Australia needs to implement a circular economy that minimises wastage, promotes renewable energy sources, and endorses sustainable production in its push to achieve net zero emissions by 2050.
“[A circular economy] is a systemic framework that enables efficient and effective approach,” circular economy business Coreo CEO Ashleigh Morris said at the recent 2023 ACSI Annual Conference.
“It supports good governance inside business and enables them to increase their resilience in the face of continual market pressures on ESG.”
In a circular economy, products, components, and materials are used for as long as possible through re-use, repair, refurbishment, and recycling. The goal is to create a closed-loop system where resources are continuously cycled back into the economy rather than being discarded as waste.
In contrast to the traditional linear economy, where resources are extracted, used once, and then disposed of, a circular economy seeks to create a regenerative and restorative system that mimics the cycles found in nature. The concept of a circular economy is rooted in the principles of reduce, re-use and recycle, which prioritises waste prevention and minimisation over disposal.
The government has a key role in driving this re-thinking around the production of goods and services, according to Professor John Thwaites of the Monash Sustainable Development Institute and Ministerial Advisory Group on the Circular Economy.
“The government’s role has to be to set the market rules and incentives so that that works, so that there are the proper incentives for the circular economy,” he said.
“Currently, that’s only about 16 to 20 per cent of emissions. Frankly, the government has a huge role to play if we’re going to have a circular economy. It has to set the market rules and incentives so that that works, so that there are the proper incentives for the circular economy.”
The current system does not reward or penalise companies for being ‘circular’.
“Our current market and regulatory frameworks do not provide the incentives for companies to be circular. That’s essentially because externalities are not priced. It doesn’t cost anything for a company simply to emit carbon emissions to put waste into landfill or to pollute the environment. It’s the community and environment that has to pay it.”
A circular economy in practice
Countries such as Canada, China, and Japan have embraced a circular economy, according to non-profit organisation Circular Australia chief executive Lisa Mclean.
The mechanisms of a circular economy allow governments to tackle crises relating to carbon, climate consumption, resource scarcity and biodiversity.
“The circular economy is becoming a well-known and acceptable framework to tackle those crises, but also the sustainable development goals,” Mclean said.
In 2021, Circular Australia investigated the economic opportunities of a circular economy found there was more infrastructure to support recycling.
“We’ve got Woolworths and Coca Cola investing in plastic recycling infrastructure,” Mclean said, adding that recycling was not the only answer.
“We’re not going to get to a circular economy by just recycling. There’s a real need for infrastructure and manufacturing to process other waste streams, which are highly valuable.”
She explained that many businesses are undoubtedly embracing a circular economy, “but there are also a lot of laggards.”
“I think a key challenge is how to bring them along both through regulation market incentive, but also through soft power,” she said.