September 2014: Roundtable notes

Thanks very much to our hosts for supplying the notes below. For the blog of the talks given by the speakers at this event, please have a look at this blog post.

Discussion: Where are the opportunities for better regulation to encourage/enable the circular economy?

Host: Steve Wallace, Aldersgate Group.

Fiscal: Changes to VAT rates as recommended by the EAC were generally supported. It was felt that a rate could be set for a realistic amount of recovered material in a product and that the percentage required to qualify could be gradually ramped up.

Environmental: It was felt to be unjust that companies had a low cost ‘waste’ disposal route to developing countries where the waste recovery operation standards and final disposal routes were of a lesser standard (including worker pay and conditions) than would be tolerated here. Perhaps there needs to be further restrictions on waste export put in place. However, it was noted that care had to be exercised in forcing an outright ban as it could damage the limited income that those receiving the waste need in order to survive – How can standards be improved without making things worse? It was noted that producer responsibility could be tightened and that some companies were probably ignoring latent liabilities associated with end of life products (for example, how the contaminated land liability regime emerged in the USA).

Environment: It was noted that CO2 emissions standards and pricing have driven improvements and mandatory GHG reporting was cited as a good mechanism for bringing emissions to the attention of boards. It was felt that there would be benefit in introducing a similar reporting requirement for resource use and recovery. This is much more complex than GHG reporting so it could be introduced step by step, starting with critical resources (as defined based on a basket of parameters including importance to the economy, scarcity, value and social/environmental impact, including at the place of origin – e.g. conflict minerals).

General: It was felt that there is a mismatch between current regulations and desired CE outcomes. For example, much of well intentioned environmental regulation works in its narrow sector but does not when considering resource efficiency – REACH was cited as an example that was restricting the reuse of materials/components and could do with a more balanced approach in some cases. Conflicts between risk-based and hazard-based (e.g.) waste legislation were also quoted. Could companies also be mandated to release more information in relation to product maintenance and repair so that their life could be extended by others?

Perhaps what is needed is a critical review of legislation through the lens of making CE work.   Is this something that the Aldersgate Group could facilitate?

Discussion: How would you describe the circular economy to a Financial Director – is it an environmental or a commercial agenda?

Host: Alex McKay, M4C

Overwhelmingly we agreed that we would frame the circular economy as a commercial agenda when speaking to a Financial Director. We may also mention the reputational benefits.

Having said that, we agreed we probably wouldn’t even talk about ‘the circular economy’ with an FD. Instead we’d put forward commercial schemes which drove the business towards the circular economy in incremental steps.

The challenge would be when activities were not commercial in the short term – BT’s plans were 3 years in the making. This is not feasible for many businesses, particularly SMEs, especially when there are no guarantees they will work.

Getting the right ‘in’ is important – finding the right opportunity to start the ball rolling or exploiting a connection or partnership e.g. the Ellen MacArthur Foundation.

Identifying future liabilities can help e.g.  landfill tax

Reputational risk is also crucial – it has driven major drives forward such as FSC and sustainable palm oil.

However, sometimes the financials just don’t add up…yet, in which case you may need to wait for the economies to shift  and focus in another area instead.

For an elevator pitch – we discussed talking about the circular economy as a resource cycle and likening it to the water cycle.

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