With Chinese production a crucial element in many global supply chains, the country’s investors and issuers are naturally very close to the hot issue of supply chain sustainability. Market participants are becoming more aware of the need to promote worker health and safety and environmental impact in supply chains.
More than 90% of issuers prefer to work with companies which have sustainable supply chains — or even require this. More surprisingly still, as many as 87% of investors prefer to invest in companies which make efforts to have sustainable supply chains.
Most, however, have not gone as far as asking suppliers for evidence that they are sustainable: only 13% of issuers impose this requirement. Among investors, 16% expect companies they invest in to be able to demonstrate that their suppliers behave in a sustainable way.
The most common approach, particularly among issuers, is simply to ask suppliers to behave in a sustainable way, without demanding evidence. Sixty-four percent of issuers do this, while 51% of investors expect companies to have policies stating that their suppliers should behave sustainably — but without requiring them to prove this.
An even weaker tack wins much support, too. A fifth of investors believe supply chain sustainability is important but take no consistent measures on the matter.
One negative for the supply chain issue is respondents’ assessment of its innovation potential. Across issuers and investors, only 19% see significant scope for exciting innovation in the sustainability of supply chains over the coming five years.
Investors are particularly sceptical. Among 12 potential areas of sustainability innovation, they rank supply chains equal last with agriculture.