Supply chains must be incentivised to quantify resource risk

The UK's manufacturing industry is at threat unless the Government intervenes to help businesses mitigate against resource risk, the Circular Economy Taskforce has warned.

This is the stark message from the taskforce’s first report – a year on since its formation in 2012. The research, produced by the Green Alliance which is facilitating taskforce action, sets out the major environmental risks that are creating commercial uncertainty among businesses in the UK.

These risks include the rising cost of mining copper due to water scarcity in regions such as Chile. Copper is a staple of the electronics industry, but extraction costs are going up as ore grades go down.

In addition uncertainty over future carbon prices is undermining the business case for better use and recovery of materials such as aluminum, while oil extraction is generating knock-on costs for manufacturers due to its energy-intensiveness.

The report says that less energy could be used by remanufacturing and recycling resources, and help to offset the price of oil.

However while there is a clear business appetite to avoid resource security risks, companies need enablers and the right market conditions to help them tackle the issues.

The Green Alliance points to the Government’s forthcoming industrial strategy – a long-term vision of how it will help UK business compete in future global markets – as a great opportunity to address the problem head-on.

“UK businesses can’t tackle resource risks effectively until the Government’s industrial strategy takes them seriously,” commented Green Alliance senior policy advisor and report author Dustin Benton.

“Other countries are taking action to secure resources to support their industries. The UK needs to act now or risks falling behind.”

The study also highlights the need for collaboration – which is now considered a central theme within the circular economy – right down the supply chain.

If there was a clearer industrial strategy this would de-risk partnership working and incentivise businesses to align their models and operations for smarter reuse strategies and recovery of secondary materials.

Read our in-depth report on the Circular Economy Taskforce report and its implications for business

Maxine Perella

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