As the COVID-19 pandemic enters a new phase, organizations are contending with a host of supply chain resiliency challenges: shipping disruptions, access to raw materials, shifting consumer habits, a patchwork of regulations, and competing geopolitical interests. Amid this upheaval, firms are also under heightened pressure—from investors, policymakers, and civil society—to ensure their supply chains are attentive to environmental, social, and governance (ESG) considerations.
On Thursday, September 23, during the 2021 Concordia Annual Summit, Concordia Global Patron Member Veracity Worldwide convened a private roundtable discussion on these pressing issues. A select group of private and public sector leaders gathered to share insights and best practices on supply chain resilience and sustainability. The conversation addressed several major questions, including:
1) What have been the most acute impacts of COVID-19 on global supply chains, and what trends did the pandemic accelerate or slow down?
2) Which practices and technology innovations are best-in-class organizations employing to address supply chain risks, where is that innovation taking place, and what factors are contributing to their successes?
3) What is the state of play between policy and innovation? Are any regions, industries, or governments managing this interplay particularly well and what can be learned?
Unlike public sessions, this discussion was held behind closed-doors. These key takeaways have therefore been edited to protect the confidentiality of the roundtable and reflect the spirit of the discussion.
- Policy and market-access tools are increasingly being used by governments to advance a norms-based trade agenda, defined in part by environmental, labor, and human rights-related principles. Regulators are scrutinizing firms’ supply chain practices with newfound rigor, which is influencing broader trade dynamics and shaping the COVID-19 economic response and recovery in manufacturing-rich nation states.
- As a result of strong consumer demand for ethically-sourced products, countries are using import restrictions to exclude products that have forced labor in their supply chains. These forced labor import bans have been legislated in places like the US, Canada, and the EU, but the degree to which each enforces the bans varies.
- The effectiveness of import bans on eliminating forced labor in supply chains has not been thoroughly researched. Unilateral regulatory interventions are not as effective as a multilateral approach, and the patchwork of regulations makes it difficult to adhere to complete supply chain compliance.
- Jurisdiction-specific intelligence is key as firms look to diversify supply chains to ensure resilience and ESG-attentiveness. Market conditions and stakeholder considerations have dramatically changed, and a renewed effort to gain contextualized insights is essential.
DISCUSSION HIGHLIGHT: Enforcing Clean Cotton Supply
The complexity of companies’ supply chains limits visibility into raw materials like cotton, making it difficult to identify sources of abuse in supply chains. Participants discussed the importance of identifying forced labor in the sourcing of cotton — a commodity that is largely sourced from the Xinjiang province in China, where the Uighur population is subjected to forced labor. If companies fail to exclude Xinjiang cotton from their supply chains, they risk violating US law and face backlash from activist consumers for being complicit in abuse. But forsaking Xinjiang cotton means alienating Chinese consumers and the Chinese government, who believe Western companies are thwarting growth potential. This, in turn, contributes to broader geopolitical tensions that exacerbate supply chain issues as a whole. Multiple speakers addressed the acute challenges of identifying and avoiding cotton produced with forced labor, and the myriad political considerations attached to that issue. The group exchanged ideas about a range of practices — involving local information-gathering, satellite imagery, activist and industry initiatives, and a variety of technological tools — to uncover and prevent forced labor.
DISCUSSION HIGHLIGHT: Health Products and COVID-19 Traceability
The COVID-19 pandemic has exacerbated fraudulent activity in the global healthcare system, including in the production and sale of fake drugs and personal protective equipment (PPE). The rapid development, distribution, and administration of vaccines has created unique challenges and opportunities for malfeasance. The exponential demand for protective supplies, combined with the lack of traceability measures, has enabled many counterfeit products to flood the market. In countries experiencing vaccine hesitancy, the flood of counterfeit products only further undermines public distrust in health authorities. Roundtable participants discussed emerging challenges in the healthcare supply chain, strategies for tracking and tracing products, tools to protect sensitive information, and considerations for efficient distribution.
This roundtable is part of an ongoing series of programming championed by Concordia and its Global Patron Members on the influence of ESG and geopolitics on global supply chains and manufacturing. Join us on November 9th for a virtual strategic dialogue further exploring the topic as part of the 2021 Concordia Indo-Pacific Initiative.