On Enabling the Circular Economy

The circular economy is not necessarily new as a concept. Moving away from take-make-waste, linear value chains to unlocking a circular, design regenerative, and value-creating economy is an understood opportunity for many regions around the world. CEOs are already striving to translate five circular business models into their operations. In 2016, as the Paris Agreement catalyzed collective global action toward a more sustainable future, over half of worldwide greenhouse gas emissions were associated with producing basic materials. There is a clear advantage to aligning circular strategies to reduce the gap in emissions reductions. The European Union alone hopes to save €600 billion for EU businesses, create 580,000 jobs, and reduce 450 million tonnes of carbon emissions by 2030 through its circular ambitions.  

Five Business Models and Three Disruptive Technologies

(Source: WBCSD, CEO Guide to the Circular Economy, 2017)

How Do We Act Now?

The EU is at the forefront of the circular economy. This fall, The European Days for Sustainable Circular Economy event in Finland assembled key stakeholders to develop a knowledge-base that can stimulate the societal transition toward the circular economy. Many sectors—both private and public—can recognize synergies and come up with better incentives to accelerate circular outcomes. Panel experts show how multi-actor collaboration can explore trade-offs across sectors from sustainable farming practices to artificial intelligence, from sustainable financing to sustainable manufacturing. The EU Horizon 2020 research and innovation programme has effectively unlocked funding for such events.

“…the transition to the circular economy is an opportunity for European businesses to develop new practices and take the lead…the economic model of the future, replacing the disposable economy.”

Krista Mikkonen,
Finland’s Minister of the Environment and Climate Change

The conference calls for a scale-up of action and exhibits many of the elements Guidehouse has identified that can enable better circular economic policies. Guidehouse and WBCSD recently coauthored a report assessing policy enablers to accelerate the circular economy. We’ve identified leading policies from among 100+ circular initiatives and pinpointed aspects of these effective policies that can enable their growth and acceleration across borders. 

What Does an Effective Policy Have that Others Do Not?

Circular economy policies come in all shapes and sizes. They can provide a broad vision or tackle a specific sector. Yet, because the circular economy casts a wide net in principle, the concept runs the risk of being vague, often making it difficult to frame and act upon. Policymakers and businesses alike want to take advantage of its enormous potential; however, not all policies lead to desired results and are often hampered by administration burdens, costs, and lack of cohesion.

Effective policies incorporate strong incentive mechanisms that focus on both financial support and non-financial measures that create market opportunities for circular products, services, and business models (such as green public procurement). Taking the right measures to unlock these incentives requires a degree of synergy behind policy alignment and collaboration across sectors. Co-creating momentum by linking the circular economy with mainstream social or economic policies can serve as a powerful tool to draw support from additional networks, access capital, and avoid having to start from scratch—much like the Finnish conference demonstrated. 

The Way Forward…

Recent national policies show a need to better understand how the interaction between international value chains and governance frameworks enable the circular economy. Guidehouse and WBCSD’s report touches on this by examining a number of elements that can help replicate enablers in other regions. However, in 2018, China’s ban on solid, imported waste revealed how one country’s policies can prompt circular value chains in others to develop integrated, extended, producer-responsible business models and prevent unwanted outcomes. While sectors and countries are no longer siloed, as new platforms and conferences emerge greater cooperation is needed at the transnational level that acknowledges how (for example) displacement of workers and domestic protectionism are related to creating value in a more effective, global circular economy.