DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

32 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS
the linear system. How pervasive the shift will become remains to be seen, but a new
model of consumption could be emerging, in which consumers embrace services that
enable them to access products on demand rather than owning them, thus becoming
users.
There is a rapidly growing amount of capital available for businesses that not only
deliver sound financial returns, but also create social and environmental value.
Sustainable and Responsible Investment (SRI) overall has increased from just over USD
3 trillion in 2010 to well over USD 6 trillion in 2014 (doubling in four years). Issuance of
green bonds has increased from under USD 5 billion in 2010 to nearly USD 40 billion
in 2014 (an eight-fold increase in four years). Leading institutional investors are joining
the field: AXA Group has committed EUR 150 million of internal capital to an impact
investment project; Zurich Insurance Group is developing an impact investment strategy,
and hopes to encourage the adoption of responsible investment in the mainstream.
Socio-demographic trends make the benefits easier to capture. For the first time in
history, over half of the world’s population resides in urban areas. Continued urbanisation
and overall population growth is projected to add another 2.5 billion people to the urban
population by 2050, bringing the proportion of people living in cities to 66%. 33 With
this steady increase in urbanisation, the associated costs of many of the asset-sharing
services and the costs for collecting and treating end-of-use materials will all be able
to benefit from much higher drop-off and pick-up density, simpler logistics, and greater
appeal and scale for service providers. Centralised use should mean that reverse logistics
– like the logistics of new product delivery – become more efficient and more costeffective.
1.3 The role of policymakers and this toolkit
As many circular economy opportunities have a sound underlying profitability,
businesses are driving the shift towards the circular economy. Yet there are often
non-financial barriers limiting further scale-up or holding back development pace.
Policymakers therefore can play an important role in enabling and, as appropriate,
setting the direction for a transition to the circular economy.
Policymakers around the globe have already started to provide positive stimulus for the
adoption of circular business practices. The Dutch government’s Green Deal (see Box 3
for more details) offers a responsive service to companies that ask for help in realising
circular economy opportunities and face implementation barriers. Some governments
have set up taskforces to remove regulatory barriers, for example the Taskforce on
Resource Efficiency in Denmark (see Box 5 in Part 2 for more details), which aims to
identify barriers to circular economy practices in existing regulations, and to propose
options to overcome them. Until recently, London’s housing legislation made the practice
of residents letting their homes on a short-term basis through sharing websites such as
Airbnb illegal. The legislation was amended in 2015 to legalise the practice. The Scottish
Government, in setting up the Scottish Material Brokerage Service, aims to aggregate
contracts for the 3 million tonnes of secondary materials collected annually across
200+ public bodies into a robust and cost-effective supply chain. China has chosen to
stimulate the use of secondary materials in production processes by reducing by 50–
100% the VAT on goods produced from them.
There are two broad, complementary policymaking strategies that can help accelerate
the circular economy. The first is to focus on fixing market and regulatory failures.
The second is to actively stimulate market activity by, for example, setting targets,
changing public procurement policy, creating collaboration platforms and providing
financial or technical support to businesses. These approaches are complementary and
policymakers can determine where to put the emphasis, taking inspiration from the most
applicable aspects of both approaches. Moving towards the circular economy offers a
unique chance for businesses and policymakers collaboratively to accelerate specific
business opportunities while at the same time helping to achieve wider societal goals.
33 United Nations, World Urbanization Prospects – The 2014 Revision (2014).