- The world can become more sustainable post coronavirus due to shorter supply chains, increased remote work, and animal rights.
- Due to the disruption in global supply chains, more US companies are planning on moving manufacturing to North America.
- Both shorter supply chains and increased remote work can have a significant impact on carbon emmisions.
- The coronavirus has had an immediate impact on Animal Rights.
The coronavirus outbreak is undoubtedly disrupting the world in ways only a pandemic or world war can do. Global markets are down double digits, and China’s GDP is on pace to contract by 6% contraction, leading some believe a global recession is inevitable. One of the more frightening aspects of this crisis is not the short-term economic damage but the potential long-lasting disruption to supply chains. The world relies on China’s manufacturing sector, and across all industries, Chinese facilities remain closed. Crucially, shipping and logistics companies have reported high closure rates signaling a sharp decline in exports.
Despite all the negative sentiments out there, I am an eternal optimist. Instead of writing about fear or sadness, I want to write about how some good may actually come out of this global pandemic. I believe the coronavirus can lead to a more sustainable future. Here are my top three ways,
1) Shortening Supply Chains
Between President Trump’s tariffs and the coronavirus, companies are becoming cautious about China. The tariffs raised prices of goods by a total of $77 billion across all US imports. Meanwhile, the coronavirus has decreased the supply of goods. The severity of the impact is complicated to project. The majority of global companies have no idea of what their risk exposure in Asia is. Most do not have complete knowledge of the locations of all partners that provide parts to their direct suppliers. For this reason, the Chinese shutdowns affect manufacturing companies across the region, not just China. The virus will have long term impacts on Asia’s entire manufacturing sector.
Also, a few companies have already shut down operations due to a lack of demand. For example, Chrysler recently shutdown facilities due to a lack of demand in addition to the supply of parts. Similarly, Hyundai said that it “decided to suspend its production lines from operating at its plants in Korea … due to disruptions in the supply of parts resulting from the coronavirus outbreak in China.” In general, there is both a supply and a demand problem with Asian supply chains.
All this chaos means that more European and North American companies are, at the least, looking into moving more manufacturing closer to home. However, the bigger the supply chain, the bigger the challenge of moving production back to the western hemisphere. Take the US footwear industry; 70% of shoes sold in the US come from China, while just 1% are made in the US. That’s right, 99% of all footwear produced is imported. Quite simply, the infrastructure to manufacture in the US is not in place to move production our of Asia on a large scale. This is true across many industries.
Nonetheless, more companies want to move manufacturing closer to home. According to a 2020 International Trade and Trends in Mexico survey, 160 executives from the manufacturing, automotive and technology sectors said they intended to move business to Mexico from Asia in the next five years.
What are the sustainability benefits of moving manufacturing to Mexico or closer to the final consumer?
- Reduced Carbon Footprint: Products made by nearby vendors immediately cuts down on logistical miles, which reduces carbon emissions. Also, local suppliers are more likely to source from other local companies, which further reduces environmental impact.
- Transparency: Taking a 24 flight to visit a manufacturer is impractical and a burdensome task. Consequently, many companies cannot efficiently monitor their manufacturing partners. Without proper oversight, Asian manufacturers have a history of utilizing unsustainable practices to save money. However, manufacturing closer to your headquarters allows companies to have better control of their supply chain due to proximity.
- Increased Efficiency: There is alot of waste that goes into manufacturing. Due to shorter lead times, companies that manufacture closer to the final consumer have increased forecast accuracy, which equates to less wasted goods.
2) Animal Rights and Wildlife Trade
Many people associate sustainability with pollution, but sustainability encompasses the treatment of all living things. The Chinese Congress approved a ban on the sale and consumption of wild animals after it was linked to the spread of the coronavirus. China has over 20,000 farms raising species, including peacocks, civet cats, porcupines, ostriches, wild geese, and boar. I am not going to get into the danger of eating these wild animals, but 75% of emerging infectious diseases come from animals. However, the more significant victory is for animal rights. The animals affected in china’s wildlife trade suffer during the entirety of their lives. If captured in the wild, animals endure grueling transport conditions where chances of survival are low. The ones that survive or are breed into captivity face horrible living conditions. China does not enforce animal cruelty laws. Google it; it’s not a pretty sight.
Still, China has a long way to go when it comes to animal rights. The ban does not include the trade of wildlife for non-food uses, which may open up loopholes. Nonetheless, with public opinion in favor of the ban, this is a big step in the right direction. Hopefully, as the disease continues to spreads, the entire world will rethink how we treat and use captive animals.
3) Increased Remote Work
With millions under lockdown, many of China’s workers have been forced into telecommuting. Popular with just a few sectors, the outbreak has forced companies with few remote workers to find creative ways to make distant working effective long term. It’s not only China; companies around the world are encouraging remote work due to the coronavirus, including Twitter, Google, and Facebook. Whether it is a flight or the use of cabs, every daily commute, work trip, generates CO2. In fact, business travel can represent over 50% of a company’s greenhouse gas emissions. A small reduction in global business travel will significantly decrease greenhouse emissions overtime.
However, there needs to be innovation. Slack, Zoom, and the cloud are not enough. Remote work is a controversial subject in the board rooms of most companies as there are conflicting reports to its benefits to productivity. Many companies, including IBM, gave remote work a try but have since retracted the policies. Hopefully, new remote work innovation will arise out of this pandemic leading to a world with less wasteful business travel.
Can The World Learn From the Coronavirus?
Besides increased sustainability, I hope the world learns a lesson in human empathy. The coronavirus Chinese origin has unsurprisingly sparked an increase in xenophobia and racism. In the US, there have been multiple attacks on Asians since the outbreak. Meanwhile, the world needs to collaborate to stop the spread. We need empathy, not fear.