Reshoring: what are the implications for responsible investors?
Reshoring: what are the implications for responsible investors?
Anne-Claire Imperiale, Head of Sustainability, Sycomore AM
What are your key considerations when assessing whether a reshoring project is “fair and sustainable”?
The success and long-term viability of a reshoring initiative stem from a clear strategic vision. The decision to bring production back must form part of a broader corporate strategy and a renewed momentum, moving from a purely global model to a more “glocal” approach: seeking proximity to end markets and shortening value chains in order to better manage risk. Structurally, this approach is self-evident in certain sectors, such as agrifood.
As more companies consider reshoring and shortening their value chains to regain control, we believe this creates genuine opportunities to better address social and environmental challenges. For a reshoring project to be considered “fair,” it is essential to take into account the expectations and impacts on all stakeholders: suppliers, partners and subcontractors, employees, customers, local communities, and the environment.
What are the obstacles to “fair and sustainable” reshoring, and can they be overcome?
Labor costs in certain European countries can be a barrier, but this can be mitigated. Savings in logistics, optimization of production processes through greater automation, and improved inventory management can help offset higher wages.
A second obstacle is the availability of a skilled workforce. Recruiting the right capabilities locally can be difficult, particularly as the attractiveness of industrial jobs remains a challenge. This issue is especially pronounced in countries such as France. For example, companies must be able to offer attractive working schedules, particularly when remote work is not an option.
Infrastructure—especially transport—is another critical factor. In France, companies seeking to establish operations may also face the absence of a structured supply chain, as certain expertise, such as textiles or ceramics, is largely oriented toward the luxury sector. It is therefore not easy to redirect these capabilities toward mass-market production with tighter pricing constraints.
The successful acceptance and support of a new industrial site are essential. This requires the involvement of all stakeholders, including local authorities. Companies can engage with public authorities early on to ensure their needs are understood, challenges are addressed, and projects are co-developed.
In this reshoring perspective, what roles do different types of investors play?
The approaches of different investor categories are complementary.
Private equity funds bring fresh capital and can leverage powerful tools to drive change within companies: attaching conditions to capital contributions, setting performance requirements, linking executive compensation to outcomes, and holding board seats.
Institutional investors increasingly seek measurable impact—such as the number of jobs created—across both listed and unlisted investments, particularly in the current context of European sovereignty. They can promote the development of financial products designed to meet these expectations.
For asset managers such as Sycomore AM, the investment horizon is critical. Reshoring projects require time and capital. This is one of the strengths of long-term active managers. Supporting reshoring initiatives can be integrated into our shareholder engagement policy. Engagement themes may include executive remuneration linked to project success, assessment of stakeholder impacts, and alignment with corporate strategies on climate, biodiversity, and skills development.
We may also assess the company’s governance and organizational structure to ensure it is well-positioned to address local challenges and to play an active role in regional ecosystems through decentralized governance models.
This document reflects the author’s views as of the publication date and does not constitute investment advice.
