Context

COVID-19 has created immediate challenges and foregrounded systemic fragilities in global supply chains

The FCDO launched the BP4GG programme in February of 2020 to co-create initiatives with businesses to pilot and scale shared value innovations that can tackle the Sustainable Development Goals.

On 11th March, the World Health Organisation declared COVID-19 a pandemic. The shocks to complex supply chains across the world were already being felt. With national lockdowns, restricted travel and an immediate focus on maintaining the flow of essential goods, many industries were thrown into chaos and millions of vulnerable people were falling back into poverty.

In response to this growing crisis, the BP4GG programme created the Vulnerable Supply Chains Facility (VSCF), a fund to rapidly form partnerships with businesses and not for profits to jointly deliver support to vulnerable people in some of the hardest hit supply chains in agriculture and garments manufacturing.

As the pandemic continues, the situation has evolved from an immediate crisis-footing to questions around the longer-term resilience and sustainability of supply chains, and how to protect workers and their livelihoods during this pandemic, supporting their recovery, and in insulating them against future shocks.

The BP4GG programme will close at the end of 2021. The team is evaluating the experience of bringing together a disparate group of stakeholders to form a rapid response and thinking about the implications and sustainability of the activities that have been initiated.

At the same time, supply chain challenges in the UK have become increasingly acute and there is a surge of interest around how well global links in the chain are able to withstand public health shocks as well as economic and political changes. such as Brexit.

The UK has hosted COP26 to impel global leaders to commit to a drastic climate response. Both COP26 and COVID-19 are foregrounding the need to overhaul the current economic system, and take radical action on climate, wealth generation and inequity. In the UK this is translating to the need for post-COVID-19 ‘build back better’ green recovery.

FCDO merger

In September 2020 the UK Department for International Development (DFID) merged with the Foreign and Commonwealth Office (FCO) to become a joint diplomatic and development assistance department, the Foreign and Commonwealth Development Office (FCDO). Part of this mandate will be to bring trade and development closer, priorities that have been made more acute by the impact of COVID-19 and the UK’s departure from the European Union.

In November 2020 departmental budgets for 2021-22 were announced following a year-long spending review. Given the impact of the global pandemic on the economy and public finances the UK reduced its 2021 spend on Overseas Development Assistance (ODA) from 0.7% of gross national income to 0.5%. The most recent budget announcement in October 2021 commits to that reduction in spending until 2024.

The need for FCDO to work with the private sector and other partners to deliver on the SDGs is more pressing than ever.

The need to build resilient supply chains and meet SDG targets remains, while at the same time FCDO budget for funding large-scale projects has been reduced. This means the nature of FCDO’s role in tackling these challenges is changing. The overall financing gap to deliver on the SDGs has also continued to widen. To be able to effectively meet the challenges this presents, FCDO will have to work more closely and collaboratively than ever before with businesses in the UK and worldwide.

The impact of COVID-19, a perspective from UK businesses

Crisis management

Business leaders have described entering into ‘panic mode’ as a result of the ‘sheer chaos’ that COVID-19 created at the outbreak of the pandemic. One retailer described how it ‘felt like someone switched off the lights and everyone was feeling their way through’. Aisha Aswani, Senior Human Rights & Ethical Trading Manager at the Co-op, describes entering ‘a period of sustained crisis management’.

Loss of trading, jobs, and livelihoods

In March 2020, retail outlets were closed for non-essential goods. Whilst some trade moved online, garments saw a dip in these online sales. The designation of some goods as ‘non-essential’ was devastating for some businesses. Caroline Downey, Sustainable Sourcing Manager at MM flowers, describes how this designation meant that ‘flowers were destroyed, thousands were out of work and flower farms collapsed’. While the sale of these may have been ‘non-essential’ for European consumers, they are essential for producer countries and workers whose livelihoods depend on these exports. There was a dramatic impact on retailers; ‘revenues went down by 90%. Warehouses were full to the brim. There were 70% redundancies at head office level and 95% of staff were put on furlough.’

Shortage of goods & labour

Retailers have been under ongoing pressure to figure out the impact of the constrained availability of goods and labour on their operations. These on-going COVID-19 challenges have been compounded by more recent Brexitrelated labour shortages.

Shifts in consumer behaviour and values

Amy Morris, Ethics and Sustainability Manager at Waitrose and David Alder, Group Technical Director at importer and grower Minor Weir and Willis (MWW) describe rapid shifts in consumer purchasing. When lockdowns were first imposed people stopped buying and retailers stopped stocking flowers ‘overnight’, whilst there was a surge in demand for fresh produce from large retailers, especially those with out-of-town stores. Amidst these shifts, some existing trends in consumer behaviour accelerated, including concern about food miles and provenance, and the conditions for workers in labour forces.

Increasing cost of freighting

Flights were grounded, limiting air-freighting capacity however the demand for shipping perishable foods soared, causing the cost of air freighting for all produce to grow. This made a case for exploring alternative freighting via the sea. For importers such as David Alder at MWW, this has meant ‘needing to rapidly rethink supply chain routings, sources, and packaging technology.’

Pre-existing worker vulnerabilities to shocks foregrounded

According to Danny Miles, Corporate Human Rights, Ethical Trading & Modern Slavery Lead at Morrisons, the pandemic ‘placed a spotlight on less well understood areas of our supply chain and reinforced that there are pre-existing systemic issues that were exacerbated by the impacts of COVID-19’. Similarly, Fiona Sadler, Global Head of Ethical Trading at Marks and Spencer, highlights the ‘lack of any social protection for workers in countries outside of the UK to mitigate something so unknown and so fast.’ In sourcing countries without furlough schemes and social protection policies workers were left particularly exposed. In the garments sector this has brought to light ‘what that pressure for speed entails when sourcing from developing economies.’ COVID-19 has also caused a useful shift in some mindsets with retailers, suppliers, governments, and workers all seeing the need for greater safety nets in such times of crisis.

Reliance on local partners

Many businesses described how, with movement restrictions, they lost the ability to gather information on the ground and became highly reliant on local civil society organisations and NGOs for information on changing circumstances in sourcing countries, especially in rural areas. These NGOs also played a vital role in delivering support.