Probability: Very high.

Financial Impact: Mixed.

As more companies worldwide become more invested in ESG performance, manufacturers seek nearshore production closer to their customers to control environmental impacts better and support local communities. Nearshoring allows companies to reduce their carbon footprint by minimizing long-distance transportation and associated emissions. It enables manufacturers to adopt more sustainable practices and utilize cleaner energy sources. It can also create local jobs, positively impacting the economy and reducing unemployment rates¹. It provides opportunities for fair wages, safe working conditions, and adherence to labor laws, promoting social well-being. It allows for better-quality control processes, reduces lead times, and increases agility to meet customer demands.

Nevertheless, according to the Savills Nearshoring Index, there can be a trade-off between labor cost and ESG performance in developed markets and the higher cost of holding inventory there². Returns may be lower, and costs may not be cheaper, but “you can service your customers better. You are closer by so you can have more innovation. And you have a better ESG score.” Van den Bossche claims³. All these factors ultimately result in higher customer satisfaction, allowing companies to leverage their ESG initiatives further.

1. https://www.linkedin.com/pulse/role-esg-reshoring-manufacturing-robin-conklen ↩︎
2. https://www.savills.com/impacts/market-trends/can-nearshoring-solve-supply-chain-resilience.html ↩︎
3. https://www.supplychaindive.com/news/6-reasons-supply-chain-shifts-reshoring-nearshoring-friendshoring/700724/ ↩︎