Source: World Economic Forum in collaboration with Kearney.2.7 Environmental, social and governance Environmental, social and governance FIGURE 11 The increasing significance of environmental, social and governance (ESG) factors means that aligning policies and practices with ESG principles is now seen as essential for sustainable development and long-term economic resilience. ESG considerations are becoming increasingly relevant across all aspects of economic activity, and countries that successfully bridge the gap between government initiatives and corporate responsibility will stand out as value chain leaders. This alignment benefits from close cooperation between governments, businesses and civil society to craft ESG policies that are consistent and applicable across borders. Using the indices described in the production readiness model (see Appendix 1), the top three strongest-performing markets for sustainability competitiveness, stable climate and renewable energy production, among other factors, were Norway, Denmark and Sweden (all convergers). While all seven readiness factors are crucial, each company will have different thresholds and priorities for each. With the growing number of companies committing to carbon neutrality, a country’s sustainability performance is becoming an increasingly important factor. Gunter Beitinger, Senior Vice-President, Manufacturing; Head, Factory Digitalization, SiemensSub-factors Sustainability and net zero Policies for environmental protection, renewable energy, carbon footprint management and achieving net-zero emissions Social responsibility Labour standards and corporate social responsibility initiatives Governance Corporate governance standards, ethical practices and transparency in business operations Indices Renewable energy production Alignment with net-zero emissions goals Workers’ rights Sustainability competitiveness Stable climate conditions Control of corruption Environmental, social Geopolitical regulatory and skillsResourcesInfrastructure Technologyand governance landscape Fiscal and Labourand energy Beyond Cost: Country Readiness for the Future of Manufacturing and Supply Chains 22

Beyond Cost 2024