Oliver Chapman, CEO of supply chain specialist OCI and the No.1 fastest growing company in the UK, comments on the move by the world’s largest sovereign wealth fund to focus on net zero and social policies.
Norway’s sovereign wealth fund, which controls $1.3 trillion worth of assets, is planning to vote against companies which don’t have net zero plans or with high internal inequality and poor diversity.
The fund says it will become a more active shareholder. It is thought that other wealth funds may follow suit.
“The supply chain is complex and can hold surprises – and plans for net zero are meaningless if organisations in the supply chain do not adhere to the same targets. Unless an organisation focuses on its entire supply chain, it is effectively outsourcing its carbon footprint.
“A similar argument applies to organisations which claim to have strong diversity and say they treat employees fairly, if organisations in their supply chain have poor records in these regards.
“This is why we believe the logical next step for funds such as Norway’s sovereign wealth is to look closely at the supply chain relating to the companies it invests in.
“But understanding the supply chain is not so simple.
“Our advice to organisations is to thoroughly audit their supply chain, forming a strong understanding, not only of suppliers, but suppliers to suppliers, and so on.
“Only a detailed supply chain audit can create awareness of fragility and opportunities within the supply chain and ways it can be enhanced.
“Such a detailed understanding of the supply chain is also an important step in creating supply chain agility so that organisations can respond rapidly to external shocks.
“Norway’s sovereign wealth fund is setting a trend which others will follow. The supply chain will also come into focus, and organisations must start the tricky process of understanding their supply chain in detail as soon as possible.