Are climate and geopolitics the challenges to sustainable development? Novel evidence from the global supply chain

Abstract

Ensuring the stabilisation of the global supply chain is crucial to the world’s sustainable development. This investigation employs the wavelet-based quantile on quantile regression (QQR) approach to probe the comprehensive effects of southern oscillation (SOI) and geopolitical risk (GPR) on global supply chain pressure (GSCP) and further explore whether extreme climate and geopolitical risk disrupt the global supply chain. The empirical results suggest that SOI influences GSCP in different time scales, showing that extreme climate contributes to the deterioration of the global supply chain, where the La Nina events exert more influential and enduring effects than the El Nino phenomena. The positive influences from higher GPR to GSCP (except for the lowest level) in the short term indicate that geopolitical risk also disrupts the global supply chain, but this view is not held in relatively lower GPR and the medium- and long-run scenarios. By comparison, extreme climate brings more destructive effects on the global supply chain than geopolitical risk. Against the backdrop of severe climate challenges and intensifying Russia–Ukraine war, the conclusions provide valuable implications for stabilising the global supply chain and achieving sustainable development by preventing and defusing potential risks caused by climate disasters and geopolitical events.