Coronavirus is shining the spotlight on unhealthy supply chains: cleaning them up will help both business resilience and worker wellbeing
This article was co-written with Christine Bader
The Coronavirus is leaving no sector of the global economy untouched. Electronics, automotive, healthcare, clothing and others are reporting delays in production, reductions in sales, and hits on earnings.
But when we speak in abstract terms of slowdowns in global manufacturing, all we hear is the sound of big machines grinding to a halt. Which is true — but misses the much larger human costs that accrue to the most vulnerable members of the global supply chain.
It is in every company’s best interest to assess the impacts of this pandemic not just to their bottom line, but to the people who work for their vendors and suppliers — and find ways of supporting them like the critical long-term partners they are.
Beyond the health consequences of the virus, those in global supply chains who are being the hardest hit by the outbreak are those who were already the most vulnerable, earning minimal wages and benefits and lacking a safety net for themselves and their families.
In China, where the pandemic began, workers are being terminated or suspended with partial or no compensation, and paychecks are being cancelled or delayed. By one estimate, China’s 300 million rural migrant workers could lose a combined US$115 billion in wages.
Even workers in countries where the virus hast yet to spread are starting to suffer a similar fate due to the interdependence of our global supply chains. Myanmar’s 600 garment factories rely on China for 90% of their woven fabrics, and half of those factories could shutter soon if they don’t receive materials in time — leaving the 450,000 mostly women workers without the salary that supports their families. Same in Bangladesh, and other countries that depend heavily on Chinese exports.
Closer to home, companies have started offering support to vulnerable workers beyond their own employees. Microsoft announced that it would continue to pay its vendor hourly service providers who staff the company’s cafes, drive its shuttles and provide other support for its offices in California and Washington State while those offices are closed. Facebook, Amazon, Expedia Group, Google and Twitter soon fell in line and did the same.
Beyond technology companies, logistics company Hermes Parcelnet announced that it would continue to pay its self-employed couriers who need to take time off due to the virus. Deliveroo, Uber and Lyft have followed suit.
Companies are starting to consider the impacts on workers in their supply chain as well. On Friday, UK supermarket Morrisons committed to advancing payments to its smaller foodmakers, farmers and businesses that stock its shelves.
Other businesses should follow suit and support the invisible workers that make their businesses possible, even beyond the legal boundaries of their direct employees and the physical boundaries of their home countries.
Most companies have a supplier and vendor code of conduct, spelling out their expectations that the third parties they work with will pay and treat their workers properly. Now, all companies should ask: How do we reconcile our commitment to wages being paid, while understanding that suppliers are bleeding revenue — only part of which comes from us? How do we reconcile our commitment to reasonable working hours with our desire to get production back on track?
The answer doesn’t have to be the buyer taking full financial responsibility. For starters, buyers can bring together interested parties to begin developing solutions. For example, when an unauthorised supplier to H&M in Cambodia went bankrupt in 2012, leaving 200 workers unpaid, H&M convened conversations with the Government of Cambodia, union representatives and other buyers to create a joint account for compensation.
Some companies may question whether the wellbeing of those working for their suppliers and vendors is really their responsibility, particularly when they’re concerned about their own survival.
The resounding answer is yes. From the Nike and Kathie Lee Gifford sweatshop scandals in the 1990s to the dozens of brands that were sourcing from the Rana Plaza factory complex that collapsed in Bangladesh in 2014 killing 1,134 people, firms have learned that while they might legally distance themselves from their suppliers, business continuity and brand reputation suggest otherwise.
Supply chain responsibility is also, increasingly, a matter of compliance, with legislative initiatives such as the UK Modern Slavery Act, the California Transparency in Supply Chains Act and the French duty of vigilance law.
Resilient businesses are resilient not despite of, but because of the fact that they place people at the heart of their business decisions. We have both worked with many companies across sectors and regions over the years, and seen time and time again that investing in strong stakeholder relationships strengthens continuity in times of crisis. During the last decade’s Ebola outbreak in Liberia, palm oil company EPO continued to maintain employment and visited its neighbouring communities daily, donating sanitation supplies and equipment, and today reports stronger community relationships as a result.
This particular pandemic will eventually pass; but the climate crisis and other unforeseen events will continue to challenge our systems and institutions. Now is the time to develop responses not just to this particular pandemic, but to the even more insidious disease of vulnerability for the world’s most vulnerable workers. If they don’t have a safety net, the rest of us don’t either.
Anna Triponel is a former corporate attorney with Jones Day and founder of Triponel Consulting, a business and human rights advisory firm. Christine Bader is co-founder of The Life I Want (thelifeiwant.co), a storytelling project reimagining a future of work that works for all, and from 2015–17 was Amazon’s director of social responsibility. Bader and Triponel worked together on the United Nations mandate on business and human rights, which concluded in 2011.