Latest News 2021-05-20
WHILE many corporations have taken positive strides to meet sustainability targets, the circular economy does not yet exist.
At best, what we have is a “reuse economy” that incorporates recycling but still absorbs additional raw materials.
In a world of finite resources coupled with a growing climate crisis that will impact all stages of the global supply chain, the existing “take-make-waste” approach – what we term the linear economy – is exposing companies to risks that can wipe out profits and negatively impact the organisation’s ability to continue as a going concern.
Economic disruptions during this ongoing Covid-19 pandemic have brought to light the urgency to transition towards a more sustainable consumption and production life cycle. Linear business practices are vulnerable at every stage.
By contrast, a company with a circular mindset will be well protected from value chain disruptions because it will have engineered a way to extract limitless value from its resources.
The circular economy is more than just recycling; it presents a more holistic solution whereby economic growth and benefit is decoupled from the consumption of finite resources and the production of waste in the first place.
The case for the transition towards a circular economy is anchored in enhanced economic value – that is, gross domestic product (GDP) and employment.
In Australia, a study conducted by KPMG estimated that the benefit of a circular economy will likely rise to US$210bil (RM867bil) in GDP and an additional 17,000 full-time equivalent jobs by 2048.
The European Commission’s Circular Economy Action Plan aspires to increase the European Union’s GDP by an additional 0.5% by 2030 and create around 700,000 new jobs.
Malaysia has every potential to realise similar value and benefits by transitioning to a circular economy, but this is an ambition where our government and financial institutions play pivotal roles.
Governments have a crucial role to play in lowering the hurdles for a circular economy and creating a playing field that favours solutions, products, and business models that are more sustainable.
This is particularly important to secure participation from small and medium enterprises (SMEs), which makes up 98.5% of Malaysia’s business establishments.
Hurdles faced by SMEs will limit the speed at which our economy will transition towards a circular economy.
The Netherlands is one of the leading countries when in 2016 its government committed to become a country 100% based on circular economy by 2050.
Within two years, the Netherlands rolled out 85,000 circular economy initiatives including 420,000 jobs.
It also introduced the green deal circular procurement, an initiative that fosters collaboration between organisations and encourages the purchase of circular goods and services.
This generated over €100mil (RM504.68mil) in procurement done circular, with the program since copied by Belgium, Finland and Paris.
Beyond that, our government should look at evaluating the viability of developing frameworks to accelerate financing for a circular economy.
Source: The Star (https://www.thestar.com.my/business/business-news/2021/05/20/insight---realising-the-circular-economy-for-malaysia)