4. Investing in the Fundamentals
With the policy, business and development communities becoming increasingly enthusiastic about the CE, and with the risks of poorly coordinated domestic CE strategies highlighted by recent developments in the global used-plastics trade, there is an urgent need to consider the conditions under which the CE can flourish while delivering on existing international commitments to sustainable development and climate mitigation.
Policymakers will need to consider how best to capture and preserve existing CE expertise and innovation in the informal sector.
Robust regulation will be needed both to create the right incentive structures for a transition to the CE and to ensure that businesses are held to the highest labour, health and environmental standards when rolling out CE practices. Policymakers will need to consider how best to capture and preserve existing CE expertise and innovation in the informal sector. They will have to consider how to mitigate the risk of large-scale displacement of informal workers, and put in place the right policy structures to support domestic CE practitioners and innovators while attracting foreign investment and trade. Inequities in access to finance and variations in consumption patterns will need to be addressed to ensure that CE strategies align with the principles of inclusive and sustainable growth.
4.1 Putting in place the policy architecture
4.1.1 Regulation
Experience in developed countries suggests that the range of potential policies for implementing the CE is broad (see Table 4), with a variety of interventions required to facilitate the transition. In developed countries, interventions have included financial incentives such as reduced VAT on repaired products, as well as policies such as labelling schemes to help consumers choose more ‘circular’ products. While the bulk of policy activity in this area has been in developed countries, some of these interventions are already in use in developing countries: extended producer responsibility (EPR) policies, for example, have been widely adopted in emerging and developing countries, including China, Colombia, India, Nigeria and Thailand, and the governments of Indonesia and the Philippines are considering adopting EPR schemes for the management of plastic waste.173 Other measures will be less applicable to developing countries. Differentiated and preferable VAT rates for repair services and sales of second-hand goods may, in principle, act as an incentive for CE activities, but in practice are likely to be difficult to administer where institutional capacity is low.
Table 4: Selected elements of a circular economy policy toolkit for developed countries
Type |
Policy |
Example |
---|---|---|
Economic instruments |
Landfill taxation |
Landfill tax in Denmark, the Netherlands and the UK |
Carbon tax |
Carbon tax in the Netherlands, Norway and Sweden |
|
Container deposit legislation |
AB Svenska Returpak in Sweden |
|
Infrastructure investment |
UK Recycling and Waste LP fund for smaller-scale recycling and waste infrastructure |
|
Differentiated VAT rate |
Reduced VAT rates in China for secondary raw materials |
|
Information-based |
Labelling |
EU Ecolabel; Der Grüne Punkt in Germany |
Public education programmes |
EU public information campaign on environmental damage caused by plastic waste |
|
Skills and training |
Scotland Skills Investment Plan |
|
Ecodesign |
Extended producer responsibility (EPR) |
India 2016 E-Waste Management Rules; Canada-wide Action Plan for Extended Producer Responsibility |
Ecodesign requirements: durability, repairability, recyclability |
EU’s Eco-Design Directive |
|
Other regulations |
Waste prevention standard |
BS 8001: 2017 – a framework standard for implementing the CE in organizations |
Voluntary agreements |
European PVC industry voluntary agreement; WRAP’s Courtauld Commitment to reducing private-sector food waste |
|
Waste shipments: proper enforcement |
UK Transfrontier Shipment of Waste Regulations |
|
Public procurement and innovation |
Green public procurement |
Dutch government’s Green Deal |
Targeted public R&D |
EU Circular Economy Finance Support Platform; EU InnovFin, backed by Horizon 2020; Innovate UK |
|
Pilot zones |
CE industrial parks in China; eco-industrial parks in Scandinavia |
Sources: Authors’ analysis, building on table in McCarthy, A., Dellink, R. and Bibas, R. (2018), The Macroeconomics of the Circular Economy Transition: A Critical Review of Modelling Approaches, OECD Environment Working Papers, No. 130, doi:10.1787/af983f9a-en, Paris: OECD Publishing.
Accounting for local infrastructure and institutional capacity in the design of CE policies and regulations will be key if policymakers are to avoid pushback from industry. In India, the e-waste EPR system, introduced in 2011, has seen more than 700 electronics producers apply for authorization but has also met with wide resistance. Producers argue that the EPR targets – to collect and recycle at least 30 per cent of products within two years of implementation and 70 per cent within seven years – are too ambitious.174 Poor at-source segregation of waste, the lack of formalized reverse logistics infrastructure and the continued role of informal workers in collecting around 80 per cent of waste have all posed major challenges for companies trying to trace their products – whether to buy them back, move them around the country or assign them to authorized recyclers.175 In Nigeria, the government has encountered challenges in implementing its EPR scheme for e-waste.176 The policy was introduced in 2016, but a lack of capacity has hampered roll-out of the framework across the country. The regulatory enforcement agency, for example, has no official presence in 10 out of 36 states.177 As in India, the large size of the informal recycling sector presents challenges: Nigerian consumers are used to being paid for their waste by informal workers, and unwilling to hand over end-of-life products without compensation.
In addition to incentives to encourage CE activity, robust regulations will be needed in developing countries both to mitigate the risks of negative environmental and health externalities and to reduce the likelihood of ‘regulatory flight’ (whereby foreign companies take advantage of a lax regulatory environment in one country to implement practices that would not be permitted in other jurisdictions, as discussed in Section 2.1.1). Standards on durability, reusability and recyclability are particularly important in the construction sector, where developing countries have a window of opportunity to embed CE design principles in new buildings and infrastructure. With appropriate building standards, developing-country governments and urban planners can incentivize the building of structures that are long-lasting, easily maintained and refurbished, and readily repaired in the event of climate-related damage. Similarly, regulating the design and construction of new infrastructure in such a way as to maximize connectivity can encourage more efficient use of primary resources. As part of the Smart Cities Mission in India, more than 100 cities are implementing initiatives to develop urban areas that provide decent quality of life to citizens via the application of ‘smart’ solutions including integrated multimodal transport and enhanced digital connectivity.178
With appropriate building standards, developing-country governments and urban planners can incentivize the building of structures that are long-lasting, easily maintained and refurbished, and readily repaired in the event of climate-related damage.
Commitments under the UN Framework Convention on Climate Change (UNFCCC), notably via countries’ Nationally Determined Contributions (NDCs), will be a key vehicle through which to shape climate-friendly and climate-resilient building design. In its updated NDC, in December 2017, Lesotho committed to the decarbonization of its building sector and outlined plans to implement climate-related building codes and standards, launch energy-efficiency programmes and develop national standards for alternative building materials and technologies.179 Lesotho is in a minority: of the 193 countries that have submitted NDCs, only 40 have committed to creating building energy codes.180 Nonetheless, the design and implementation of well-developed and robustly enforced building energy codes in other developing countries can mitigate the risk of locking in high energy consumption over the lifetime of the building stock, and reduce the consequent likely need for expensive retrofits as and when future regulations are introduced and implemented.
Labour standards are another important yet little discussed area. Protecting labour rights and promoting safe and secure working conditions are particularly important in the waste management sector, where the handling of materials including e-waste potentially poses environmental and human health risks.181 Hybrid approaches to integrating the informal sector into managed supply chains are one means of promoting basic principles of good practice in workplace safety, but robust labour standards and the promotion of decent work principles will be needed to enshrine appropriate monitoring and accountability frameworks in developing countries.
4.1.2 Integration of informal workers
Informal-sector employment in waste management presents both opportunities and challenges for lower- and middle-income countries seeking to shift towards a CE. Informal waste-pickers contribute significantly to the ‘circularity’ of developing economies. In India, roughly 80 per cent of waste is collected and processed by informal workers.182 They collect, sort, trade and often process, recycle and repair secondary products and materials.183 As a result, few things left on the street are not retrieved for further use. Compared to industrialized waste management processes, these activities are often cheaper and less technology- and energy-intensive. Some studies also suggest that waste-pickers are more effective at collecting waste on a household level than more formalized processes are.184 Finally, the existence of a strong skills base in separation, repairs and recycling can be an advantage.185
In India, roughly 80 per cent of waste is collected and processed by informal workers. They collect, sort, trade and often process, recycle and repair secondary products and materials. As a result, few things left on the street are not retrieved for further use.
Careful approaches are needed to avoid rapidly displacing employment in the informal sector and losing the skills base and resource efficiency associated with that employment. The most exciting opportunities for harnessing the skills of informal workers without rapidly displacing employment seem to lie in hybrid approaches that provide access to finance for the informal sector (see Box 6) and the adoption of taxation and fiscal structures that tax resources rather than people, thereby lowering the costs of hiring and increasing the costs associated with primary resource extraction and waste generation.186
Box 6: Informal-sector hybrid model in Brazil
In 2010, following a 20-year deliberation period, Brazil adopted its National Solid Waste Policy, designed to respond to the critical challenges presented by the 67 million tonnes of solid waste the country produces each year.187 The policy was ambitious, mandating that solid-waste plans be prepared by every municipality by 2012, that all dumpsites be closed by 2013, and that recycling be increased from 1 per cent of solid waste to 45 per cent by 2031, among other directives.188 The plan also called for the social inclusion of 75 per cent of the estimated 200,000–800,000 waste-pickers, or catadores, by 2031.189 Traditionally independent and working as part of the informal economy, catadores separate and gather recyclables to sell.
The National Association of Collectors of Recyclable Waste (Movimento Nacional dos Catadores de Materiais Recicláveis), established in 2001, sought formal recognition of the profession – a goal that was achieved in 2002 – to secure remuneration for the environmental management aspect of informal waste-picking, beyond just the sale of the raw materials. In 2013, the non-profit BVRio Institute signed an agreement with the National Association of Collectors to develop a system to support the remuneration of catadores for reverse logistics services.
A pilot project was established. Running from April 2014 to March 2015, it included more than 1,000 catadores from 30 cooperatives, as well as the consumer goods companies O Boticario and Biscoitos Piraquê. The cooperatives issued and sold ‘reverse logistics credits’, certificates which confirmed that reverse logistics services had been provided for the responsible disposal of waste. The credits were applied to more than 1,600 tonnes of solid waste, generating over $100,000 in revenue for the cooperatives, and making it worthwhile for the catadores to collect waste materials with a lower raw-material value than aluminium. The cost to the companies ranged from $0.00013 to $0.011 per unit of packaging, so the credits also offered an economically viable way of complying with their obligations under the National Solid Waste Policy.190
Digital technology companies have also begun to enter the space, with apps such as Cataki launching an Uber-style service to link householders wanting to dispose of recyclables with catadores, although as of 2017 the app had limited penetration.
Brazil has yet to meet the targets outlined in the National Solid Waste Policy. As of 2015, only 40 per cent of municipalities had submitted solid-waste management plans, and around 3,000 dumps remained open.191 Ultimately, for the policy to be a success, the law must be enforced and innovation must continue to create solutions that respond to both the environmental and economic pressures for the stakeholders involved.
4.1.3 Trade policy
Domestic trade policies potentially provide an important means through which national governments can encourage and incentivize a transition to more circular approaches among domestic actors while creating an attractive investment environment for foreign financiers. Energy-efficiency requirements for imported second-hand vehicles; minimum percentage requirements for recyclable content in plastic waste; health and safety standards for recycled or recyclable products and materials; and quality, health and safety standards for remanufactured products192 – all could, depending on how they are designed, either expand or restrict international trade in various categories of desirable and undesirable secondary materials. India has banned the import of refurbished Apple iPhones in order to prevent the dumping of e-waste, and Pakistan is considering banning all second-hand mobile phones.193 A number of countries have also imposed stricter controls and import restrictions on old and inefficient second-hand vehicles as a means of meeting their NDCs under the Paris Agreement.194
Import duties can have a substantial impact on access to affordable inputs for CE activities in developing countries. The reduction or removal of import duties on primary goods used for pollution management and resource management – such as equipment used in recycling plants – or on secondary raw materials can lower the capital costs of CE infrastructure and feedstock in import-dependent countries and boost the competitiveness of downstream CE activities. India, despite boasting limited supplies of domestic scrap steel, has taken a 13 per cent share of global secondary steel production through importing waste and scrap for material recovery;195 were scrap metal imports available at a lower cost, other countries might be in a position to do the same.
The reduction or removal of import duties on primary goods used for pollution management and resource management – such as equipment used in recycling plants – or on secondary raw materials can lower the capital costs of CE infrastructure and feedstock in import-dependent countries and boost the competitiveness of downstream CE activities.
For developing countries, the removal of restrictions on trade in services relevant to the CE across various modes of delivery (such as measures that restrict domestic businesses’ access to operating licences overseas, or to foreign services in IT and communications) will be critical to promoting a more inclusive approach to the CE. Developed countries could benefit from repair services, for appliances and other goods, based in developing countries. Developing countries could benefit from the expertise of specialized companies in the sorting and processing of e-waste.
Box 7: Domestic trade policy and WTO rules
The non-discrimination principle enshrined in the World Trade Organization (WTO) agreements, centred around the General Agreement on Tariffs and Trade (GATT), prohibits the use of protectionist trade measures by member countries. Regulations or taxes must not discriminate between imported and domestically produced ‘like products’, or between imports from different WTO members. But certain exceptions to these rules permit governments to impose unilateral trade restrictions in specified circumstances, for example when ‘necessary to protect human, animal or plant life or health’ (GATT Article XX(b)); or ‘relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption’ (GATT Article XX(g)). A series of dispute cases have helped to clarify the meaning of ‘likeness’, and the following factors may be taken into account: (1) the properties, nature and quality of the products; (2) the end-uses of the products; (3) consumers’ taste and habits in respect of the products; and (4) the tariff classification of the products. It may therefore be permissible for products which are like in terms of physical characteristics and end-uses but which have very different environmental impacts at the point of production (e.g. aluminium cans made of recycled scrap versus those made of new aluminium ore) to be subject to differentiated treatment.196
Such treatment could, in theory, include differential tariffs (import and export duties) based on non-product criteria such as a manufacturing process.197 But this is rare. In practice, trade measures based on non-product criteria have been more common in respect of product standards, labels and accreditation procedures. These factors offer a further basis for encouraging trade in CE products, above all those that are difficult to distinguish from non-CE products at the point of import, such as e-waste and functional used electrical and electronic equipment.
The WTO’s Agreement on Technical Barriers to Trade (TBT Agreement) lays down disciplines regulating the use of standards in international trade. It employs the same concept of ‘likeness’ to ensure that domestically produced goods are not treated more favourably than their imported equivalents. Under the TBT Agreement, technical regulations must not be ‘prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to international trade’ and ‘shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create’.198 In this context, the protection of human health or safety and/or the health of animals, plants and the environment is considered a ‘legitimate objective’. Products manufactured using CE practices could therefore, in theory, be afforded preferential treatment if their positive environmental impact is easily demonstrable, and if the trade measures in question are clearly not protectionist in effect.
4.2 Fostering innovation and investment
4.2.1 Support for research and innovation
For many companies operating in the developing world, above all in resource-intensive economies, the CE may not initially be seen as an attractive business proposition or fertile space for investment in novel solutions. If governments are to encourage the private-sector innovation needed to support the transition to a CE, they will need to identify early opportunities that harness the competitive advantage of incumbent industries and that demonstrate the potential for the CE to enhance market opportunities.
Fostering innovation will also depend on heightening awareness of the breadth of solutions and practices that contribute to the CE. In developing countries, where urbanization and industrial development are expected to continue apace, manufacturers, investors and policymakers have a window of opportunity to embed CE principles early in those processes. As such, they also have an opportunity to provide consumers with products and business models designed for ‘second life’ applications, easy repair or asset sharing. Yet responses to the Chatham House–UNIDO survey indicate that improved waste management is seen as the greatest opportunity presented by the CE (see Figures 5 and 6), and that circular approaches are most commonly understood as those designed to deliver greater resource efficiency and recovery and to promote ‘repair and reuse’ models (see Figure 7). Less well appreciated is the potential for CE practices to contribute to more sustainable and lucrative approaches to construction, electronics production or textiles production, for example, through materials substitution, design for disassembly or longer product lifespans.
Figure 7: Which activities or practices do you most associate with the circular economy?
The curating of knowledge-sharing networks can play an important role in encouraging the early research and experimentation required to establish first principles and lower the barriers to entry for businesses and innovators. Examples of CE solutions and initiatives abound across both developed and developing countries (see Figure 8), but small businesses and CE researchers based in universities may have no easy way of tapping into the lessons learned from existing projects. Virtual networks, supported through government-to-government partnerships, donor projects or civil society initiatives, can link innovators around the world, enabling the exchange of ideas and approaches. Such knowledge-sharing can help to demonstrate the multitude of ways in which CE solutions may be applied to support different actors.
One example is 3D printing. With relatively low-cost 3D printers and easy-to-use software increasingly available,199 many actors in developing countries are taking up 3D printing technology. Its applications in the CE context vary. The Ethical Filament Foundation has worked with local waste-pickers, industry and entrepreneurs in India, Kenya and Tanzania to produce valuable 3D printer filament out of recycled waste that is then sold to local businesses.200 New Story, a US-based non-profit organization, has used 3D printing technology to build affordable, customizable and sustainable homes in Bolivia, El Salvador and Haiti, thus reducing demand for materials and providing for greater recyclability.201 The Victoria Hand Project is using 3D printing to provide prosthetic limbs to amputees in Nepal and Cambodia, in an initiative that has increased quality of life for hundreds of citizens.202 Knowledge-sharing networks that showcase these projects while connecting suppliers of 3D hardware and software with potential customers could enable wider uptake of the technology.
Figure 8: Circular economy activity around the world
Investment in digital accessibility and digital literacy will be another critical component for government strategies aimed at encouraging innovation in the CE. Digital technologies are likely to play a critical role in accelerating the uptake of circular activities, not least because the barrier to entry is relatively low.203 There are many possible applications of data in CE approaches: firms are using active location sensors and radio frequency identification (RFID) to track and check the condition of products, which in turn allows the timing of repairs to be optimized and facilitates the sharing of assets between consumers; optical scanners are helping to identify materials in waste streams for more accurate separation into different categories;204 and online platforms can match available secondary materials and products with potential customers.205 Equitable access to these technologies, and to the employment opportunities and resource efficiency gains they can deliver, will depend on ensuring that workers – especially in rural and disadvantaged locations – can acquire the necessary training.206
Developing novel alternatives to materials used by low-income households and rural communities will be as important as innovation in high-tech solutions. Plastic bottles, sachets and containers, for example, are invaluable for keeping liquids, food and household items safe from contamination and allowing them to be sold in amounts that are affordable for the average consumer in lower-income countries.207 Finding and funding novel alternatives will be critical to ensuring that the removal or substitution of existing packaging and containers does not curtail product access.
4.2.2 Novel finance mechanisms
Whether technology-intensive or not, CE innovations will need to be accompanied by innovative forms of financing if they are to be adopted.208 Many efforts to establish large-scale financing facilities for the CE in developing countries have yet to be operationalized, given the absence of a strong pipeline of suitable projects. Circular investments are often seen as high-risk, owing to their novelty and to uncertainties around the valuation and insurance of repaired products. Constraining factors also include long asset lifetimes, difficulties around ownership models for products flagged for reuse and remanufacture, and the cross-industry nature of CE models.209 Product-as-a-service models, for example, require new forms of leasing and insurance contracts and typically require longer-term financing. Similarly, circular business models typically rely on cooperation across a network of suppliers; banks may thus seek assurance that no single point of dependence in a given network poses a threat to the other participants. Innovative financing will also be needed to ensure that local entrepreneurs and small and medium-sized enterprises (SMEs) are supported in the transition to a CE.
A range of financing organizations will likely need to be involved, providing not only blended finance but guidance on how to structure and operationalize circular value networks. Collaborative approaches to financing guidelines could accelerate the creation of a lower-risk investment environment for private-sector financiers.
Financial instruments with novel risk-sharing mechanisms could help to enhance collaboration along the value chain.210 Such mechanisms could support the sharing of supply chain risk information, or underpin revenue-sharing and buy-back arrangements to mitigate losses to any one actor in the event of a disruption to supply or demand.211 A range of financing organizations will likely need to be involved, providing not only blended finance but guidance on how to structure and operationalize circular value networks. Collaborative approaches to financing guidelines, as seen in the CE finance guidelines launched by ABN AMRO, ING and Rabobank in 2018,212 could accelerate the creation of a lower-risk investment environment for private-sector financiers. Governments can also help to incentivize novel projects via public procurement rules and fiscal policy, potentially building on lessons from renewable energy markets. In the electricity sector, a combination of price guarantee policies – such as feed-in tariffs – and innovative public financing models encouraged the flow of private investment into renewable energy sources. This stimulated technological development in renewable energy. It enabled economies of scale to emerge so that, today, solar PV installations and wind power are competitive with conventional energy sources. In 2016, 90 per cent of renewable energy investment came from private sources.213
At the level of individual strategies or products, initiatives to strengthen financial access will be key to enabling small businesses and low-income consumers to participate in circular value chains. Low-cost models for asset sharing, product-as-service models or subscriptions to software can enable lower-income customers to adopt CE products and services.
4.3 Addressing the social dimensions of the CE
In the past, the CE agenda has been criticized for being too focused on technical and engineering aspects, to the detriment of understanding the role of people’s desires and aspirations.214 Discussions of resource management have not always considered the social dimensions of resource access and resource use, or the shifts in attitudes and behaviour implied by a transition away from linear consumption patterns towards the circular and sharing economy.
Social norms and consumer behaviour are key to the success of the CE, and developing countries are in many ways ahead of developed countries when it comes to consumer attitudes towards goods and services. The new consumer classes in developing countries are not perfectly replicating the consumption patterns of developed economies. Affluent Chinese, Indian and Indonesian consumers tend to be younger and more internet-savvy than their counterparts in European and North American markets,215 shopping online more and spending less on durable goods and more on lifestyle experiences such as travel. On average, people living in lower-income economies tend to display more ‘circular’ behaviour than those living in higher-income countries. Moreover, despite considerable variation, per capita resource consumption is generally lower in developing countries than in developed ones.216 In India, for example, 60 per cent of discarded plastics are recycled, compared to just 6 per cent in the US.217 Similarly, the Marshall Islands recycles 31 per cent of municipal solid waste, whereas New Zealand recycles only 15 per cent.218 In fact, the Marshall Islands forms part of a group of Pacific islands (including 14 countries and eight territories across Melanesia, Micronesia and Polynesia) that collectively recycle at least 47 per cent of waste; they aim to increase this share to 70 per cent by 2025.219
Where current and anticipated trends in consumer behaviour are towards ‘throw-away’ models of resource use, nudge tactics and awareness campaigns can encourage perceptions of product reuse, recycling and asset sharing as mainstream and appealing. Experience of policy design around the world in support of sustainable consumption indicates the importance of environmental cues and targeted information in disrupting habits, particularly when the impacts of individual changes may be hard to see.220 A campaign to encourage more responsible water use in Brazil, for example, included a calculation of the volume of water wasted over an individual’s lifetime through leaving the tap running while teeth-brushing; in São Paulo, the campaign contributed to a reduction in water consumption of more than 30 per cent.221 In the case of ‘switch’ changes – involving switching from an unsustainable behaviour to a more sustainable one – schemes that automatically make the sustainable option the default have been shown to be successful.222 So, too, have information campaigns that alert individuals to changes made by their peers: one frequently cited study demonstrates that hotel guests are more likely to reuse their towels when told that most guests at the hotel had done so.223
Encouraging positive consumer attitudes will be particularly important to the scaling up of value-added surplus products (VASPs) in the food system.224 Certain approaches will require a degree of public education to demonstrate their safety and to socialize their use. For example, sludge recycling – the collection, treatment and use of human sewage – offers opportunities for the manufacturing of fertilizer, fuel, building materials (bricks and cement), animal feed and bioplastics,225 but there has been substantial consumer resistance to expansion of the associated supply chains in many countries. Moreover, considerable effort will need to go into influencing consumer mindsets to avoid the ‘rebound effect’ whereby price reductions for a commodity that occur as circular practices take hold either increase consumption of that commodity or result in higher spending elsewhere in the economy.
Policies will likely be needed to promote equitable access to the CE-associated benefits – including increased access to cheaper transport and living spaces – that are enjoyed predominantly by the wealthier segments of developing-country populations.
As the middle classes expand, governments in developing countries will need to manage a growing divergence between the consumption and wastefulness of a fast-growing elite and the consumer habits of an increasingly ‘left behind’ group of poorer and more vulnerable people. Policies will likely be needed to promote equitable access to the CE-associated benefits – including increased access to cheaper transport and living spaces – that are enjoyed predominantly by the wealthier segments of developing-country populations.226 It will also be important for policymakers to manage gender inequities. As women tend to have poorer access to digital technologies – in Africa, only 12 per cent use or own digital technologies, versus 18 per cent of men227 – there is a risk that the roll-out of the CE will further exacerbate inequities in women’s access to goods, services and employment.
4.4 Summary
- Developing-country governments will need to provide an enabling environment for private-sector innovation and change in public behaviour if the CE is to take hold at scale. Fundamental to such an environment will be a robust policy architecture that creates the right incentives and punitive measures to guide industry action, that integrates the large and vibrant informal sector, and that encourages foreign investment in domestic industries engaged in circular activities.
- Innovation strategies will be required to encourage R&D in CE solutions beyond recycling and waste management. Where CE approaches are untested or involve coordination across multiple actors in a supply chain, novel financing mechanisms are likely to be needed to lower the investment risk.
- Development of a comprehensive CE will also depend on public uptake of circular behaviours, including consumption of used or refurbished goods and participation in asset-sharing models. Equally as important will be policy measures to tackle inequities in resource access and use, both between low- and high-income groups and between genders, to ensure that the benefits of the CE are reaped widely and fairly.