Resilience in Sustainable Global Supply Chains: Evidence and Policy Recommendations

Hannes Grohs, Jan Grumiller, Werner Raza
DOI number
#Sustainability standards
#Corporate responsibility and lead firms

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The COVID-19 pandemic-induced lockdowns and export restrictions highlighted the vulnerability of global trade and global value chains (GVCs). What is more, many commentators argue that the likelihood of exogenous shocks that threaten international trade and GVCs, such as natural disasters, pandemics, or political conflicts will increase in the future. In light of the new global context and due to the experiences during the COVID-19 pandemic, it is increasingly acknowledged in the scientific community and among policy-makers that the resilience of critical and vulnerable GVCs needs to be strengthened in order to guarantee security of supply. However, a major shortcoming of the current debate on how to improve GVC resilience is that it is not linked to the issue of environmental sustainability. This report aims at addressing this link between GVC resilience and sustainability, both at the conceptual and the policy level. To this end, the report (a) provides a systematic over-view of the literature, highlighting the trade-offs and compatibilities between GVC resilience, sustainability and efficiency; (b) assesses selected policy initiatives on GVC resilience and sustainability, including the US Executive Order 14017 on America’s Supply Chains; (c) presents a case study on the medical products sector in order to provide a better understanding of the strategic aspects of resilience and sustainability in supply chain management in the context of the recently witnessed GVC disruptions; and (d) develops policy recommendations. This report argues that since the emergence of GVCs, firms have primarily focused on GVC efficiency and largely disregarded GVC resilience and sustainability. In general, GVC efficiency, resilience and sustainability have important trade-offs as well as compatibilities that policy-makers need to take into consideration. In many GVCs, increasing GVC resilience and sustainability requires policy interventions since the desired societal level of GVC efficiency, sustainability, and resilience differs from firms’ perspectives, particularly because increasing GVC resilience and sustainability can be very costly and challenging for firms.

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