Zero Carbon, Your Cup Of Coffee, And The Supply Chain Challenge

Trade-dependent Singapore will need to act quickly as existing model of competitiveness changes with companies under pressure to decarbonise. Green infrastructure and standards are the way ahead.

- Thia Jang Ping

It is a system the ordinary consumer doesn’t think about, yet it is vital in supplying daily necessities from coffee to laptops – that of global value chains (GVCs).

Now more people are now awakened to the necessity – and fragility – of this system of production of goods and services across multiple locations worldwide, thanks to the delays, shortages and other shocks arising from the pandemic’s disruptions.

Even though the current upheavals will eventually ease and settle, an even bigger challenge looms – the requirement under Paris Agreement on climate change to cut planet-warming carbon emissions.

A growing number of countries and companies are pledging to achieve net zero emissions. The push towards this goal and the transition present a challenge that has many implications for Singapore, given that GVC activities and trade have been our economic lifeline. With trade that is more than three times our GDP, many of our companies – together with multinationals – are all engaged in value chain activities of some kind.

The role and evolution of GVCs, together with challenges and implications regarding carbon emissions, are spelt out in the latest publication by the Asian Infrastructure Investment Bank (AIIB), Sustaining Global Value Chains, to be released at its annual meeting next week.

We estimate that more than 70 per cent of Singapore’s exports are GVC-related. As companies come under increasing pressure from governments and consumers to decarbonise, it stands to reason that Singapore will need to act quickly.

The pressure is on as GVC products and activities embed a significant amount of carbon emissions, which are then traded across borders.