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Investment managers want companies with sustainable supply chains

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Investment managers in both the UK and US believe that companies without sustainable supply chains will attract less investment and see share prices fall over the next ten years, according to a new report by procurement consultancy Proxima.

The report, published today, assesses supply chain sustainability through the lens of the investment manager. The research found that over eight in 10 (85 per cent) investment managers believe that businesses who do not implement supply chain sustainability initiatives will see share prices fall as a result over the next decade. Investors are concerned about inaction, with 84 per cent also stating that issues with supply chain sustainability and ESG standards are a risk to their investments.
 
There is overwhelming evidence that supply chain sustainability is at the top of the investor’s agenda with 97 per cent of investment managers telling the firm they consider the sustainability standards of a business’ supply chain when making investment decisions. This is reflected on both sides of the Atlantic, with U.S and U.K-based investment managers in agreement.
 
The research also reveals that there is rigour in how investment managers look at the supply chain sustainability of companies, with nine in 10 (89 per cent) investment managers discussing ESG (Environmental, Social, and Governance) standards in the supply chain with the companies they invest in. A further two-fifths (37 per cent) are having these conversations frequently.

Supply chain sustainability also matters to investors over the long-term. This topic will dominate the next decade, with 88 per cent of investment managers believing that supply chain sustainability standards will be a key criterion for investment decisions over the next ten years.

Eight in 10 managers (80 per cent) also believe that businesses without supply chain sustainability and wider ESG standards will struggle to access capital in the next ten years.

Seven in 10 investment managers (70 per cent) believe that businesses should accelerate purpose initiatives at the expense of short-term profitability.
 
Simon Geale, Executive Vice President at Proxima, says: “It is clear that investors have supply chain sustainability in their sights as we look to build a better post-pandemic world.

“The concept of how a business can create value is changing, and business leaders are seeking to balance short term profit with progressing a broader range of ESG factors that will create sustained value in the mid-term. This trend is only set to continue and will dominate the coming decade; therefore, action now can create first mover advantage.

“Supply chains are going to be at the heart of the change. They can be complex, and frequently are, but ultimately remain a key part of the solution along with innovation and collaboration. It’s vital that a business brings in the expertise it needs to address the challenge.”

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