In part two of her blog, Bioregional’s Johanna Tilkanen explains how changes to regulation and infrastructure can speed up the transition to a circular economy
In the first part of my blog I explained how digital technology and new financial models are creating new opportunities for circularity. Here I’m going to look at regulation and infrastructure.
Enabler no. 3: Regulation
Policy at the European as well as the regional level is increasingly moving towards the circular economy. However, the transition to a completely new way of thinking about materials, ownership and consumption is a long process which requires a lot of changes to existing legislation and regulations designed for a linear economic system.
A big issue is some of the regulatory barriers currently hindering the use of some secondary materials considered as ‘waste’. Many promising circular economy trials are often cut short upon realisation that cutting through the bureaucratic jungle of using a ‘waste’ material as a resource is too burdensome, costly or even impossible.
Overcoming these regulatory challenges requires pretty ambitious industry collaboration in pinpointing the bottlenecks many businesses are experiencing, whilst making sure that the secondary materials we use are safe and sustainable.
A recent report published by the Leaders Group on Climate Change has called for a robust policy framework to help the transition to a circular economy. It warns that given low carbon, oil and commodity prices businesses lack incentives to replace virgin resources with recycled resources.
This report, supported by companies as diverse as Coca-Cola, 3M, Unilever and GSK, found wide agreement on the need for more effective EU policies to help companies overcome these barriers. Examples included setting minimum design requirements, targeted tax measures for disposable items or to encourage repairs, more ambitious public procurement criteria, or reducing labour taxes in favour of resource taxes.
Enabler no. 4: Infrastructure
As the sourcing of materials in the new circular model moves from extracting virgin materials to recovering secondary materials, and from owning a product to having access to a service, infrastructure also needs a big shift to facilitate this change.
Many challenges remain here, requiring balanced efforts from businesses and government – such as publicly managed waste collection systems. Without the right recovery and recycling infrastructure in place, or a circular logistics system, we will never fully achieve a circular economy. There is also the need to standardise materials and components to facilitate re-use, recovery and recycling.
For example, you may have discovered a great, safe, secondary material to use as a raw material for your circular product but then find that there are not enough recycling facilities to secure the material supply. Or, even if the recycling facilities exist, the material does not actually get recycled for one reason or another. The vast majority of the 2.5 billion paper coffee cups used in the UK each year are not recycled for this reason.
Luckily, there are already promising examples of pioneering businesses coming up with solutions – look at B&Q’s Green Pallets scheme which uses reverse logistics and facilitates reuse of materials, or US-based The Materials Marketplace: a project using cloud computing to allow users to identify secondary material sources, encouraging their use.
DHL has developed a ‘reverse logistics’ business model that will allow organisations to map out and develop closed-loop product supply chains. Its Reverse Logistics Maturity Model provides detailed guidance on how businesses can tap into a process of moving goods after the point of sale for the purpose of re-capturing value or being disposed of properly, thus saving money and environmental resources, and eliminating waste.
One example of where the required standardisation has happened is vehicle batteries. Because almost all manufacturers use the same standardised materials, 99% of a vehicle battery can be recycled regardless of who produces it. Another sector that has started to look at reducing impacts and the potential role of standardisation is the plastics packaging sector, through the New Plastics Economy initiative.
Being bold will be worth it
Making the circular economy happen is about pushing the boundaries and shaking up the system until there is enough momentum to ensure the required shifts will happen naturally.
But in the meantime, it’s important to be aware of these institutions and frameworks to work out how you might be able to make them work for your (circular) benefit, and perhaps even more importantly, how you could collaborate with others to make the required changes happen.
Although it may seem that some of these circular economy ‘enablers’ are not yet as enabling as they need to be, you can still start to apply circular principles to your business. There are some inspiring examples here.
The circular economy challenges us all to change our thinking and collaborate in a completely new way to ensure that the transition to the circular economy is truly sustainable. And that is why it is so exciting. The amount of work required to get there may seem daunting, but for the sake of being able to live sustainably on our one planet, being bold in tackling these challenges will be well worth it.
Read Part 1 on circular economy enablers here
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Corporate Advisory Officer