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Six ways to strengthen the circular economy

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Planned obsolescence has meant electronic goods form the fastest growing waste mountain in the EU (ArieStudio/shutterstock.com)

Mutually-reinforcing measures, plus finance and labour, are needed to bend a linear economy into a circle.

The close of 2023 confirmed what many feared: the year was the hottest on record and climate talks in Dubai provided little in the way of satisfaction. The globe’s extraction and consumption of materials—heavily linked to greenhouse-gas emissions—continued to spiral, with consumption over the last six years nearly on a par with that of the entire 20th century.

The circular economy has been posited as a solution to our climate woes, offering a toolbox of practices to do more with less, thereby slashing emissions, pollution and material use. But although the volume of discussions, debates and articles on the topic nearly tripled over the past five years, the world is becoming less circular year on year. This is according to the Circularity Gap Report 2024, the annual ‘report card’ for the global economy just out from the Dutch impact organisation Circle Economy Foundation.

Advancing the transition

The report calls for bold action to heavily reduce material consumption, noting the pivotal role of policy-makers in the transition. Although some burgeoning policies are nudging us in the right direction—the European Union’s coming green-claims directive and ecodesign regulation, for example—more are needed worldwide to drive the circular transition. It is time to ‘walk the walk’, the report urges, outlining six policies governments around the world must explore to advance the global transition to a circular economy.

Set strict environmental standards for products: this ranges from mandating material- and energy-efficient manufacturing processes to requiring design for durability, repairability and (if necessary) recycling. Banning destruction of unsold and returned goods is a priority: Amazon achieved (even greater) infamy when it emerged that the company destroyed millions of items of unsold stock each year—with goods described as going ‘straight off the production line and into the bin’. The EU’s recent ban on the destruction of unsold clothing, starting from 2025 for big businesses, is a step in the right direction and should be widened to other product groups.

Roll out environmental ‘scores’ for all products: today’s consumers increasingly favour sustainable products, with nearly 90 per cent of ‘Generation X’ consumers willing to pay more for them. Environmental ‘scores’ that help consumers choose between product offerings—and stave off companies’ rampant ‘greenwashing’—can nudge shoppers in the right direction: food labels, for example, may include environmental and social impacts, in addition to nutritional information. Labelling and certification schemes are however highly fragmented, with hundreds across Europe, many centring on just one aspect of sustainability. Launched decades ago, the EU’s Ecolabel programme represents an early effort to harmonise this, although many product groups are still not covered and recognition outside of Europe may be limited. A unified, life-cycle approach to ecolabelling is yet to come for many countries worldwide. In the EU, the coming Digital Product Passport will hopefully boost transparency in a harmonised system that shares product information for each step of the value chain, from extraction to production to end of life.

Spread certifications and warranties for recycled materials: these can boast significantly lower environmental impact than their virgin counterparts but, due to our current political and financial landscape, other incentives are often lacking. This is all too common in construction—materials- and emissions-intensive—where opting for recycled materials can seem more trouble than it is worth. Developing certifications for these materials can help validate their safety and quality, putting them on a par with their virgin counterparts and lessening the stigma around their use.

Strengthen universal ‘right to repair’ legislation: planned obsolescence now seems ubiquitous and can cost a European consumer up to €50,000 over their lifetime. Many common products—think laptops and mobile phones—are designed to prevent users from repairing them or even replacing worn-out batteries, limiting a product’s lifespan to that of its shortest-lived component. This creates mountains of waste: electronic waste is the EU’s fastest-growing stream and less than 40 per cent of it is recycled. While bans on planned obsolescence are certainly on the menu, ‘right to repair’ legislation will also have a crucial role. The EU’s proposed directive—the result of considerable lobbying efforts from advocacy groups and member states themselves—will establish a Europe-wide quality standard for repairs, ensuring consumers are up to date on producers’ obligations and even setting up online platforms to match them with retailers and repair services. The goal: ensuring repair is more attractive, simple and affordable than buying new, so products can be kept in use for as long as possible.

Tighten producer-responsibility regulations: imagine if responsibility for the disposal of obsolete or broken products was shifted upstream—falling on producers rather than individuals or municipalities, in theory incentivising them to design lasting, easy-to-recyle products. This is what extended producer responsibility (EPR) schemes aim to do. But although successful in improving waste collection and recycling, current iterations have failed meaningfully to extend product lifetimes or prevent waste. With new schemes rolling out around Europe—the Dutch EPR for textiles, for example, went into effect in mid-2023—legislators have the chance to tweak regulations so that EPRs’ full potential is unlocked. Better governance, greater transparency and enforceability and systematic inclusion of product design in schemes will all be crucial starting points.

Cut taxes on circular products and services—and increase them on linear ones: policy-makers should look to level the playing field and give planet-healthy products and services a fighting chance. Incentives such as bonus cheques and reduced or zero tax on repair services and refurbished goods can help consumers make more sustainable choices. Sweden, for example, has already cut value-added tax on repair, while Austria, Germany and France offer partial reimbursements to customers who take this route. In tandem, taxes can be leveraged to shift consumption patterns, especially among the ultra-wealthy—a tax on luxury goods, for example, could curb excess consumption while channelling extra revenue into public goods, from improved public transport and healthcare to urban green spaces. Subsidies could also be shifted away from high-impact activities and products: meat, air travel and fast fashion, for example.

Concerted action

This list is far from exhaustive. Effective policies will vary by sector and country, while rigorous implementation and monitoring are also key.

Moreover, the increasingly financialised economic system across the globe often means governments’ abilities to drive change and direct funding to the right places can be limited. So while policy can set the right incentives in place, concerted action from international financial institutions and development banks is crucial to enable the transition in practice to a circular economy.

The social dimension must not be forgotten, either: millions of workers trained in circular skills will be needed around the world to take the circular economy from theory to action. The biggest paradigm shift of the 21st century calls for all hands on deck.

Ana Birliga Sutherland
Ana Birliga Sutherland
  Ana Birliga Sutherland is a writer and editor for Circle Economy. She has degrees in law and environmental management from University College Utrecht and the University of Edinburgh respectively.
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