Charting APEC’s Framework for Sustainable Supply Chains

APEC’s longstanding frameworks and collaborative initiatives are driving the transition toward sustainable, resilient and inclusive supply chains across the Asia-Pacific region.

In recent years, global supply chains have come under immense pressure, from geopolitical tensions and pandemic shocks to climate change and resource scarcity. These events have made one thing clear: to remain resilient, supply chains must also become sustainable.

As we gather in Jeju for the APEC Forum on Sustainable Supply Chains, this moment offers us a chance to reflect on APEC’s journey so far in pursuing sustainability, and how we can build on our foundations to shape the next chapter of resilient, climate-smart supply chains.

APEC’s Early Footprint on Sustainability

Sustainability is not a new conversation for APEC. As early as 2012, APEC Leaders made a formal commitment to promote green growth and seek practical, trade-enhancing solutions to global environmental challenges.

That commitment deepened over time. By 2020, APEC leaders underscored the importance of economic policies that support global efforts to tackle climate change and strengthen emergency preparedness.

In 2022, our collective agenda expanded further to embrace the bio-circular-green (BCG) economy, an integrated model that applies innovation and technology to reduce waste, increase resource efficiency and foster new green business models.

We have also taken concrete steps across various APEC fora—from energy and small and medium enterprises (SMEs), to emergency preparedness—to embed sustainability into trade and investment.

One of our more practical achievements has been the APEC List of Environmental Goods, now updated to HS 2022 nomenclature. This list reduces tariffs on 54 goods critical to environmental protection and renewable energy, helping economies transition toward greener industries.

Institutional Tools for Supply Chain Sustainability

Sustainability efforts must be anchored in solid institutional mechanisms that support economic integration in the region. APEC has long recognized the importance of concrete deliverables to support global business and trade.

A cornerstone initiative is the Supply Chain Connectivity Framework Action Plan (SCFAP) started in 2009, now in its third phase (2022–2026). This action plan resolves five chokepoints affecting supply chain efficiency and resilience; from inadequate infrastructure and digitalization to a lack of awareness and support for sustainable practices. Through addressing SCFAP chokepoints, APEC has promoted policies that improve the functioning of global supply chains including by encouraging green procurement across governments, large firms and SMEs.

Member economies are also driving the adoption of BCG economy principles by integrating them into broader trade and sustainability strategies. In addition, greater engagement from the private sector is being incentivized through tax reforms, updated regulatory frameworks and increased public procurement of green goods.

Support for small businesses remains central to these efforts, particularly in enabling them to adopt extensive sustainability strategy across the supply chain. This includes improving access to financing, low-carbon technologies and sustainability toolkits. Trade and investment are increasingly being leveraged to accelerate the transition toward lower emissions and greener operations.

Progress is evident in certain front. We are seeing more companies publishing sustainability reports and growth in renewable energy capacity, but there are still gaps. The region is still lagging in terms of clean energy transitions, and many firms still struggle to measure or manage their environmental footprint effectively.

Why Focus on Supply Chains?

Supply chains are the epicenter where sustainability challenges and opportunities intersect. They account for more than 50 percent of global greenhouse gas emissions, driven by transportation, manufacturing and energy use.

A typical consumer-goods company’s supply chain generates more than 90 percent of its environmental impact, including land and water use and carbon emissions, which originates not from its own in-house operations but from its suppliers. This mostly falls under what we call Scope 3 emissions and they remain the hardest to monitor and tackle.

Despite being the most significant contributor to a company’s carbon footprint, Scope 3 emissions are a strategic priority for only a small fraction of businesses. Much of this is due to a lack of visibility and reliable data. The complexity and length of modern supply chains make it difficult for lead firms to see beyond their immediate suppliers.

Recent surveys show that a majority of global CEOs struggle to measure environmental, social and governance performance across their value chains. Many manufacturers still lack insight into their suppliers’ sustainability performance. Without visibility, managing emissions becomes guesswork rather than an effective business strategy. The benefits of end-to-end transparency are clear: it allows firms to identify emissions hotspots, target interventions more effectively and prioritize collaboration with the suppliers that matter most.

The Role of Digital Innovation

This is where digital supply chain technologies can play a transformative role.

Tools such as digital twins—real-time simulations of supply chain operations—enable companies to model the impact of different decisions on cost, service delivery, and carbon output. This allows for smarter trade-offs and more efficient logistics planning. These innovations can significantly reduce emissions while still enhancing overall performance of the supply chain. Nearly half of global CEOs expect technologies like digital twins to drive major sustainability gains in their industries over the next five years.

However, the effectiveness of these tools depends entirely on data quality. Without accurate and up-to-date data, even the most advanced systems will fail to deliver meaningful improvements. Building robust data ecosystems remains a critical challenge for firms and economies alike.

Making the Business Case for Change

There is often a perception that sustainability is costly and hinders profitability. However, this assumption does not hold true for all businesses.

Recent findings from the HSBC-CDP report show that the estimated cost of mitigating supply chain-related climate risks is around USD 56 billion. This is significantly lower than the USD 162 billion in potential financial losses if no action is taken. In fact, the financial gains from proactive climate strategies in the upstream supply chain are estimated at USD 165 billion, with an investment requirement of less than one-eighth of that amount.

Sustainability is not just about ethical operations; it is also about smart business sense. The very tools that strengthen supply chain resilience such as visibility, digitization and supplier engagement, are also applicable to reduce emissions and environmental risks. These goals are not mutually exclusive; they are mutually reinforcing and can yield significant returns from sustainable practices.

What APEC Can Do Next

The way forward requires both top-down leadership and bottom-up participation.

On one hand, governments must continue to provide strategic guidelines, align policies, streamline environmental regulations and foster investment frameworks that reward and encourage sustainable behaviors. APEC’s updated Investment Facilitation Action Plan already moves in this direction by promoting quality and sustainable investments. On the other hand, suppliers, particularly SMEs, must be empowered with the financing, technologies and capacity-building they need to implement sustainable practices in an affordable manner. SMEs that embrace sustainable practices can access more global business opportunities and markets, further boosting their business operations and profitability.

Government enforcement alone is not enough and will not last without effective participation from the private sector. High-level standards must be supported by continuous engagement between lead firms and their suppliers. Large companies have the resources, technology and influence to guide sustainability improvements across their entire supply chain. That is why mutual partnerships, knowledge sharing and collaboration across borders remain vital to success.

A Shared Responsibility

Sustainability is a journey of continuous improvement and engagement. It requires systems thinking, long-term commitment, open mindset and a shared sense of responsibility.

APEC has laid down strong foundations throughout the years. Through collaborative platforms, trade-enabling policies and capacity-building efforts, we are well-positioned to lead the way toward green supply chains that are not only resilient, but efficient.

As participants at this forum engage in discussions and share perspectives, all of us should think beyond individual projects. Let us aim to shape a framework, one that enables sustainability to become not just an add-on, but a core feature and principle of how APEC economies trade, connect and grow.