Join the circular economy journey to net zero

Post author image. Maya de Souza
Maya de Souza, Business in the Community’s (BITC) Circular Economy Campaign Director, discusses why businesses need to join the circular economy journey if we are to achieve net zero.

Discussions about the circular economy, combined with resource efficiency, sustainable consumption and production and doughnut economics may make you feel like you are lost in a maze of jargon.

Circular economy approaches are about how we manage the materials and products we use. Whether this is building homes and infrastructure, the electronics we use every day, or clothing often worn just a few times and thrown away. Huge amounts of emissions arise from making materials, from producing steel and cement to growing cotton to produce cloth. More emissions then come from further production process as those materials are turned into products such as buildings or clothes.

BITC’s Circular Economy Taskforce is collaborating with businesses to help turn corporate journeys towards circularity into a series of manageable steps.

In a circular economy, products, services, and infrastructure are designed to maximise value and minimise waste, reducing demand for precious primary resources, lowering carbon emissions and allowing the regeneration of natural systems. By keeping products and materials in circulation for longer through reuse, repair and remanufacture, and by making full use of waste materials, we reduce emissions and the pressure on our natural environment.1

But why is it important for businesses to embed circular economy into corporate strategies?

Firstly, circular approaches can help achieve net-zero through ways that create value for local communities.

COP26 witnessed ground-breaking commitments from many corporates to reach net zero by 20502. However, easy wins through straightforward energy efficiency measures have already been made in many sectors. Furthermore, reducing the carbon intensity of the electrical grid is often not within an organisation’s control.

Circular economy approaches offer a manageable strategy for reducing emissions from products and materials bought and emissions at end of life. For example, steel creates 25% of all industrial greenhouse gas (GHG) emissions, but steel recycled in the UK using electric arc furnaces powered by our low carbon grid means approximately 70% lower emissions3. On top of this, recycling materials such as steel or remanufacture of products such as electronic items can bring social value to communities, by creating employment for example in areas where steel production used to occur4.

Secondly, adopting a circular economy approach can help manage risk related to environmental degradation, including climate and biodiversity risk.

Future-proofing a business involves recognising the unique risks for your company and addressing them in your strategy. Investors and insurers are increasingly conscious of the risks to businesses which arise from climate and nature, as well as policy shifts to address these impacts. The Task Force on Climate-related Financial Disclosures and Nature-related Financial Disclosures highlight physical and policy risks for investors and insurers, encouraging corporate transparency on action taken to minimise them, creating a powerful driver for corporate action.

Ecosystems are increasingly fragile as species in most ecosystems have declined by 20% since around 19005 and 1 million more species face extinction6, many within decades. When combined with climate change impacts, a failure to act means business exposure to physical risks from climate change as well as deterioration of soil and water quality. Circular economy approaches to reduce primary material usage can lessen these risks.

Businesses that fail to transition will also be exposed to policy risk: being out of step with policy changes, whether carbon prices or nature policy can be a major setback for a business, pushing up costs or reducing turnover.

Some businesses are getting ahead of the game by actually pushing for policy change that forces circular approaches themselves. The construction industry is calling for the Building Regulations 2010 legislation to be amended7 to require mandatory reporting of carbon emissions along with limiting embodied carbon emissions on construction projects. This will mean that developers, construction companies, material suppliers must work out how to reuse materials and make more use of recyclates. The price of failing to act will be in reduced access to finance and chance of winning contracts.

Thirdly, a circular approach can reduce supply chain risk by protecting you from rising prices as well as supply chain blockages.

If you take lithium as an example, prices doubled between May and November 20218. Companies recovering lithium at the end of a product’s life, or extending a product’s lifespan, can potentially increase their resilience by reducing dependence on commodities with volatile prices. This volatility is likely to increase as the Russia – Ukraine conflict is expected to raise commodity prices and exacerbate supply chain risks further.

So cutting through the jargon, joining the circular economy revolution can help your business prepare for the future, while tackling the immediate challenges you face.

If you are a Business in the Community member, contact your Relationship Manager about joining our Circular Economy Taskforce to work with peers to help bring the circular economy to life. If you are not sure who your Relationship Manager is, log in to MyBITC to find their details.

bring the circular economy to life in your organisation

References

  1. United Nations Environment Programme (2019) Global Resources Outlook: 2019: Natural Resources for the Future We Want.
  2. Department for Business, Energy & Industrial Strategy and Lee Rowley MP (2021) Press Release: COP26 sees UK businesses lead the world in climate change commitments, 4 November.
  3. Allwood, J. M., Dunant, C., Lupton, R., & Cabrera Serrenho, A. (2019) Steel Arising: Opportunities for the UK in a transforming global steel industry
  4. Green Alliance (2021) Levelling up through circular economy jobs, 4 August.
  5. IPBES (2019) Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.
  6. ibid
  7. Part Z (n.d) A proposed amendment to UK Building Regulations 2010.
  8. Green Car Congress (2021) Benchmark: Lithium Prices continue to rise, 4 December.