On the 15th of November 2018 The Economist will host the Sustainability Summit, kicking off with an Oxford style debate where two protagonists will endeavour to sway the audience as to whether or not the Circular Economy (CE) is achievable in Asia. This is a big question. It is also a question that few have considered even though the challenges are obvious as the urgency to shift our economic system is obscuring the task at hand.
The issues raised on Circularity in Asia are simple:
- What are the societal implications?
- What will be the effects on employment and international trade?
- How to transition millions of micro, small and medium size business to circular systems?
The solutions will not lie in another app or website and government policy, programs and tax incentives will only go so far. It will not be resolved through education and awareness programs although offering alternative and more profitable business models will certainly see a positive shift. The answers lie in these three questions as they are inextricably linked to each other and workable solutions will be found within that interconnectedness.
The truth is we do not really have answers to any of these questions, however we need to dissect them with the vain hope that some light will emerge to make the task easier because
“Unless we go to Circular it’s game over for the planet; it’s game over for society”
So starting with ‘societal implications‘ there is some suggestion that having products last longer or easier to repair will be good for us as it saves us money and reduces unemployment. This seems a rather superficial analysis and the statistics in Asia does not bear this out. In a comparison between the UK and India for the Household Appliance Repair industry, the UK sees growth and India sees a decline. Does this suggest that the rising middle class of India (and Asia) prefer new rather than repaired?
In regards to employment it has been recognized that while old linear jobs will decline alongside the growth of new Circular jobs, the impact on a society that has not equipped or trained workers with these new skills will take longer to reap the rewards and benefits the Circular Economy can unleash. In fact I have not read any research or report that has attempted to quantify the actual skills required in a Circular Economy. With this short sightedness any positive societal impact will be harder to realise.
The second point of employment and international trade in some part has been raised already above, however all those involved in the Circular Economy recognise it can only come to fruition if it is global in nature. Here is where public and private procurement will need to apply pressure to the global supply chain. As Asia is the engine room of the world, manufacturers will be required to reassess whole systems starting with design, raw material purchases and use alongside manufacturing processes. By preference it should be a collaborative exercise as no business works in isolation from each other.
Working either directly with customers or distributors businesses will also need to consider a returns policy, remanufacturing activities and the licensing and/or training of repairers to keep products in use for longer. At end of the use cycle there will need to be additional agreements as to the ownership of the material assets especially for items made in Asia and sold in Europe, the US or other regions. In many cases returning material assets back to the manufacturer may not be economical yet in a Circular Economy these end of use-cycle products will still retain significant value – who will be the rightful owner?
The third point that sees the transition of micro, small and medium size businesses to Circular systems is the most challenging. In The Economist program guide for the debate it states “is it even achievable without disturbing the small and medium-sized businesses that Asia’s economic growth relies on so heavily?” The notion that any one could consider not disturbing 98% of economic activity in the 24 countries that make up the Asian region is ludicrous.
Let’s be clear right now – the Circular Economy will disturb and disrupt 98% of all economic activity across the Asian region. The only question is “will the 98% come willingly or will they need to be dragged kicking and screaming into system change?” Many SME’s in Asia are not connected to international trade and thus immune from pressure from Circular procurement policies. Most are very local in nature and here is where government policy can have the most impact together with consumer choice and demand.
Consumer preference for Circular products or a recognization that even a micro business can source products from larger Circular companies will be vital and standard ‘education & awareness’ programs will not work here as they are far too general in nature. Specific, bite-size pieces of information easily digestible for all segments of the population that is linked to a ‘call-to-action’ activity may work better. For example, a small mom & pop store that sells a range of sundries may choose to have products with recycled content and are easily repairable from a manufacturer that also supplies spare parts for repair. The same mom & pop store can demonstrate and advertise their commitment to ensure all secondary raw materials are recycled back into Circular systems for reprocessing.
Without consumer demand and pull this crucial 98% of the economy will have no incentive to change regardless of how critical it is for a fundamental shift to our economic system. In essence there will be a need to have several solutions working in tandem that reframes the question to one of “not if a Circular Economy is achievable in Asia” but “when will it be achievable”. This means we only need to set targets rather than getting trapped in the challenges.