Business leaders, take note. Committing to models of virtuosity, sustainability and the strongest environment, social and governance (ESG) standards when times are good is one thing. Adhering to these principles, including in one's supply chain, when the going gets tough is another matter.
This reality has very real implications for the most vulnerable, including migrant workers—many of whom come from South Asia, including Bangladesh and Nepal.
A very real case in point emerged this year involving glove manufacturers, whose sales have spiked due to coronavirus-driven fears and demand. Malaysian glove manufacturers who supply medical and rubber gloves globally were accused of mistreating workers. This included allegedly subjecting migrant workers to forced labour and overtime, withheld wages and confiscation of passports.
According to human rights organisations, the problem stems in part from recruitment fees, which were to be repaid by migrant workers through "debt bondage". The resulting "trial by social media" helped drive necessary changes that the most responsible businesses would have embraced early on.
The ongoing Covid-19 pandemic has wreaked havoc across the Indo-Pacific region—not just in South Asia—displacing populations, challenging governments and healthcare systems, and stretching the limits of "conscious capitalism" in some of the world's largest economies and most developed nations. This includes in South Asia, where India recently passed Brazil to become the second worst-hit country in terms of coronavirus infections, after the United States. Covid-19 cases topped 4.5 million in India by the second week of September.
Even wealthy Singapore, with its exemplary governance, infrastructure, and business environment, has faced challenges. We see this firsthand as the city state is home to the Milken Institute Asia Center, where we both serve as fellows of this non-profit, non-partisan economic think tank. Local news reports have documented well how a lack of attention early on to foreign workers in dormitories led to the majority of the city's Covid-19 infections.
During this public health crisis, the best—and not necessarily just the biggest—companies and large family businesses across Asia should step up and forward in their treatment of employees at home and abroad. Business owners, executives and investors can help ensure that the long-touted ESG leadership is not simply a buzzword from when times are good. This includes companies that rely on a Bangladeshi workforce whether on their own payroll or that of their suppliers.
Though the forms and approaches will be different, cross-sector partnerships by businesses are vital in any all-nation solution to the challenge of Covid-19. Civil society—in its varying and contrasting forms—also must be engaged, and governments at all levels will have to play a role, whether through policy changes or direct or indirect financial support.
Regardless of what laws mandate, all stakeholders must focus on what the virus bodes for ESG standards implementation in all their markets and, critically, throughout their supply chains. While the best environmental and governance practices have been embraced by many companies, their true test now emerges in the "S," or social issues space.
Traditionally, the "S" in ESG has covered several topics, including product safety and consumer protection, labour practices, workforce diversity, and human rights across a company's supply chain.
How companies treat their employees in a given market—and increasingly how their suppliers treat their employees down the supply chains—at this time will influence how their business and product brands are perceived long after the pandemic. This will include treatment of female workers, contract employees including migrant workers, and part-time staff.
Economic challenges are significant. Countries face what the International Monetary Fund (IMF) projects to be the worst recession since the Great Depression. According to the International Monetary Fund's June 2020 world economic outlook report, the global economy is projected to shrink by 4.9 percent in 2020, a stark contrast to the 3.3 percent global GDP expansion for this year that it forecasted in January.
The coronavirus has tremendously disrupted business and society. Companies continue to cut costs and re-evaluate their workforces, and countless employees live in fear over their job security.
Growing job loss numbers underscore the scale of the global coronavirus shock. In the United States, unemployment filings reached more than 26 million by the third week of April, nullifying all job gains made since the end of the last recession. And in economies with limited social safety nets and where large portions of the workforce constitute the informal sector, the loss of a job can be even more devastating on individual households.
Amidst these challenges, however, anecdotes abound of businesses vowing to take care of their workforce through a variety of new measures and programmes. Numerous smaller businesses with significantly fewer resources have also stepped up to strengthen safety nets for their employees. For migrant workers, a simple, powerful change would be businesses agreeing to pay off recruitment fees, freeing workers from any upfront debt.
Good leadership is innovative. Difficult times call for all companies—small, medium, and large, and family-owned, privately-held or publicly-listed—to work towards greater employee security. Protecting employees today will enable businesses to establish a strong foundation for continued success and legitimate ESG bragging rights in a post-pandemic world, whether in Bangladesh or elsewhere.
Curtis S. Chin, a former US Ambassador to the Asian Development Bank, is the inaugural Asia Fellow of the Milken Institute. Abhinav Seetharaman is the Princeton-In-Asia Fellow at the Milken Institute Asia Center in Singapore.