Australia’s circular economy could be worth AU$26 billion per year, by as early as 2025. So, what exactly is a circular economy? Georgina Laird explains
13 November 2019.
By Georgina Laird, Ethics and Impact Manager
It has been four years since the Paris climate agreement was inked and the world is slipping backwards on the overarching target of limiting global temperature increases to well below two degrees this century. While the Federal Government insists that Australia will meet its Paris target ‘”in a canter”, the scientific community in Australia and internationally, is telling us that will only happen with serious massaging of the data.
It's true that progress has been made. Renewable energy capacity has quadrupled worldwide over the past 10 years. But it’s only part of the answer. A recent report found that switching from fossil fuels to renewable energy will address only 55 per cent of current global emissions. The remaining 45 per cent relies on how we make and use products.
The vicious cycle putting waste management in a spin
Population growth means that we are using more and more resources, and we’re running out of places to put our waste. China’s new waste import policy (‘National Sword’) has cracked down on what recyclable waste can be shipped into China, and sent the global waste management industry in to a frenzy. We need to make serious lifestyle changes to reduce what we use, reuse
what we already have before we recycle what can no longer be used.
Calls in Australia for an urgent ‘fix’ to the situation have become louder as councils across the country have been forced to increase rates to pay for recyclable waste to be dumped in landfill. Enter the circular economy, which turns outputs from one manufacturer into inputs for another reducing the amount of virgin materials needed and the subsequent generation of waste.
From concept to practice
But the favourable economics for shifting to a more circular economy are likely to lead the way, even if governments don’t. World Economic Forum has estimated
that the value of a circular economy to Australia could be around AU$26 billion per year, by as early as 2025. Circular businesses are highly profitable and sharing and reuse of materials and products significantly extends their market value.
These investment fundamentals, and the moral imperative to play our part in addressing the waste crisis, are why we proactively seek to invest in companies with environmentally sustainable business models.
Brambles, a global supply-chain logistics company held in our Australian Equities Portfolio, calls itself the “invisible backbone” of the global supply-chain. You’ve probably never heard of CHEP, their shipping and logistics arm, but their distinctive blue pallets may have caught your eye outside the local supermarket.
Where most of their peers sell pallets, Brambles rents them to customers and collects them at the end of the chain. Their whole business model has been built around sharing and reuse of resources. Last year alone, their reuse of wooden pallets averted the logging of 1.7 million trees. Not content to rest on their circular model laurels, Brambles recently launched ‘Zero Waste World’, a program aimed at working with customers to help cut waste and improve efficiencies in their own supply chains.
Kingspan (a new addition to the U Ethical International Equities Portfolio) is a global leader in high-performance insulation solutions for low carbon buildings. They have committed to recycling a remarkable 500 million plastic bottles each year by 2023, and then doubling that to 1 billion annually by 2025. The bottles will be reused in the production of Kingspan insulation. Such initiatives are urgently needed, given that over eight million tonnes of plastic ends up in the ocean each year—the equivalent of dumping a rubbish truck of plastic every minute.
One man’s waste can indeed be many men’s treasure.
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