The circular economy needs to find the middle ground

It's clear that UK industry must move away from the old linear model of 'take-make-dispose' and towards a circular economy. But where on that journey is UK plc, and what more needs to be done to drive it forward? SITA chief executive David Palmer-Jones considers things 'in the round'.

Moving from a linear to a circular economy requires both a top-down and a bottom-up approach. By top-down, we refer to policies that discourage linearity (such as landfill tax) and also support circularity. These policies are enacted through regulatory levers only governments can control.

By bottom-up, we mean the recognition, by companies, of the financial benefits that resource-efficient, circular, business models can bring, and to then work with the waste management sector to deliver these benefits. In other words, apart from the occasional regulatory nudge, such as maintaining landfill tax, active Government intervention is not required.

The UK’s devolved administrations have different views on the role of Government. Compare, for example, the Scottish Government’s willingness to lead from the front against England’s approach to waste policy. Zero Waste Scotland sees ambitious targets and other legislative measures as essential to underpin a viable circular economy.

Defra, on the other hand, sees these measures as a burden on business. Indeed Defra informed us last year that, in their view, “Government’s role should reduce as businesses increasingly realise the economic and commercial opportunities that arise from resource efficiencies and tackling environmental challenges”.

In our view, Defra’s assumption that businesses have aligned and adjusted their commercial interests to wider environmental concerns is highly questionable. By and large, environmental concerns are still too far removed from day-to-day commercial dealing. Neither are they properly costed into the goods or services on offer. Either way, the economic signals are, as yet, not strong or visible enough for the average company to spontaneously change the way it does business.

Some businesses can and have led the way towards circularity – notably the large national and multinational producers and retailers. For these customers, working in partnership with their waste manager is key.

But even here, there are limits to the extent to which individual companies can turn an entire economy around purely by influencing their respective supply chains. A recent UN Global Compact survey of 1000 leading chief executive officers (CEOs) found that, while remaining fully committed to sustainability as a business goal, many CEOs had taken their companies as far as they could, given the structures, incentives and demands of the market.

Their greatest problem was the lack of a link between sustainability and business value. The market was still heavily tilted in favour of the linear economy, giving companies with a linear business model a competitive edge.

This has a knock-on effect on the waste management sector, because our own circular business models rely on secure markets into which we can place our recycled and recovered products.

The UK has hitherto concentrated almost exclusively on end-of-pipe ‘push’ policies such as landfill diversion and recycling targets. The lack of balancing ‘pull’ levers, the latter aimed at creating and supporting viable markets for the materials diverted from landfill, has resulted in extremely soft markets in the UK for recycled streams, and hence our sector’s reliance on export.

With this in mind, what policy measures should we be promoting?

As a rule of thumb, our thinking should be circular rather than linear. We should not just be looking to get waste out of landfill and into recycling, but alongside these we also need measures to ensure that a market exists for these materials. In essence, that is what our CEOs said was lacking in the UN global survey.

Given that we believe regulatory intervention is essential to drive the circular economy, what we currently lack is real leadership from Government. More than anything else, this is what SITA UK asks of the next Government, of whatever complexion.

This article first appeared in the September issue of edie sister title Local Authority Waste & Recycling

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