend. Energy markets convulsed. This was an unprecedented event, but not an unpredictable one, since the Strait is a critical chokepoint in a fragile region, serving economies with limited near-term alternatives.

It also stands as one of the clearest illustrations of how energy resilience – through greater autonomy – and climate investing can reinforce each other. The question is: What else in the economic systems that generate portfolio returns is similarly exposed? We believe a great deal.

Foundation for long-term value creation

Societal resilience – the capacity of economies, ecosystems and institutions to absorb shocks, adapt, and retain their core function – remains an underappreciated risk in portfolios today.

Like Hormuz, many critical dependencies are invisible in calm conditions. Essential digital capability is concentrated in a handful of firms, and roughly 60% of active pharmaceutical ingredients are produced in India and China.

Resilience underpins long-term value creation. It spans security across energy, information, food, healthcare, institutions, critical resources, climate and ecosystems, among others.1

The risks associated with declining security along any of these dimensions can result in investment risk. Supply chain disruptions, military conflicts, extreme weather events – these are all examples where declining resilience can affect investment returns.

Fragmentation is here to stay

Geopolitics is a core dimension of resilience. Geoeconomic confrontation is the top short-term risk in the World Economic Forum’s 2026 Global Risks Report, and strategists increasingly view fragmentation as a permanent reordering rather than a temporary disruption.2

In a multi-dimensional world, geoeconomic shocks are moving from tail risks toward central scenarios. Geopolitical resilience starts with mapping structural exposures to find out which sectors and regions benefit from industrial policy (such as clean energy, critical minerals, defense, infrastructure) and which ones carry fragmentation risk.

From supply chain efficiency to resilience

Post-Covid supply-chain disruptions revealed how concentration and geography embed financial risk. Since 2020, companies have started shifting from maximizing efficiency to embedding resilience.

Diversification and nearshoring, dual sourcing and inventory buffers are rising across industries, increasingly supported by predictive analytics. Pharmaceuticals are reshoring capacity to reduce dependence on India and China, and the automotive sector has moved away from pure just-in-time models after the 2022-2023 semiconductor supply shock.

The tension is costly; resilience is a trade-off against efficiency, which is a classic risk/return metric. Return assumptions in listed markets were calibrated for an economy with stronger global integration. The shift toward resilience implies lower trend growth and higher structural inflation.

Physical resilience

Resilience also has a strong environmental aspect, particularly regarding climate change. Annual economic damage from extreme weather is around 0.5% of global GDP, and risks will rise as warming increases even under emissions reductions.

In our analysis, around 30% of the MSCI AC World Index is exposed to high gross near-term physical risk emanating from global warming; in the MSCI Emerging Markets Index, this is around 60% of market cap. The key question is how far companies – and the countries in which they operate – can mitigate gross risks through adaptation, insurance and risk management.

Issuer-level risk premiums will increasingly reflect hazard exposure, asset resilience, supply-chain diversification and access to insurance. With risk models and company disclosure still developing, investors who can assess these factors have an informational edge.

Double materiality

Besides shaping the risk profile of portfolios, resilience also presents a substantial opportunity set, from water infrastructure and grid modernization, to resilience analytics, logistics and energy infrastructure.

In addition, resilience often aligns with sustainability objectives – for example, via investments that strengthen energy independence or the regional economy.

The case for incorporating societal resilience into investment strategy therefore rests on double materiality. It affects investors’ ability to meet their primary investment objectives. Additionally, for investors such as pension funds, allocating capital to strengthen the resilience of their home economy can also align with beneficiaries’ long-term welfare.

Three common approaches toward implementation

Resilience can be embedded in different ways depending on investor type, region and preferences. We highlight three common approaches.

First, thematic investing offers direct exposure to resilience opportunities. This can be achieved either through broader allocations to specific resilience‑related themes, or via a more targeted approach that builds more concentrated portfolios of companies strengthening economic resilience that are well positioned to benefit from this long‑term trend. Beyond defense, these opportunities span a wide range of sectors, including infrastructure, IT, insurance, energy and others.

Second, some investors are reassessing the significant US exposure embedded in broad equity and bond indices. Reducing this concentration can help mitigate concentration risk, while reallocating capital toward other specified (home) regions may support local economic resilience. In fixed income, such adjustments can often be implemented efficiently while remaining close to the original benchmark if desired. In equities, however, the implications for the risk/return profile are typically more pronounced.

Finally, targeted allocations to specific sectors or regions within private debt markets – such as infrastructure projects or SME lending to selected companies – can support attractive long‑term returns while directly financing a more resilient (home) economy and society.

The Strait of Hormuz will not be the last reminder that resilience must be priced into portfolios – as a risk, an opportunity and, for some investors, a necessity.

Footnotes

1SPIL (2026), Knowledge Paper 92Mercer (2026), Investment Themes and Opportunities 2026: The Post-Consensus Era; BlackRock Investment Institute (2025), Geopolitical Fragmentation: Mega Forces

SI Debate

Related topics
share

Latest articles

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Don’t miss out

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information This disclaimer applies to any documents and the verbal or written comments of any person in presentations or webinars on this website and taken together is referred to herein as the “Information”. The services to which the Information relate are NOT FOR RETAIL CLIENTS - The information contained in the Website is solely intended for professional investors, defined as investors which (1) qualify as professional clients within the meaning of the Markets in Financial Instruments Directive (MiFID), (2) have requested to be treated as professional clients within the meaning of the MiFID or (3) are authorized to receive such information under any other applicable laws and must not be relied or acted upon by any other persons. This Information does not constitute an offer to sell, or a solicitation of an offer to buy, any financial product, and may not be relied upon in connection with the purchase or sale of any financial product. You are cautioned against using this Information as the basis for making a decision to purchase any financial product. To the extent that you rely on the Information in connection with any investment decision, you do so at your own risk. The Information does not purport to be complete on any topic addressed. The Information may contain data or analysis prepared by third parties and no representation or warranty about the accuracy of such data or analysis is provided.
In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management UK Limited (“RIAM UK”) is authorised and regulated by the Financial Conduct Authority. RIAM UK, 30 Fenchurch Street, Part Level 8, London EC3M 3BD (FCA Reference No:1007814). The company is registered in England and Wales under Ref No. 15362605.

In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management B.V. is authorised as a manager of UCITS and AIFs by the Netherlands Authority for the Financial Markets and subject to limited regulation in the UK by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.