Growing a circular economy

The current way our economy consumes resources is not sustainable. A ‘linear’

approach—where materials are extracted, made into a product, used and discarded—wastes valuable resources and damages the environment. In addition, increasing levels of consumption in developing countries will put ever more pressure on the prices of materials and subsequent costs for businesses and consumers. A ‘circular’ approach of re-using resources, maximising their value over time, makes environmental and economic sense. There are potentially billions of pounds of benefits for businesses across the economy by becoming more resource efficient.

The Government recognises this opportunity, and is involved in a number of initiatives to support a more circular economy, but instead of scaling up its work it is cutting it back. Its approach lacks leadership. The Government should learn from the strategic vision and ambitious targets that other countries have adopted. It should embrace the EU’s ambitious targets for improving resource productivity by 30% and support business in achieving the economic and environmental benefits this would bring. It should also support the European’s Commission’s proposals for recycling and the accompanying targets, and use these to drive change.

During our inquiry, we heard from a range of businesses who are taking steps to a more circular economy approach, such as those that have introduced new business models that sell a service rather than a product or use innovative materials and processes to reduce environmental impacts. They told us that there is a range of barriers that Government should tackle to create the conditions for the changes needed for this to expand. We recommend that the Government reforms taxation and producer responsibility regulations to reward companies that design products with lower environmental impacts and ensures that resources are re-used. Revenues from such an approach should be used to help fund bodies, including WRAP, working to enhance materials recovery and a circular economy. It should also support efforts to improve information about the location of materials and give direct guidance to local authorities on what materials are collected and recycled. This should include a ban on food waste to landfill and separate food waste collections. It should also work with industry to set longer warranty periods for consumer products and new environmental standards for eco-design, taking steps to stop businesses using materials that cannot be recycled when better alternatives exist, and use Government procurement standards to promote a more sustainable and circular economy. The Green Investment Bank too could play a greater part in the circular economy by financing innovative technologies.