The social aspect of supply chain management is also receiving greater attention, with customers expecting ethically sourced materials and respect for factory workers. According to Sanjay Sadarangani, Head of Sustainability Propositions, Global Trade and Receivables Finance, HSBC, “This is due to increasing consumer awareness, particularly among Millennials and Gen Z, who want to make informed choices about the clothes they wear and food they consume. Compared to simply looking for the highest quality at the lowest price, brands are putting greater focus on the environmental as well as health and safety aspects of their supply chains.”
For MNCs, over 46% currently have health and safety supplier policies in place with another 34% planning to develop them within the coming two years. Among local and regional corporates, while 48% will have frameworks implemented within two years, 40% currently have either no near-term plans to develop them or are unsure of the status of their health and safety commitments, indicating this is still an evolving area in Asia.3
Regulations such as the German Supply Chain Due Diligence Act (SCDDA), are an important step in this regard – coming into force in January 2023, the SCDDA requires German firms with more than 3,000 employees in-market to conduct due diligence along their supply chains to combat labour exploitation and environmental degradation.4 With a significant proportion of their manufacturing taking place in Asia, there will be a positive impact on Asian supply chains as vendors will need to adhere to the regulations even if this is not yet a requirement from their buyers located in other markets.