Supply chains have grown increasingly complex through the 20th and 21st centuries, especially with the rise of modern ‘globalisation’. Multinational corporations and those with sprawling supply chains face increased pressure from customers, investors, regulators, and civil society to address many of the injustices which pervade supply chains.
There are numerous tools and methods, explored earlier in the Insight, which are being deployed to map supply chains, mitigate risks and impacts, and remediate where necessary.
However, many of the issues we are concerned about as responsible investors – deforestation, (Modern) Slavery, human rights abuses, animal welfare, working conditions – would have been familiar as far back as the 1500s.
This suggests that some deeper systemic drivers are at play. Building on the work of ecological economists and historians, the Insight has suggested that the globalisation of supply chains in the post-war period (and especially since the 1980s), could be seen as the latest phase of an increasingly integrated, global, capitalist economy exploiting the availability of ‘Cheap Labour’ and ‘Cheap Nature’. As such, systemic alternatives are required.
The future of supply chains must therefore address some fundamental issues: supply chains – methods of production, transportation, extraction, use, and disposal – will have to take the pressure off the biosphere, and address social injustices. In practical terms, this will involve elements of circularity; in terms of worldview and underlying values, economies may have to become ‘post-extractivist’ in nature, with social justice at their heart. Supply chains will also have to be made resilient to the impacts of climate change, and zero-carbon. Greater levels of transparency may be required too; here, technologies may be able to help.
EdenTree regularly engages with investee companies – both unilaterally and in collaboration with other stakeholders – on supply chain risks and impacts. We seek to understand how companies work to drive positive, long-lasting impacts in supply chains, and mitigate risks.
We have outlined some pockets of good practice from investee companies throughout this Insight, such as Carrefour’s work with its supplier farms in France, companies pioneering circular economy models which change how we think of supply chains, and collaborative work to root out Modern Slavery among contracted labour forces.
Ultimately, and in the future, the companies we invest in will increasingly need to position themselves and their supply chains to flow with the broad trends outlined in the final part of this Insight.