APEC CEO Summit 2021: Highlights and insights
The full APEC CEO Summit is now available to watch, free, here.
Over two days in November, the world’s most influential political, business and thought leaders came together for the APEC CEO Summit 2021 to discuss ways the region can learn from each other and work together and to ensure it emerges from the pandemic stronger than ever.
The Summit addressed challenges and opportunities presented by the current situation, with a focus on five themes: the state of the world with, and post Covid; the digital disruption opportunity; the primacy of trust; the future of energy; and the sustainability imperative.
The state of the world with and post-COVID
The Summit was set at a complicated economic period as the world rebuilds in the wake of the pandemic. Just a year prior, the region’s economy saw a record contraction of -5 per cent, with estimates suggesting the Asia-Pacific lost over $2 trillion in potential trade over 2020.
This downturn was both faster and deeper compared to the global financial crisis – although will likely be shorter. Demonstrating this rapid turnaround, the last quarter saw record growth of 10 per cent in the region.
Keynotes from PwC global chair Bob Moritz and OECD Secretary-General Mathias Cormann, along with Dr Alan Bollard’s panel discussion on the economic state of the world helped to decipher the recovery and set the scene for the Summit. While the tone from speakers was optimistic, they cautioned the economy is still significantly impacted by the ongoing disruption of the pandemic and can be seen reflected in myriad contradictions.
The dramatic increase in trade is predominantly occurring in merchandise, with the region experiencing a chronic shortage of goods to meet demand, yet services trade is still worryingly negative.
- Domestic investment has been increasing, but foreign direct investment is at a 20-year low.
- Costs and wages are increasing, but productivity is stagnant.
- Jobs are being displaced, but skills shortages are being reported widely across the region.
- Uncertainty and significant downside risks remain, including inflationary pressures and the emergence of new Covid strains, vaccination levels and continued disruption from the pandemic – including the fourth wave beginning to sweep through Europe.
But the recovery is also providing the region tremendous opportunity – particularly for those businesses able to adapt and grow quickly and create supply chains that are robust and scalable.
Prime Minister Jacinda Ardern, this year’s APEC chair, said in her opening address:
“We have a saying in New Zealand. He rau ringa e oti ai – many hands make light work.
“The heavy load of a global pandemic that in equal measure threatens lives and livelihoods has been countered only with an extraordinary commitment to unity, partnership and progress in spite of the challenges.”
Former New Zealand Prime Minister and Administrator of United Nations Development Programme Helen Clark shared a similar sentiment, reminding delegates that they must work together and grab hold of the positives that can come from standing up to a crisis.
“We can strengthen our national systems for pandemic preparedness and response, and we can strengthen the global systems. All of that is good for business,” she said.
“If we are looking at the world we are trying to create, inclusion going forward is critical. But we must also build in resilience. Because if we don’t have resilient systems like with pandemic preparedness and response, we will repeat these lessons over and over.”
Recently elected President of Peru, José Pedro Castillo Terrones, shared a similar view, noting the APEC forum “is an important space for coordinating measures and identifying good public policy practices to face complex health and economic challenges.”
The digital disruption opportunity
While all economies across the APEC region have been impacted by the pandemic, there is clear evidence that those with digital readiness endured the pandemic and rebounded better.
Economies with both physical and digital infrastructure have been faster to deploy digital tools in the fight against Covid-19 – including contact tracing, proof of vaccine and digital trade facilitation – which has enabled them to keep their economies more open.
The pandemic acted as an accelerant and removed hurdles for innovation. Five years’ worth of technology adoption occurred within the first eight weeks of the pandemic, and the importance of its role as an enabler of trade was reiterated in almost every session at the Summit.
“The companies without digitalisation have been hit harder,” said Diane Wang, chair and CEO of DHGate. “They are at a crossroads… the choices we make today will have consequences on gender equality, digital equality and inclusive growth, for decades to come.”
In her keynote address, technology entrepreneur Amber Mac cautioned CEOs that “it may feel like there is a thick line between what you do and what big tech does, but as you embrace a tech-first strategy – an obvious path to succeed in today’s digital world – that line will soon begin to blur.”
Companies, government, and the public sector were urged to continue to seize the opportunities from digitalisation, with a heavy emphasis that the economic recovery post-Covid will continue to be digitally enabled.
Micro, small and medium enterprises (MSMEs) are particularly vulnerable to the economic impacts of the pandemic. With MSMEs making up over 97 per cent of all enterprises in the region and employing over half the workforce, digital adoption and access to innovation and will be essential for all business.
This was highlighted by Singapore Prime Minister Lee Hsien Loong, who stressed that most SMEs are not as digitally prepared as large businesses, and risk being left behind. “APEC economies must help SMEs and their workers make the digital transition,” he said.
He also acknowledged that the rapid uptake of digital innovation means that APEC economies need to do more to invest in the digital frameworks of the future, including digital identity, digital payments solutions, data exchange, data authorisation and consent.
Australian Prime Minister Scott Morrison used his address to express his concern over the rise of technology, and the ability for it to be used for bad, as well as good.
Morrison called for stronger rules for the tech sector and suggested it would be better for the sector to work in partnership with governments on regulation – saying that if not, governments will do it anyway, and “will stuff it up because they don’t understand it the same way.”
The primacy of trust
Along with digital adoption, the pandemic has also accelerated the erosion of trust around the world. There is an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world.
This extends to business, and as trust expert and public relations leader Richard Edelman told the Summit, earning trust has never been more important – or more challenging.
He described how employees have emerged as the most important stakeholder in business, with people “voting with their feet” and making major decisions – including what they buy and who they work for – based on personal beliefs.
The growing expectation of business to focus on societal engagement with the same rigor, thoughtfulness and energy used to deliver on profit was evident from delegates – the primacy of trust quickly became the most interactive session at the Summit, attracting robust discussion through the conference platform.
Edelman explained how consumers, employees and other broad stakeholders are paying more attention to what businesses say and do, and how they respond to issues including climate change, racial injustice, and other societal issues.
Intrinsically tied into trust is the need for business to apply environmental, social and governance (ESG) principles to their strategy and operations to create value for all of society.
Reiterating Edelman, the ESG panel told the Summit that there is now a much broader group of stakeholders that must be considered, including employees and the community. But beyond this, there is a growing consensus that ESG has become an extremely powerful driver for business success and financial return and is no longer seen as something that only adds costs to business.
The panel called for business leaders across the region to put ESG front and centre, integrating the principles into the purpose and values of an organisation and ensuring their commitment is actionable, verifiable, and transparent.
“The actions required are expensive, substantial, and they have to be core to an organisations strategy,” said McKinsey’s Andrew Grant. “They can’t just be window dressing or a box-ticking exercise.”
The panel said that businesses must lean in and recognise that doing good for society is also good for business.
This call for business to be a force for good in the world was repeated in the highly anticipated keynote address from international human rights lawyer Amal Clooney. She told delegates that we no longer live in a world where businesses can say ‘human rights are none of our business’.
“It is increasingly difficult for companies to say ‘we are just here to make a profit’ and bury their heads in the sand,” she said.
“Businesses, big multinational corporations, and tech companies in particular are a key part of our multilateral world of decision-makers, and each one will decide whether to be a force for good or complicit in abuses of power.”
The sustainability imperative
The Summit was unique this year, with a political leader from outside the 21 APEC economies asked to give a perspective from outside the region. The conversation between German Chancellor Angela Merkel and New Zealand Prime Minister Jacinda Ardern traversed the state of the world, Covid-19, digital innovation, sustainability and leadership.
While the discussion gave many fascinating insights, one of the key points raised was the need to take the lessons from Covid-19 and to apply them to other critical areas. The pandemic forced governments and businesses to act with urgency and in partnership with different sectors and communities who know their people best.
This same principle could be applied to manage other world problems, including climate change, scaling the uptake of renewable energy, and dealing with pressing environmental and biodiversity issues.
“Never before have we been able to realise how interconnected we are globally,” said Merkel.
“What is happening here influences what is happening in Africa, in New Zealand and in the United States of America. That sense of how small our globe actually is when it looks to the spread of such a virus should continue to guide us when we tackle issues like biodiversity and climate protection.”
This message was echoed by Canadian environmentalist Dr David Suzuki, who gave a deeply passionate keynote address. He told attendees that the planet is “at code red – and that spells trouble for humans.”
“Nature pays no attention to human laws and borders,” he said. “We are animals. If we don’t have air for three minutes we die and if it is polluted, we get sick. But we use air as a garbage can for toxic waste. We must show reciprocity and responsiveness so nature can continue to be abundant and generous.
“Success as a species is to look ahead, recognise dangers and opportunities and choose a deliberate path to avoid danger.”
Viet Nam President Nguyen Xuan Phuc affirmed the strategic importance of sustainable development and climate change response for the region.
“Our green planet is shaken by cumulative and unprecedented impacts caused by climate change, extreme natural disasters, environmental degradation, and the COVID-19 pandemic,” he said.
“Time is not on our side, for these challenges continue to worsen with every passing day. Thus, we need to work closely together to overcome such hardships.”
A similar call was echoed by President of the People’s Republic of China, Xi Jinping.
“APEC economies should make its post-pandemic recovery a green one and take the lead in making a science-based response to climate change,” he told the Summit – just hours after announcing a surprise plan with the US to work together on cutting greenhouse gas emissions in the crucial next decade.
The future of energy
The APEC region demands around 60 per cent of the world’s energy consumption, and transitioning to new forms of clean energy production and consumption will be an essential part of meeting our climate change challenges.
In her keynote address on future energy challenges, Tesla chair Robyn Denholm told APEC economies that they must act now to accelerate their transition to renewable energy to power utilities, vehicles, communities and homes.
“We all succeed or fail together in the race to zero emissions,” she said.
Denholm said the growth in electric vehicle sales was encouraging, but it would be a steep climb to eliminate combustion engines. Getting there would require a joint effort between the public and private sector, with significant capital investment and supporting policies that set standards and deadlines on emissions to accelerate the transition.
“Vehicle pollution reduction will be only as fast as our ability to ramp up battery production and EV manufacturing,” she said.
In the panel on future energy solutions, Blackrock managing director for renewable power and sustainable investing Dr Valerie Speth, told delegates that there is no topic ranking higher than climate change and decarbonisation among her colleagues and investors.
“It is the best investment opportunity for the coming decades,” she said.
A similar message was shared by President of the Republic of Korea, Moon Jae-in. His administration has closed domestic coal-fired power plants, stopped permits for new ones and cut public funding for new overseas coal power plants.
“Instead, we are expanding the use of safe and clean energy,” he said. “By 2025 we will have more than doubled solar and wind power facilities from 2020 levels.”
South Korean companies are making a $37 billion investment in and exploring partnerships on all aspects of the hydrogen economy from production to distribution to end use.
He said that as an economic forum that represents 61 per cent of world GDP, APEC “will stand at the forefront of cultivating the hydrogen economy ecosystem.”
Looking to the future
The Asia-Pacific region is home to 270 million indigenous people, making up around 70 per cent of the world’s indigenous population. Yet the full potential of the community’s contribution to the region’s economy remains largely untapped and was disproportionately impacted by the pandemic.
The panel on the indigenous economy featured speakers from Aotearoa New Zealand, Canada and Australia, and discussed indigenous leadership and the ethos of putting culture at the centre of decision making.
Rangimarie Hunia, chief executive Ngāti Whātua Ōrakei Whai Māia, told the Summit that indigenous people have values and approaches that are ancient.
“When we start to be in the game of business, we take those values and we apply them to the long-term, not the short,” she said. “When I hear things like planet over profit, that has been our way of doing since time immemorial.”
Continuing the theme of ‘looking to the future’ was a focus on young people, who make up one-third of the region’s population. The Summit had the most ever young people attend as delegates, as well as many younger voices featured in keynotes and panels throughout.
One of the most inspiring keynote addresses came from Jerome Foster II – aged just 19 and the youngest ever adviser to a US President.
Foster was appointed to President Biden’s Environmental Justice Advisory Council after spending every Friday for 58 weeks campaigning for the climate outside the White House during Donald Trump’s presidency.
He encouraged other young people attending the Summit to know that they “have so much potential… this is the perfect time for you to really step into that, and to merge your passion with what you want to do for a living.”
“As a young person it often feels like you’re inheriting an Earth that is completely backwards,” he said. “But it is now our role to figure out how we are going to make that better.”
It is the next generation, after all, that are the biggest stakeholders in the work that APEC is doing.
Watch Tim McCready and panel: Fran O’Sullivan, Brent Wilton and Hannah Pattullo discuss what was learnt at the 2021 APEC CEO Summit.