SWITCH to Circular Economy Value Chains is funded by the European Union and led by UNIDO with Chatham House as partner.
The project aims to remove barriers, unlock opportunities and demonstrate an inclusive circular economy. It does so by addressing a complex set of challenges faced by the circular transition in developing countries.
SWITCH to Circular Economy Value Chains targets three main value chains where there is promise for a circular transition; plastic packaging, ICT and electronics, as well as textiles and garments.
Introduction
Unless growth is decoupled from the extraction, production, use and waste of materials, resource consumption is set to almost double in the next 40 years.
Circular models such as repair, remanufacturing, reuse and recycling are not new, but they have only become established in a handful of sectors. Currently, the world is only nine per cent circular.
The EU is now spearheading change on a global level with a Circular Economy Action Plan addressing trade policy, product standards and international cooperation. But for this change to be just and inclusive, developing countries must be supported in their circular transition through investment, technical assistance and capacity development from advanced economies.
In the best scenario, developing countries unlock circular opportunities and make them integral to their growth story, but barriers may prevent them from keeping up with new standards and demand from consumer markets.
Circular theory has advanced, now action is needed
The transition towards a circular economy is complex and barriers are numerous:
Technical: Different equipment and technological capacities are required to shift production systems to reuse, remanufacture, and recycling.
Social and cultural: Circular models require coordination between multiple stakeholders as well as producer and consumer awareness of how to treat, use, and dispose of resources.
Economic: Industrializing, developing countries often do not adequately price the resources and waste generation of fast-growing manufacturing sectors.
Financial: Circular transitions involve high up-front costs. Businesses in developing countries face many barriers accessing finance and must pay high interest rates on credit.
Overcoming these barriers is imperative in view of the circular economy’s substantial economic, environmental and societal benefits.
There is significant interest in establishing circular economy practices in developing countries. Many circular practices exist in society and traditional industries. The large informal sector in developing countries is active in the circular economy.
However, attempts to introduce circular solutions in fast-growing manufacturing sectors have so far been fragmented and often at the research rather than implementation level. There is an urgent need for interventions which progress the circular agenda from abstract to practical implementation through effective and replicable demonstrations.
SWITCH is a comprehensive package of change
SWITCH leverages the influence and resources of European multinational companies (MNCs) to assist the private sector in developing countries to change their practices and transition to circularity.
The project targets tier 1, 2 and, when feasible, tier 3 suppliers of EU MNCs to run well-designed pilots that can catalyse the switch to circularity in multiple value chains.
The project seeks to catalyse change through:
- Supporting and investing in pilot projects that can become circular blueprints for other developing nations and value chains;
- Raising capacities of micro- small- and medium-size enterprises and connecting them to multinational MNCs which can test and scale their solutions;
- Developing innovative finance models that address the gap in green finance products and loans for SMEs;
- Researching and raising awareness around policy interventions that could remove barriers and unlock circular opportunities in the target country.
Together, these efforts will accelerate the circular transition and also ensure a strong social impact through capacity building and skills training.
SWITCH recognises there will be winners and losers when activities in the linear economy are replaced by circular ones. Therefore, just transition principles must be embraced by policy-makers, businesses and international organisations to promote an inclusive circular economy.
