Canada’s moving towards a Circular Economy – business must prepare now

circular economy

We are in the middle of a mega trend driven by climate change, resources scarcity, urbanization, social media and unbridled consumerism. Change will come, either a time of our choosing or at a time that is ecologically thrust upon us. Our best hope to get ahead of the curve is to shift towards a less wasteful and more circular economic model.

Our new economy must encourage and reward a more effective use of scarce resources while enabling product design innovation and regeneration. In a recent Swedish case study prepared for COP21, it was concluded that 70% of emissions could be cut if circular economy, energy efficiency and renewable energy regulations and policies were adopted.  Amidst the noted mega trends and with the UN reporting that global consumption is set to triple by 2050, there is a new global effort towards using business ingenuity in a way that demands and rewards producers who take steps to reduce waste, resources and emissions.

Canadian market: The push for producer responsibility

Amongst several federal and provincial environmental and climate related policies, Canada’s drive towards a circular economy has been partially led by the Canadian Council of Ministers of Environment’s 2009 Canada Wide Action Plan. The initiative was introduced across provinces to focus on products and packaging waste diversion while reducing public expenditure and encouraging innovation and new jobs through Extended Producer Responsibility (EPR) programs.  As per the Conference Board of Canada, beyond the environmental burden of waste, governments are keen to pass their $3.2 billion waste management cost burden onto producers.

EPR programs across Canada have achieved some success in terms of diverting end-of-life materials such as e-waste, beer packaging, batteries and tires…

With EPR programs growing from 33 product categories in 2009 to 94 categories in 2014, governments have actively sought to make industry environmentally and financially responsible for the costs related to collections and recycling.  EPR programs across Canada have achieved some success in terms of diverting end-of-life materials such as e-waste, beer packaging, batteries and tires and they seem to be making a modest impact to date with diversion rates improving from 21.6% to 25.2% between 2002 and 2012 according to Statistics Canada. Current Canadian EPR programs, despite challenges, are considered by industry leaders as a good foundation to build upon in order to further drive producer responsibility in the future.

Policy towards zero waste and product innovation

Thus far, the programs including legislated, shared and product stewardship initiatives, have generally focused on the most economic means of collecting and recycling materials which may limit the benefits from an economic and environmental perspective. In order to substantially increase waste diversion rates and the sustainability impacts, producers must focus on waste and GHG reductions at the source – through the product life cycle and design.  But, with a significant amount of waste still going to landfills, governments are expected to further develop and tighten EPR policies, harmonize country-wide EPR approaches and launch new zero waste strategies to reduce waste, increase diversion rates and place the cost burden on industry while shifting towards a circular economy.

With more governments focusing on EPR and circular economy ideals for 2017, business must prepare now to reduce risk and generate sustainable value.

With more governments focusing on producer responsibility and even more product categories in the pipeline for introduction in 2017, it is key for forward thinking organizations to begin to adopt innovative “cradle to cradle” concepts and circular economy business models in order to prepare for impending change, minimize risk, gain a competitive advantage and generate sustainable value.

How can the private sector prepare for a circular economy?

In an evolving marketplace with existing and impending climate related policies, market-driven sustainability initiatives, growing resource scarcity and empowered consumers, it is imperative that producers, as well as industry stewards and retailers adopt circular business models across their value chain in order to mitigate reputational, supply chain, financial, environmental and regulatory risks.  This circular business approach can in turn help organizations capitalize on life cycle opportunities including cutting emissions and water consumption, limiting resource usage, reducing costs, generating new revenues, building brand value and driving innovation.  In addition, with growing supply chain and procurement pressure, circular business helps organizations open and maintain access to markets and secure access to capital while exhibiting accountability and transparency.

Leading producers such as Levi Strauss, Philips and Timberland as well as retailers such as Marks and Spencer, IKEA and Best Buy have demonstrated tangible success in terms of the adaptation of circular economy and sustainable business models.  As such, in an ever changing regulatory landscape and marketplace, it is key that organizations begin planning ahead in the short-term in order to drive innovation and efficiency while maintaining their legal, social and environmental license to operate through circular practices.
Michael W. Zabaneh is an international strategic business and sustainable development expert, with experience across Canada, Europe, MENA and Asia.  His work has most recently been focused on public and private sector cleantech, climate change, sustainable development and circular economy advisory, projects and investments with Ernst & Young, a leading UAE-based PPP, the United Nations Social Commission’s Sustainable Development Division, the European Commission and Econometrics Research Limited. Follow Michael on twitter here @michaelwzabaneh