An exclusive poll conducted by Investment Monitor shows that C-suite level executives consider climate change to be the macro trend exerting the biggest long-term impact on foreign direct investment (FDI), far ahead of other major trends such as offshoring, remote working and industry 4.0.
The poll of 101 C-suite readers of the website found that half consider climate change to be the most important macro trend to watch (49.5%). By contrast, only half as many cited remote working as the most important trend for FDI in the coming years (21.8%), with a further 18.8% pointing to industry 4.0.
Just 9.9% cited offshoring and reshoring as the major trend to watch, suggesting that speculation about permanent and drastic changes to global value chains may be overstated.
Climate change was also the top concern among general Investment Monitor readers, chosen by 40.7% of respondents.
Glenn Barklie, chief economist at Investment Monitor, says: “Climate change and sustainability responsibility have been heightened since the Covid-19 pandemic.
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Climate change is an emerging FDI concern
ESG has become a key concern for investors in recent years, a trend exacerbated during the Covid-19 pandemic. Businesses are becoming more acutely aware of the risks posed by climate change, and the need to move ahead of governments.
“These two factors are going to affect almost all companies. Companies have to fall in line with the targets set by governments, coming up with new ways to be responsible yet still drive profits.
There has been a notable reassessment of company strategies, placing climate change and sustainability very much at the top of that list. Glenn Barklie, Investment Monitor
“There has been a notable reassessment of company strategies, placing climate change and sustainability very much at the top of that list.
“Working from home is likely to have more of an impact on the size of FDI operations. With companies likely to remain flexible or lose good talent, working from home has benefits in that companies can have smaller offices or more remote workspaces where costs are cheaper. Working from home should not be a worry for foreign investors.
“Offshoring/nearshoring is going to be more of a trend for manufacturing companies. Those in more service-based sectors are less likely to be concerned about nearshoring.”