Policy must catch up with business 'ingenuity' on resource efficiency, says Corporate Leaders Group
Business "ingenuity" on resource productivity has "moved ahead of the policy agenda" and politicians need to introduce new legislation that fosters the circular economy and service-based business models, according to the director of The Prince of Wales's Corporate Leaders Group (CLG).
Speaking ahead of a new report on business models for resource productivity, launched today (15 September), CLG’s director Jill Duggan told edie key political barriers had hindered the emergence of new business models that could generate new job opportunities.
“Part of the role of the CLG is to give policy makers confidence in making ambitious policy,” Duggan told edie. “But it’s much easier to invest against very strong signals from Government than very week signals; otherwise it’s a very slow take-up of these new approaches.
“We're at the beginning of this journey here and we haven't thought through all the consequences, but one could well be the spread and creation of job opportunities which could be a very attractive option for ministers and businesses.”
CLG - a coalition of European business leaders including Tesco, Kingfisher and Unilever - examined 14 companies, including the likes of Philips, Interserve and Stora Enso, as to how they were championing resource productivity. The companies were in agreement that “systemic challenges” were still slowing progress, such as a perceived market failure for secondary materials like plastic.
The report notes that all companies want EU regulations to be harmonised to create a broader understanding waste definitions, treatment and potential reuse and end-of-life applications.
The companies agreed that more effective policies were needed to help overcome current barriers such as setting minimum design requirements, targeted tax measures for disposable items to encourage repairs, more ambitious public procurement criteria and to reduce labour taxes in favour of resources taxes.
Some of the companies, such as Philips Lighting, are currently moving away from a linear business model to sell services and functions in relation to their products. This use of “servitisation” is offering unique economic benefits to certain companies, but is still in its infancy. The report recommends that policy is used to catalyse growth in this area and make other companies aware of the benefits.
The EU Commission estimates that waste prevention, re-use and resource productivity could create net savings of €600bn for businesses in the EU, all while reducing annual emissions by 2-4%. For the UK, nearly £80bn could be saved if the country adopts resource-efficient business models by 2030, according to the Aldersgate Group.
Broader social benefits
Outside of financial benefits, Duggan suggested that another selling point of a service-based model is the new stream of jobs created that are located outside of facilities. Jobs based on repair, remanufacturing and maintenance could create “more diverse opportunities for work across a lot of communities”, she noted.
“There are broader social benefits that can be told from this change in attitudes,” Duggan said. “The companies that survive and thrive are those that do look to the future to consider these issues and ones carrying on with old-fashioned ways are vulnerable.
“Part of the problem is communication and communicating policies to a whole range of businesses so they really understand what's expected and why. It's one of the first things that any Member State can do. Awareness raising is one of the most important things that any Government can do.”
The report draws on the conclusions provided by Interserve’s group director of sustainability Mat Roberts, who claimed that 70% of circular economy policy is focused on end life, whereas ideally, it should be “nearer 5% responsibility left for end of life decisions”.
The sentiment is echoed by Duggan who claimed that more emphasis should be placed on the design of products, with the aim of ultimately consuming less material. However, Duggan noted that these ideologies would have to be fed into school systems to equip the next generation of workers with the knowledge to champion resource productivity.
This isn’t the first time that Duggan has called on policymakers to catalyse companies to unleash new business models. Last year, Duggan told edie that policy makers should enable a “fundamental shift in attitude” to take place across all sectors in order to collaboratively push towards a resource-efficient future.