Are Nordic companies deglobalising?

• According to the IMF, large multinational firms have recently expressed a growing interest in reshoring production. We conducted a similar text-mining study for renowned Nordic companies based on annual reports in lieu of earnings calls, and find somewhat different results.

• Undeniably, Nordic businesses have lately discussed supply chains more often compared to the pre-pandemic period. However, they do not seem to share a similar level of interest to reshoring or friend-shoring as their multinational peers, nor has China been mentioned any more frequently than before.

• Our results could reflect that Nordic firms see some risks related to geopolitics and China differently compared to their multinational peers. Alternatively, it could reflect that the Nordics just lag behind, and that while concerns inside boardrooms are on the rise, publicly, a diplomatic tone is preferred.

In recent years, the COVID-19 pandemic and rising geopolitical tensions have severely disrupted supply chains of those firms operating globally. Together with growing emphasis on sustainability, these developments have spurred a debate about geoeconomic fragmentation – the concept of a policy-driven reversal of economic integration. The pace and magnitude of geoeconomic fragmentation, if it was to happen, would also redefine globalisation. As we have argued in our Research Global – Deglobalisation, is it really happening? 13 March, the outcome is not necessarily deglobalisation in the sense of less trade and investments, but rather a re-shuffling of trade patterns and investment flows.

When analysing geoeconomic fragmentation, macro-level data is often scarce and lagging, and hence, it is worthwhile to develop other measures. For instance, in their April WEO, the IMF conducted a text-mining analysis of earnings calls from a large sample of multinational firms, which showed firms’ increasingly focus on re- and friend-shoring coinciding with greater geopolitical risk. On the back of the IMF’s conclusions, we conducted an alike study, with our main emphasis being 51 of the most renowned Nordic companies. Additionally, our research has been extended to annual reports across 2013-2022 including the search of buzzwords such as “supply chain”, “China” and a wide range of “shoring”-keywords.

Our analysis finds that ‘shoring’-keywords are not very present in the annual reports as only 2 out of 51 companies mention these in their annual reports. This is a stark contrast to the IMF study, where mentioning of ‘shoring’ words had increased coinciding with greater geopolitical risks. Firstly, the divergent results can be attributed to the different data sources being used. IMF rely on earnings calls which generally tend to be more openmouthed, while annual reports reflect a more hesitant approach in terms of politically sensitive thinking. Moreover, analysts have addressed these issues more frequently during earnings calls. However, it is important to note that other factors may also explain the difference in results

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