‘Is the circular economy achievable in Asia?’ seems to be a hot topic and a question that constantly comes up on our radar. Out of 249 countries in the world, by 2050 seven Asian countries will have 45% of global GDP.  In essence the Asian region, with more than 50% of the world’s population, will make or break our efforts to become a sustainable and circular world. As there is no choice and this goal must be accomplished the real question is not ‘is it achievable?” but rather ‘how will it be achievable?’

Here are some suggestions:

 

Language

In 2017 a research paper was published “Conceptualizing the circular economy: An analysis of 114 definitions”¹, stating there are 114 different definitions of the circular economy in use. Language is the single most important starting point for all circular economy practitioners, government agencies, NGO’s, businesses and civic society when working together.

While defining the circular economy is only one aspect, we cannot forget the core values and principles that are the key foundations. In 2016 the US FDA created Docket No. FDA-2016-N-0436², to receive information and comments on the medical device industry and healthcare community that refurbish, recondition, rebuild, remarket, remanufacture, service, and repair medical devices. One of the aims was to invite revisions and any additional terms that may help define third-party and OEM activities related to the refurbishment of medical devices. The FDA wanted to establish a common language for both industry and a legal framework.

However as the circular economy gains traction the range of core values appears to be ever expanding. When we were simply recycling we had the 3R’s: reduce, reuse, recycle. Then these expanded to 6R’s: rethink, refuse, reduce, reuse, repair, recycle and even the 12R’s: Reduce, Reuse, Recycle / Reclaim, Repair, Refurbish / Recondition, Repurpose (upcycle or downcycle), Re-design / Eco-design, Remanufacturing, R&D (new materials, processes, technologies and innovation), Re-skill (policy-makers, business and civil society), Reverse logistics / Supply chain management, re-vision (green industrial revolution and ecological civilization).

A modified version of 9R’s (one favoured by this author) begins to define circular economy values for both businesses and consumers through a legal structure.

 

 

Legal Foundation

When we agree on a defined circular economy language the next step is to establish the legal parameters for both businesses and consumers. This need not be fixed as businesses must remain competitive and offer a range a services according to their capability. For example not all repair businesses may be able to test the strength of any repairs or include a warranty. Yet the legal language, particularly for repair, refurbish and remanufacture, provides the opportunity for both business and consumer choice.

Without this framework circular economy practitioners run the risk of working within a very undefined grey area leaving it up to businesses to make their own rules. This will have a detrimental effect on consumer uptake and may even damage the perceptions of the circular economy.

 

Reality Check

Looking at one of the core principles of the circular economy within the Asian context, the remanufacturing industry in Indonesia provides the classic scenario of the challenges circular practitioners will face. The manufacturing industry contributes approximately 22% of Indonesia’s GDP with SMEs representing 99.96% of the total number of manufacturing industries (3.27 million companies) and accounts for 87.47% of total industry workers.

The Indonesian manufacturing SMEs do not comply with the economic, social and environmental objectives of sustainable development because the objective of sustainable manufacturing is to develop and continually improve human life through optimization of production and consumption activities by the efficient use of materials and energy, focusing on poverty reduction and maintaining the resources for the benefit of future generations.

Unfortunately, the development of a remanufacturing industry mainly held by SMEs is still neglected and environmentally unfriendly. Many SMEs feel doubtful that their remanufacturing business will grow due to the high competency in the global market. Only a few large companies, like Sanggar Sarana Jaya, PT Komatsu Remanufacturing Asia have recognized the valuable of remanufacturing strategies in Indonesia that also offer economic, social and environmental benefits in the future.³

However we cannot go past these numbers, 3.27 million manufacturing industries spread out across the Indonesian archipelago of 17,508 islands of which 922 are permanently inhabited⁴. Will there be a trickle down effect from big remanufacturing businesses or do we tackle this from the bottom up?

One solution should be an industry association much like US Remanufacturing Industries Council and the EU Remanufacturing Council that can lobby, provide guidance and case studies for mid size manufacturers to comprehend how to manage a remanufacturing industry. Furthermore we do not seem to be igniting the interest of entrepreneurs or start-ups in the massive opportunity within reverse logistics one very vital cog of the circular economy that can fortify the 9Rs. Are there other support industries that we need to build first to make it easy for SME’s to include remanufacturing in their business model? Anyone can sell or rent a product, the key is getting it back for reutilisation.

 

A Global Strategy for the Circular Economy?

In a recent article in Nature, ‘Globalize the Circular Economy’⁵ the authors suggested five ideas for a global strategy for the circular economy:

(a) A global database to capture links between resource uses run by the UN: There are a number of attempts of global databases of varying styles and degrees. Some are very focused on materials and resource management, others act more like an E-bay type operations. This is both a market issue and a intra-government issue to address.

In a recent report by the World Economic Forum, a new term has emerged ‘The Internet of Materials’ (IoM) “a decentralized data system connecting data on different products and materials through standardized communication protocols. Data should be supplied by producers as products are sold, tying in data on material provenance and product design. Ensuring data confidentiality and anonymity are key here to avoid competitive and anti‑trust challenges.”⁶

The report currently focuses on consumer electronics and plastic packaging. As the circular economy progresses this must expand to include all materials, the only question remaining is the financial mechanisms that incentivises SME’s to participate. If it was structured innovatively an entrepreneur could hold the license for a particular area or native language thus removing the burden of governments to translate and maintain the database and reducing costs for SME’s.

(b) A global platform should be established for sharing knowledge about the circular economy – Let us start with language first.

(c) International alliances are needed to promote large-scale experimentation: Agree and why our organisation launched the Asian Plastics & Packaging Agreement based around a certifiable plastics supply chain, global definitions for recycling and the basic requirement for each country in Asia to establish their own sustainable plastics and packaging industry within a global alliance.

(d) Standards for performance measurement, reporting, accounting and future products need to be developed and harmonized: The EU’s Eco-design initiative will push the boundaries on this. The downside is more and more Asian exporters are finding it easier to export intra-Asian because there are far less regulatory barriers. This will put the kibosh on the CE around Asia and it is unclear how many Asian governments are ready to support a similar initiative.

(e) Policymakers should develop ways to enforce regulations, settle disputes and implement sanctions on a global scale:  Few countries in Asia can enforce the laws they enact and naming and shaming seems a little draconian.

 

Diversity and Economic Disparities

Many people who have travelled or worked around Asia are acutely aware of the diversity and economic disparities between countries. If we are to globalise ideas, initiatives or alliances then industry associations such as a Remanufacturing Industry Association in each country linked regionally and internationally for information, networking and particularly events on best practices will be necessary.

Another way is through ideas such as the Repair Café, an international network started by Martine Postma in the Netherlands. There are now approximately 1,500 Repair Cafes worldwide and we need to advertise them to encourage more uptake potentially by social entrepreneurs. Unfortunately there is an extremely small number in Asia and should they become more ubiquitous it may add to the circular economy’s profile and reinforce the core principles of the 9R’s.

 

Plastics, Packaging & Waste

The world generates 2.01 billion tonnes of municipal solid waste every year and the top three waste generating regions are East Asia and the Pacific, Europe and Central Asia and South Asia. Unfortunately there is no agreed regional labelling to assist consumers to dispose of recyclable resources correctly yet there are several very good examples available; no common framework for NGO’s to coalesce around to share circular values; and no united guidelines for governments who are interested in business growth and job creation.

 

 

For example, there are many hundreds of well meaning NGO’s all working to improve recycling rates yet most of them do not know where the recycling materials end up. There needs to be direction and collaboration between the sectors of society that promotes recycling and the reprocessing factories. While it is a chicken/egg scenario for business to invest into reprocessing factories, none-the-less business models can be adapted for investment to encourage the ‘pull’ factor but only if scaled up regular collection systems can be proven to work thus securing the feedstock for reprocessing factories to operate profitably.

For example, there are many hundreds of well meaning NGO’s all working to improve recycling rates yet most of them do not know where the recycling materials end up. There needs to be direction and collaboration between the sectors of society that promotes recycling and the reprocessing factories. While it is a chicken/egg scenario for business to invest into reprocessing factories, none-the-less business models can be adapted for investment to encourage the ‘pull’ factor but only if scaled up regular collection systems can be proven to work thus securing the feedstock for reprocessing factories to operate profitably.

Circular Economy Asia (CEA) spent several years working on a Recyclable Resource Recovery Collection System model where the fundamentals lie in a few simple rules:

(i) Provide a regular collection service that is convenient and efficient.

(ii) Support informal recycling collectors and utilize the tiers they operate within because it is a system that already works well.

(iii) License informal recycling collectors for geographical areas that is connected to technology providing the information and data for a range of key solutions. In addition you can mandate training and allow each license holder the option to sponsor and train a number of unlicensed 2nd tier collectors.

The Asian Plastics & Packaging Agreement is another program by CEA that seeks to establish a common recycling labeling system, a certifiable supply chain and advocates each country in Asia to establish a sustainable, circular plastics and packaging industry. There must be a common regional framework that defines what a sustainable and circular plastics and packaging industry should look like to provide a shared goal to build.

 

Skills and Training

While there are a growing number of people beginning to work in the circular economy, we must cast our eyes into the future by identifying the training and skills for this new workforce. Again referring to remanufacturing as an example, the essential skills are forecasting, planning and inventory management. In addition staff and professionals can cross-train and transfer between forward supply chain, sales, operations planning (S&OP) and scheduling which are also highly transferable to new product manufacturing.⁷ A range of skills and training in technology will also enhance employment prospects.

Circular economy practitioners cannot sit idle believing this is someone else’s task. We must contribute to this discussion in meaningful ways that guides students, schools, colleges and universities towards circular employment prospects.

 

Academia

We cannot go past academia and the students who dig deep and ask the questions businesses and governments do not have the resources to undertake. We have not even scratched the surface on the R&D the world will need to undertake to transition from a linear economy to a circular system. Asian universities lag very far behind and it will take some time before they realise the value of new course offerings.

Some of the information in this article comes from research by students, including Asian students studying abroad who can refer back their own country. This is extremely valuable for dedicated circular economy practitioners as it provides numerous key elements to their professional experience.

In conclusion and coming back to the original question of ‘how will the circular economy be achievable in Asia?’ – for those of us based in Asia implementing the circular economy in any emerging market is not for the faint hearted. It requires a dedication and commitment that must rise above the usual terms of ‘passion’ and ‘love your job’. It requires an unwavering conviction that there is no other choice and with a combined effort over many years it will come to fruition.

 

References:

[1] Conceptualizing the circular economy: An analysis of 114 definitions.’ by Julian Kirchherr; Denise Reike; Marko Hekkert, 2017. Resources, Conservation and Recycling. 127: 221-23.

[2] https://www.federalregister.gov/documents/2016/03/04/2016-04700/refurbishing-reconditioning-rebuilding-remarketing-remanufacturing-and-servicing-of-medical-devices

[3] ‘Sustainable Manufacturing for Indonesian Small and Medium Enterprises (SMEs): The Case of Remanufacturing’ by Y. A. Fatimah, W. Biswas, I. Mazhar, M. N. Islam, Sustainable Engineering Group, Curtin University, Perth, Australia.

[4] https://en.wikipedia.org/wiki/List_of_islands_of_Indonesia

[5] ‘Globalize the Circular Economy’ by Yong Geng, Joseph Sarkis and Raimund Bleischwitz, Nature, Vol 565, 10 January 2019, pages 153~155.

[6] Harnessing the Fourth Industrial Revolution for the Circular Economy – Consumer Electronics and Plastics Packaging’ by The Platform for Accelerating the Circular Economy (PACE) in collaboration with Accenture Strategy, 2018.

[7] Examining Remanufacturing in Supply Chain and Operations Management’ APICS Insights and Innovations, APICS Foundation, 2012.