The BPCC's Corporate Social Responsibility policy group met on April 17 to consider the challenges and opportunities that lie ahead – and an answer in the form of the 'circular economy'.
Michael Dembinski, the BPCC's chief advisor, opened the meeting by citing results from HSBC's latest survey of investment managers' attitudes to sustainable business. [Read article here about the survey.] The upshot is – the sustainability agenda is here to stay, and corporations will feel pressure from investors as well as regulators and consumers to prove their sustainability credentials.
Julia Patorska, leader of the Economic Analysis Team at Deloitte, defined the circular economy as being in opposition to a linear economy where the model is extract-make-use-dispose. A major challenge facing industry will be the EU's proposed Extended Producer Responsibility Directive, which will significantly increase industry's responsibility for dealing with its products at the end of its useful life.
The circular economy has, said Ms Patorska, three major groups of actors – consumers, producers and regulators.
In the discussion that took place around Ms Patorska's presentation, there were many interesting observations. Consumers are not consistent in their behaviours, wanting convenience at a low cost, but at the same time complaining that the result (over-production of packaging for example) leads to environmental degradation.
Our over-production and over-consumption is harming the planet. We are indeed 'stuffocating'. But what can responsible businesses do to curtail waste while maintaining profitability and growth? The answer lies in creating a circular economy, in which waste is designed out of the system from the outset.
Offering a new way of supporting businesses to achieve their financial goals while reducing negative environmental impact, the circular economy will be brought about partly through self-regulation, partly through consumer pressure, and partly through new laws. Firms will need to adapt to the new realities – those that quickly adapt to the needs of the circular economy will have a long-term competitive advantage.
The presentation led to a lively debate in which participants' interests as business people, voters and consumers could be seen to diverge. On the one hand, we want a clean planet, fit for life to thrive, on the other we want friction-free business and convenience. Business, seeking growth, will tend to want to sell more and more things to consumers; having decluttered their homes, consumers will be ready to buy new things to replace those they've disposed of.
A subject that will gain an ever-higher position on the agendas of business leaders, the circular economy is more than just a passing management fad.