War in Ukraine Lives and livelihoods, lost and disrupted Report

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The Russian invasion of Ukraine has caused thegreatest humanitarian crisis in Europe since theSecond World War. Already, thousands of lives havebeen lost, and millions of livelihoods have beendisrupted through displacement, lost homes, andlost incomes (Exhibit 1). We, like so many others, areshocked by the unfolding humanitarian tragedy andthe consequences of this brutal war.As in any conflict, uncertainty is high. It is unclearhow the military situation, the political process, andthe countermeasures around the world will playout—in either the shorter or longer term. However,it is already certain that, as a consequence of theeconomic impact of the crisis on energy and foodmarkets, disruptions will affect many in Europeand beyond.In this article, we offer an initial framing of thechallenges, with full recognition of the uncertainties.We begin with a perspective on the short- andmidterm disruptions and then frame scenarios forthe potential impact on livelihoods in the eurozone,in the belief that some guidelines to bounduncertainty are better than none at all. As conditionschange, we will adjust. We conclude with somereflections on implications for business leaders asthey navigate yet another crisis.Web 2022UkraineExhibit 1 of 4Exhibit 1The Russian invasion of of Ukraine has has caused the greatest humanitarian crisisin in Europe since World War War II. II.Ukrainian refugees and internally displaced people since start of conflict (as of March 23)Internally displacedRefugeesBelarus4,938Poland2,144,244Ukraine¹6,295,051Russia271,254Slovakia256,838Hungary324,397Romania253,771Moldova371,104¹Ukraine internally displaced data as of March 16.Source: United Nations Office for the Coordination of Humanitarian Affairs, UNHCR2 War in Ukraine: Lives and livelihoods, lost and disrupted
Untangling short- andmidterm disruptionsAs business leaders deal with the short-termeffects of the conflict, fundamental disruptionsare under way that will shape the future beyondthe immediate crisis. While we recognize that morechallenges may emerge over time, several areas arealready apparent:— The invasion of Ukraine is causing a massivehumanitarian crisis. In addition to the pain andsuffering experienced by those inside Ukraine,there are already more than three million peopleseeking refuge in neighboring nations, withsimilar numbers displaced within Ukraine. Asin other major conflicts and refugee crises—including those in Syria and Yemen—it will be agargantuan task for the world community to aid,shelter, and host these unfortunate people.— Once again, the vulnerable will suffer themost. Vulnerable populations are most likely tobecome refugees and will find it hardest to bearthe rising costs of food and fuel. Aid efforts areunder way globally to ensure that people’s basicneeds for food, shelter, and psychological safetyare met, in and beyond the conflict zone. Initialdiscussions on how to defray higher energycosts for all are taking place in many countries,and first funds have been made available.— Energy policy is rotating toward secure accessand source diversification. The role of Russianoil and natural gas globally brings into focusthe importance of access to energy. Whileacceleration of renewable energy can solvepart of the puzzle, gas will remain an importantsource, and nuclear and coal may become largercomponents of the fuel mix to secure supply,particularly to replace potential shortages ofgas. The implications for achieving publiclycommitted net-zero emissions are not yet clear.— Food security is on the agenda. Theconcentration of wheat, fertilizer, and relatedproduction in Russia and Ukraine will strain foodsupplies globally. Securing the continual supplyof food to the countries most exposed to exportsfrom these regions is becoming a major neartermissue.— The competition for critical materials,equipment, and commodities intensifies.The world’s real and perceived needs for secureaccess to natural resources, materials, andadvanced equipment (for example, neon, nickel,palladium, semiconductors) is likely to growand further intensify the race among nationsand companies.— A new age of supply chain control effortsand localization attempts has arrived.The era of not looking too closely at supplychains, trusting suppliers, and optimizing forcost is probably over. Those behaviors, alreadymade suspect by new tariff regimes andthe COVID-19 pandemic, are now likely tobe consigned to history. Governments andcorporations are looking to increase supplychain resiliency and are considering innovativeways to fund these changes.— Global technology standards are more likelyto separate. To promote security interests andforeign-policy objectives, governments haveincreased the use of geo-economic tools suchas sanctions, direct-state support to strategicindustries, and export controls over sensitiveequipment, software, and technology. Thecoordinated use of these tools by like-mindedcountries in response to Russia’s invasion ofUkraine is likely to accelerate the trend towardseparation of standards and independenttechnology development.War in Ukraine: Lives and livelihoods, lost and disrupted3
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War in Ukraine Lives and livelihoods, lost and disrupted Report

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