Bilateralism, unilateralism or bust? Rethinking global governance in a fractured world

KPMG International hosted a dinner discussion in August 2025, as part of the Global Responsible Tax Program, to explore the shifting nature of global governance and its implications for tax and beyond.

As international cooperation comes under increasing strain from recalibrated US policy to the wider reassertion of sovereignty, questions around how we govern across borders are becoming more urgent and complex. The era of confident multilateralism seems to be giving way to a patchwork of bilateral, regional and sometimes unilateral approaches. What does this mean for global regulation of key issues like the environment and tax? At the heart of this is a deeper question: what kind of institutional architecture, existing or new, might help steward common goods across national lines? And what role can and should business, policymakers and civil society play?

The dinner was held under the Chatham House Rule and was attended by a small group of business leaders, tax experts, academics, policymakers and advisors. The write-up below summarizes the personal views expressed and does not necessarily represent the position of any organization, including KPMG.

How durable are today’s fractured forms of cooperation?

Participants debated whether the current turbulence is a temporary pause before a new global order emerges, or whether the relatively stable decades after 1945 were in fact an unusual interlude. Some suggested that global governance — as often imagined in multilateral institutions — has historically been brief and fragile.

Others noted that while institutions such as the United Nations (UN) continue to attract strong participation, their authority is increasingly questioned. This raises the possibility that what is sometimes perceived as a breakdown of order may instead be a return to a more historically typical state of flux.

What does the reassertion of sovereignty mean for cooperation?

The group explored how sovereignty is being reasserted as governments prioritize resilience over efficiency. Energy, resources and supply chains are being treated as strategic assets, with tariffs and regulations deployed to protect them. This complicates alignment across jurisdictions, raising compliance costs for business and testing trust between states.

At the same time, sovereignty has not precluded cooperation; selective deals continue where interests overlap. Participants also noted that emerging powers — particularly China, India and Brazil — are more actively shaping debates. Some framed China’s posture as a bid to offer stability in contrast to a more fragmented West, while others highlighted concerns about leverage, debt and trust.

How can common standards emerge when societies define “fair shares” differently?

Tax served as a prism for broader debates about fairness. Some argued that competition between jurisdictions disciplines governments; others saw it as a path to destructive undercutting. Public polling indicates growing support for tax as a tool to incentivize positive behaviors, especially around sustainability, rather than solely as a punitive measure on large corporations.

Yet participants observed that fairness is interpreted differently across contexts; what appears equitable in one country may seem unjust in another. This complicates negotiations on global tax and environmental frameworks. Some suggested framing around “justice”. For example, ensuring just transitions in energy or climate policy may provide more workable common ground (although it may run into similar issues).

What role should companies play in shaping and sustaining global rules?

For businesses, geopolitics now ranks as a leading risk¹  at night, surpassing economic volatility and regulation, as one participant shared anecdotally that geopolitics is keeping corporate communications people up. Yet many executives feel ill-prepared to respond.

One visible shift has been in communication; companies continue to pursue sustainability, diversity and social programs, but they are broadcasting these less openly due to polarized political environments. This trend, described as “green hushing”, reflects public caution rather than full retreat.

Can soft law and shared norms compensate for weaker treaties?

Participants pointed to frameworks such as the Paris Climate Agreement as evidence that normative rules can have practical influence even without legal enforcement. Cities, states and corporations often adhere to these standards quietly, regardless of national politics.

Similar approaches may hold promise in taxation and technology governance, where detailed consensus is elusive. Yet the durability of such soft law depends on reputational pressure, societal expectations and peer comparison, rather than legal sanctions. Whether this is sufficient to address complex issues such as global tax remains an open question.

Where might new leadership come from?

Examples such as the High Ambition Coalition (HAC) at the Paris Climate Talks showed how small and mid-sized states, often in partnership with businesses, can shape global frameworks. Such coalitions may provide a path forward in taxation, particularly when universal consensus proves unattainable.

Participants also asked whether existing institutions like the UN or the Organization for Economic Co-operation and Development (OECD) can adapt to shifting power balances, or whether new, more flexible arrangements will emerge. At the same time, trust deficits persist. Initiatives backed by larger powers are often viewed with suspicion, raising the challenge of how coalitions can scale while maintaining legitimacy.

Where might new leadership come from?

Underlying many exchanges was the question of trust. Participants referred to studies showing that, in countries with weak administrative or institutional capacity, tax collection is constrained.² Survey evidence indicates that in many jurisdictions, only around one-third of citizens believe their taxes are effectively spent for the public good.³ Rising inequality and the perception that the system is “rigged” further undermine willingness to contribute, fueling populism.

Some participants distinguished between reducing poverty and addressing inequality, suggesting the former as a priority. Others argued that visible fairness in outcomes matters politically as much as material redistribution. The broader point was that taxation cannot be disentangled from legitimacy; public trust in institutions and confidence in how revenues are used will shape the feasibility of global tax coordination.

The discussion suggested that global governance is neither collapsing nor consolidating but transforming into something more fluid and unsettled. What emerges from this shift may not resemble the multilateralism of the late 20th century, but nor is it likely to be pure fragmentation. Instead, the future may lie in hybrid forms. Coalitions that cut across regions, normative standards that shape behavior without binding law and businesses acting as stewards alongside states.

What remains unresolved is whether these adaptive arrangements can deliver the legitimacy, power and trust needed to manage common goods in a world of diverging interests. That, more than institutional design alone, may determine whether this fractured order proves resilient or brittle.

Contributors

• Alice Jeffries, Head of Tax Policy, CBI
• Helen Brand, Chief Executive, ACCA
• John Connors, Senior Tax Counsel, Vodafone and Chair of the International Chamber of Commerce's global tax commission
• Thomas Fife-Schaw, Managing Director, Ipsos Corporate Reputation
• Jaqui Freeman, VP Tax Policy, BP
• Carne Ross, Strategist, Writer, Founder, Independent Diplomat
• Clare Short, former Secretary of State for International Development
• Owen Williams, Head of Tax Operations, Reporting & Governance, Johnson Matthey
• Joe Zammit-Lucia, Trustee, Radix and Author of The New Political Capitalism
• Becky Holloway, Program Director, Jericho
• Neal Lawson, Partner, Jericho