How New Circular Economy Legislation Can Help Transform the Way We Do Business
Juan Jose Freijo Global Head of Sustainability Brambles Ltd - Jun 29th 2016, 12:22
One of the biggest challenges facing companies today is how to make their business models sustainable while promoting growth and profitability. In this age of globalisation, with huge demands on land, water, food, raw materials and energy, we cannot continue with a linear economy that in essence creates, uses and disposes, assuming resources are unlimited. A different approach is needed.
What is the circular economy?
A circular economy presents an alternative to the traditional linear system. It is based on “reduce, reuse and recycle” principles and strongly links the environmental and economic aspects of the operating business models, which are a more efficient alternative to traditional production and waste streams. It preserves increasingly scarce resources, keeps the value of products and materials in the economy for as long as possible and minimises the amount of waste generated, re-introducing them back into the production circle.
This new approach has benefits for business, communities and the planet. By making the most of materials, companies can generate efficiency savings and cut costs. If more and more firms take this approach, we can decouple economic growth from resource consumption which will make tackling climate change much easier. The European Commission estimates that becoming more circular could save around 500 billion tonnes of greenhouse gas emissions by 2035 while also boosting economic growth.
How are politicians getting involved?
As a crucial component of our planet’s future, many governments and political bodies are planning legislation based on the circular economy. On Wednesday 2nd December 2015, the EU released a Circular Economy Action Plan with tough targets for eliminating waste. By 2025, Member States must reuse and recycle:
Circular Economy - EU Commission
55% of plastic
60% of wood
75% of ferrous metal
75% of paper and cardboard
By 2030 these targets will be increased to:
75% of wood
85% of ferrous metal
85% of paper and cardboard
The 2030 plastic target will be set later, after the EU is able to measure progress and assess the impact of new technology. The plan also includes an objective to cut food waste in half by 2030, in line with The Consumer Goods Forum’s Food Waste Resolution and the UN’s Sustainable Development Goals.
It is in the Member States’ best interests to follow the EU’s Action Plan. Europe cannot compete with the rest of the world on wage costs or cheap natural resources. It must rely on leadership in green technologies and modern waste management to generate growth. The EU is advising Member States to use economic instruments such as landfill taxes and incineration charges to reduce waste.
How can we contribute to the circular economy and align with legislation?
There are many ways we can all make our economy more circular and reduce waste. It starts with transparency and traceability; knowing exactly how the materials we use are sourced and where they end up. The Consumer Goods Forum organises workshops and reports on this issue through its End-to-End Value Chain & Standards Pillar.
We should also take a circular approach to design, ensuring that as many components as possible can be recycled. There must be an efficient end-of-life strategy for the goods produced. Companies need to start thinking of themselves as providers of sustainable services, not creators of disposable products.
Challenging the current waste streams is also imperative. How much waste is created to get products to market? How can we make supply networks more efficient? What happens to all the packaging we use? By answering these questions, we can ‘close the loop’ and create a sustainable economy that benefits everyone long term.
One efficient way to integrate environmental aspects into modern supply networks is through close collaboration, not only between different companies but also through different industries. We must connect different parts of our economy together so we use resources as efficiently as possible. Inventive companies that can transform linear chains into sustainable networks will reap the benefits of an increasingly environmentally conscious economy.
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