Jan 29, 2022 - Economy

A pandemic victim: Ethical supply chains

Illustration: Aïda Amer/Axios

Illustration: Aïda Amer/Axios

Over the last decade, global companies have put in place elaborate policies to ensure their suppliers protect worker safety and human rights. They're struggling to comply with those policies in the pandemic.

Driving the news: COVID-era disruptions have caused a spike in noncompliance with health and safety rules, according to new data from Qima, which audits supply chains.

Why it matters: Companies have spent years trying to appeal to consumers by promising ethical consumption. The supply chain crisis has made those promises worthless.

By the numbers: Qima, which inspects suppliers of consumer goods and food products in 80 countries, said that 29% of factories audited in 2021 were "critically non-compliant," requiring immediate intervention — up from 18% in both 2019 and 2020.

  • The share of factories experiencing critical violations of health and safety guidelines doubled to 16%.

The big picture: As the pandemic caused rolling shutdowns across the world economy, companies needed to act nimbly, shifting production to new countries and new facilities. Some of those factories cut corners to fulfill the new demand.

  • "Put yourself in the shoes of a factory manager in Vietnam or China. You have no visibility into the future, you see brands canceling orders overnight. It's very tempting for them to take shortcuts," says Mathieu Labasse, vice president at Qima.

The bottom line: It's one thing to gain a PR advantage from talking about an ethical supply chain. It's quite another to stick to those policies when the going gets tough.

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