Businesses take initiative in creating circular economy

Waste and supply chain managements are among the topics highlighted by international and local policy influencers.

Photo: Richard Lancaster (Credit: BEC)


On 16 May, the BEC EnviroSeries Conference with the theme Circular Economy: Towards a Resource Efficient Hong Kong – Managing Waste, Driving Growth took place. The topic was addressed by the conglomeration and discussion of policy makers, industry experts, business leaders and academics.

Compared to a traditional, linear “take, make, dispose” model, a circular economy is restorative and regenerative in terms of waste management, in particular minimising environmental impacts of industrial activities.

Alexander Verbeek, Independent Advisor and Former Strategic Policy Advisor on Global Issues for the Netherlands Ministry of Foreign Affairs set the tone of the conference by delivering an international (specifically European and Netherlands) view on the circular economy, green growth and the severity of climate change.

The Netherlands, with similarities to Hong Kong in terms of geographical location by the sea, large trade industry, densely populated cities, legal framework, strive towards innovation and efficient transportation, is further ahead in working towards a green circular economy. Waste management has developed in the Netherlands into an innovative and international oriented sector. Only a fraction of the waste is dumped as landfill due to innovative reusing/recycling technologies and methods. By conducting this style of waste management towards a circular economy, society benefits in numerous ways such as an increase in jobs, financial gains, decrease in CO2 emissions, cleaner water and less importation of primary resources.

Alexander Verbeek (credit: BEC)

Verbeek told Harbour Times on the sidelines of the conference that governments should be proactive in setting goals or regulations and subsidising pilot projects, that then influence businesses to invest in green technologies and systems. This creates a level playing field for all competitors that otherwise may not have taken the innovative step individually from fear of losing competitiveness. An example of a green deal is how the Dutch government is currently requiring all public buses in the country to change from combustion engines to clean energy by 2025, this will naturally require businesses, legislators and other stakeholders to be proactive in making this goal a reality.

Another innovative example given by Verbeek of a circular system was Rotterdam, Europe’s busiest port which diverts the greenhouse gases (GHG) emitted by port actions through pipes to greenhouses in a nearby agricultural area to promote plant growth.

The dis-incentivising idea of ‘green is expensive’ is still a common assumption amongst some businesses, but is shown otherwise by visionary policies and companies such as Unilever making more profits by going green and sustainable. Green companies can often produce more efficiently using less raw materials, reducing packaging and weight, and also reducing transportation, labour and waste costs.

On a global scale, the COP 21 showed great multilateral diplomacy, when all nations agreed in Paris to keep the global rise in temperature well below two degrees Celsius. This is fueling the large-scale move towards a greener and circular economy where business opportunities will flourish in response. According to Verbeek, it is urgent that all countries should drastically reduce the use of fossil fuels to halt further GHG emissions. But we also need to realise that society will be affected by the consequences of climate change “even if we theoretically would be able to completely cease the use of all fossil fuels by tomorrow.” Adaptation policies are urgently needed, for instance the increasing water problems in the world or the latest predictions for sea-level rise.

Verbeek explained that for many countries it could be interesting to look at the taxation system through an environmental lens. Fossil fuels are still more subsidised than clean energy. Businesses’ behaviour would also change if the current systems, which taxes labour relatively more than raw materials, was to flip. “What you would then get is more jobs and a more efficient use of resources as the latter is now more expensive while labour is taxed less. You get a completely different economy; the same amount of tax comes in for the government but you work cleaner and more people have a job,” Verbeek elaborated. “Though there are further pros and cons to this, this is one way of looking at the economy through a different lens.”

 

A business case

Edwin Keh, Chief Executive Officer of The Hong Kong Research Institute of Textiles and Apparel, also touched upon tax issue but from a slightly different angle. He pointed out that the city has a relatively narrow tax base and low tax rates compared to countries such as Germany and Japan, hence hindering any possible tax incentive for businesses through levies.

The Hong Kong Research Institute of Textiles and Apparel and the non-profit H&M foundation have entered into a four-year partnership, developing recycling technologies of textiles and other waste, creating a large-scale sustainable commercial product.

For Keh, a transparent and sustainable business promotes good business as it does not only appeal to consumers, who are now more environmentally conscious about the products they buy, but it also helps cut operational costs through the reduction of material, water and energy use.

Edwin Keh (credit: BEC)

He also suggested an alternative pricing method for Hong Kong as landfill use and pollution emittance have long been underpriced. “As a society, we need to look at true cost,” he asserted, while calling on businesses not to be “victims or bystanders” but to play smart, giving reasons for businesses to invest and research in areas of sustainability and making the government a good partner.

Having a less risk-averse bureaucracy and businesses which can be more resilient and prioritise long term success over quarterly outlook, as Keh advocated, could bring the city closer to a circular economy. “These are symptoms of systems that are now obsolete, from a time when the world moved at a different pace.”

Richard Lancaster, Chairman of the Business Environmental Council and Chief Executive Officer of CLP Holdings summed up key objectives and future prospects of the bi-yearly conference.

The BEC with over 200 companies ranging from large to small creates a forum where ideas are gathered and put to action. The council and conferences possess other functions, including the implementation of pilot schemes, providing interconnectivity amongst members and industries.

“If you look at recycled plastic, and having plastic used in road materials and clothing, it’s just an eye opener to see the range of new materials,” claimed Lancaster, who then suggested that there can be certain requirements for roads or concrete production to use a certain percentage of recycled product within their raw materials. This demand for renewable materials will generate scale, hence lowering costs. Both government and businesses can be the regulators, as businesses can be proactive and initiate the demand if the cost difference between raw and recycled products is not significantly large.

The CLP Holdings CEO also shed light on the progress of Hong Kong towards a renewable energy economy. When asked if solar panels are a profitable method of energy production, Lancaster responded by stating that solar panels will eventually become more affordable with mass production as demand continues to grow. In Hong Kong, under the new signed scheme of control agreement with the government, CLP will be providing feed in tariffs and offering to buy renewable energy generated by customers or households.

From left: Adam Koo, CEO of BEC; Secretary for the Environment Wong Kam-sing; Richard Lancaster (credit: BEC)

Lancaster also called on businesses to think differently about supply chain and stressed the importance of integrated supply chains which feed waste from one manufacturer to another where that waste can be used as material. “Circular economy isn’t simply a matter of waste management […], but rethinking the whole supply chain and manufacturing process,” he said. “If we can turn what we think is waste into a recycled material, then it enables us to minimise the amount that we are importing.”

This was echoed by Keh and Verbeek, who both agreed that a multidisciplinary approach to the issue is needed. “A combined effort of businesses, government, academics and civil society sitting together discussing this,” put Verbeek. “That shared ambition is extremely important.”

“As for the BEC, we can provide an effective voice for businesses towards the government to possibly change or remove regulatory or standardisation barriers,” Lancaster concluded.

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James Johnston

James is a Harbour Times intern. He studies at the University of British Columbia majoring in Economics.