Written By: Catherine Wijnberg
A thought-provoking report by the World Economic Forum found that the circular economy has operational and strategic benefits that present opportunities worth trillions of dollars, significant job creation potential and economic growth.
Citizens, globally, are actively searching for products and services that are environmentally positive. Just this month (Sept 2021), an online poll showed 56% of respondents reporting that they considered the environment when making purchases and only 16% stated that they did not. Trends like this provide a very strong signal to businesses that face increasing competition in a rapidly changing world and a fillip for environmental and climate-change groups.
The move towards environmental sustainability is visible at an international level as well, and 56 countries from North America, Europe, the Balkans, the Caucasus, and Central Asia, recently made a united call to accelerate the shift to a circular economy and greener, more responsible resource use. Circular economy road maps, in-depth reports, surveys and studies are underway to identify the best way forward and if attendance at the recent World Circular Economy forum (WCEF) is a benchmark, enthusiasm and commitment is high.
This commitment is well-founded, according to the study by Finnish Innovation Fund Sitra, which states that the circular economy could add three billion euros of value to their nation’s economy by 2030. In a world that is anxious about growth and its negative effect on the planet, this represents a much sought-after solution. For business seeking profitable business models that satisfy discerning customers, this is a must-watch trend.
It’s no surprise, therefore, that sustainability is gaining increasing focus at a corporate leadership level, with a growth in innovative business models aligned with the circular economy. The study titled “Rethinking ownership” by Sitra found that companies are becoming increasingly motivated to design products with a long life cycle – providing a break from the tradition of planned obsolescence that our cast-away economies have until now embraced as the norm.
Jyrki Katainen, President of Sitra said: “In terms of sustainability, we need to find solutions for decoupling biodiversity loss and economic growth. As in combatting climate change, we need market-based ways to prevent the loss of biodiversity. Even though this development is in its infancy, we can already see encouraging examples of pioneering businesses where financial success goes hand in hand with the preservation of nature.”
South Africa’s alarming waste statistics
South Africa is at the embryonic stage in this journey. According to the State of Waste Report issued by the Department of Environmental Affairs, South Africans dispose of enough municipal solid waste to fill an entire football field 10 metres deep, every day. That is roughly 54,2 million tons of general (municipal, commercial, and industrial) waste per year. Only 10% of this is recycled or recovered for other uses, while at least 90% is landfilled or dumped. These statistics highlight both the need for more effective waste management methods, and a huge latent opportunity for building circular economy products and services.
Sustainable and radical transformation plans
The African Circular Economy Alliance (ACEN), a government-led initiative of which South Africa is a founding member, is working to align circular economy policies and strategies across the continent. This bold agenda has the potential to put Africa firmly in the race for climate-friendly economic growth.
Chris Whyte, the Director of ACEN, recently said: “We have the technologies, the expertise and capacity within South Africa and by embracing circular economy principles in the waste sector alone we could add up to 3% to the county’s GDP. The time to do it is now.”
Barbara Creecy, the SA Minister of Forestry, Fisheries and the Environment, also recognised that green industries provide an opportunity for creating much needed jobs. The 2020 National Waste Management Strategy will promote a waste hierarchy and circular economy principles and has exciting potential for encouraging new circular business models.
National policies such as these play a critical role in driving business and consumer behaviours. The European Commission Circular Economy Action Plan (2015) set Europe on a path “toward a climate-neutral, circular economy” and has been instrumental in driving the movement towards extending the life of raw materials and recycled products at the end of their life cycle.
Circular economy and employment
According to Finland’s Sitra, the circular economy is good for jobs, too. Their research identifies Finnish industries with the highest job demand growth as those that include reprocessing of high value extractive materials such as tin, zinc, wood, copper, steel and aluminium.
The Global Climate Action Summit is also bullish over the CE’s job creation potential and estimates that over 65 million new low-carbon jobs will be created by 2030. Given the dire jobs shortage in South Africa this is good news and if those jobs also enable healthy climate-friendly growth, even better.
Is South Africa ready for this change?
A key requirement for circular economy businesses to thrive and sustainable economic growth to become a reality is for citizens to play an active role in their consumer and lifestyle choices. Where consumers lead, business will follow.
International trends vary widely. In the Asia-Pacific region, 86% of consumers in Indonesia and 74% in Vietnam and the Philippines self-identified as increasingly eco-conscious.
In the UK, the most common way consumers demonstrate their commitment to sustainability is avoidance of single-use plastics, with 61% of consumers report having cut back.
Brand Mapp’s consumer insights research released in mid-2021 found that only 30% of mid-income South African adults recognise the climate crisis as a concern. According to the study, South Africa’s middle-class citizens are more concerned about crime, corruption, the pandemic, and government incompetence. The research also found that older citizens (65 plus) were significantly more concerned about climate change than younger citizens (between 25 and 34).
What does this mean for business?
Circular thinking goes beyond the reduce, reuse and recycle focus in the green sector to design out waste altogether. Successful business models evolve where the traditional linear production model can be redesigned to eliminate waste at the source. Process re-engineering can play a critical role as a way to achieve cost savings and environmental savings.
Simply stated, consumers want to save the world, but only if the price is right, so price sensitivity is key.
The five sectors identified for circular economy potential in Africa are food systems, packaging, electronics, fashion and textiles and the build environment. Each of these sectors are ideally suited to small business and community or township micro-enterprise and show exciting potential for the growth of profitable, environmentally positive businesses with a high labour potential.
As South Africa battles the triple threat of joblessness, poverty and inequality the circular economy is a powerful solution with the added benefit of a positive environmental impact. This creates potential for local and international markets. However, for the circular economy to succeed three components are needed. These are supportive national policies, viable business models and increasing consumer awareness. The growing trend in global collaboration in events such as the WECF, successes in countries such as Finland and evidence of profitable businesses models in five sectors in Africa indicate that this is more than just a trend to watch, it is one worth investing in.
With the right growth support, access to markets and growth finance, the potential for a large-scale surge in businesses within the circular economy is a real possibility.