· Event impact
Geopolitical tensions reshape supply chains, informal labor.
Transmission path
Geopolitical tensions are driving firms to reconfigure supply chains, potentially increasing reliance on informal and subcontracted labor, which introduces hidden social and operational risks for investors assessing ESG and operational disruption.
Market mechanism
Geopolitical tensions are driving firms to reconfigure supply chains, potentially increasing reliance on informal and subcontracted labor, which introduces hidden social and operational risks for investors assessing ESG and operational disruption.
Extended read
New research, based on 60 worker interviews, highlights how geopolitical tensions are fundamentally reshaping global supply chains. This restructuring is leading to a greater reliance on informal economic activities and subcontracted labor as firms adapt to geopolitical risks. The study specifically examines how workers adjust to these reconfigurations. For investors, this trend implies potential hidden social and operational risks within geopolitically re-aligned sourcing arrangements. It is particularly relevant for assessing Environmental, Social, and Governance (ESG) factors, labor practices, and the potential for operational disruptions in regions affected by sanctions, export controls, or trade decoupling strategies.
Exposed assets
ESGU · MSCI
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