Why a circular economy is good for jobs and growth

equipment for Metalworking production blurred imageThis post is by Marcus Gover, chief executive of WRAP, a longstanding member of Green Alliance’s Circular Economy Task Force, which works with leading businesses to develop practical ways to make the circular economy happen.

I often find myself explaining to people what the circular economy is not. People commonly think that it’s another way of talking about recycling, that it’s the latest passing corporate fad, or that it’s only relevant to the waste and resources sector. None of these things are true.

In fact, the circular economy is about creating growth and driving profitability, while increasing resource security, supply chain resilience and reducing the impact of production and consumption on the environment.

Resource efficiency benefits all sectors
A circular economy represents a huge opportunity for governments. So I am delighted that resource efficiency forms part of the Industrial Strategy Green Paper. This approach has the potential to deliver significant increases in the UK’s productivity, jobs and growth, as well as reducing greenhouse gas emissions, especially if, as we suggested in WRAP’s response, early action is taken and the approach is ambitious.

Resource efficiency and resource productivity are cross-cutting and indispensable to the move to a more circular economy. They are relevant to all sectors of the economy, not just the waste and resources sector. To achieve maximum economic and environmental benefits, I believe that all sector deals developed under the auspices of the Industrial Strategy should be required to demonstrate how they will incorporate resource productivity into their approach.

The forthcoming Defra waste and resources strategy is also a golden opportunity to drive growth and create jobs by mainstreaming the circular economy approach. Analysis of the pioneering EU Life+ REBus partnership project, led by WRAP, demonstrates the potential of resource efficient business models. Together the 26 REBus pilot projects delivered £4.9 million in financial benefits, 63,000 tonnes in material savings and 2,000 tonnes of greenhouse gas reductions, which when extrapolated, suggests that widespread adoption of resource efficient business models has the potential to deliver over £75 billion in GVA gains in the UK alone by 2030.

Good for the business bottom line
There is also a great business case for designing resource efficiency into production systems. Preserving the energy, water and economic value embodied in goods and preventing waste are profitable activities that positively impact corporations’ bottom lines. For instance, WRAP’s recent report with WRI on the business case for reducing food loss and waste showed that the median pay back for investing in food waste prevention was 14:1; that is, every £1 invested by business in preventing food waste returned £14 in financial benefits. As Dave Lewis, CEO of Tesco, said about the report “every CEO needs to hear one thing: reducing food loss and waste is a no-regrets strategy”.

WRAP has worked with Amazon to demonstrate that the market for refurbished products exists, which informed the thinking behind its Certified Refurbished scheme. And through esap, our electrical and electronic equipment sustainability action plan, we worked with Samsung to create a new ‘Upgrade’ direct leasing offer to smartphone customers. Samsung can now recover high value used products and process them through its own world class service reuse network, using genuine Samsung replacement parts where needed and ensuring data is safely wiped from devices.

All sorts of businesses are increasingly realising the benefits of sustainable approaches. Arçelik, the Turkish appliances company, for example, has developed two dedicated waste electrical and electronic equipment (WEEE) recycling facilities in the cities of Bolu and Eskişehir. Best known in the UK for its Beko brand of domestic appliances, the company has been collecting old, power hungry appliances and replacing them with energy efficient ones since 2014, with approximately 500,000 units recycled to date. But more businesses need to understand the value such approaches can deliver.

It’s time to accelerate
The fact that last year global emissions plateaued while economic growth continued suggests that, across the planet, we are starting to decouple resource use from production and consumption. For all our sakes we need to accelerate this trend. A circular economy approach is good for governments, good for businesses, good for people and good for the planet we inhabit. It’s time to deliver it at scale.

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