The Circular Economy

In Geneva last month 180 countries agreed to limit the export of used plastics worldwide, in practice by requiring the agreement of the receiving state before export. For decades developed countries have been exporting plastic and toxic waste to Asia, claiming it will be recycled but in reality a significant proportion of it was buried due to contamination, incinerated or found on the ocean floor.

As a result of unmanageable volumes, in 2017 China banned the import of foreign plastic waste. Malaysia, India, Thailand, Philippines and Vietnam are all following in their footsteps, resulting in developed market recycling companies struggling to find outlets for the plastics they collect.

Source: Financial Times

There are indications that governments are looking to push more responsibility for these, and other waste products, to the producers. France has considerable ambitions in this area.

In 2016, France passed a law banning supermarkets bigger than 400m2 from destroying unsold food and now the government wishes to extend the ban to clothing, beauty products, household appliances, constructions materials or plastics and other products. Companies will have to better organize their way of recycling. This new legislation that takes part of a circular economy law is due to pass through parliament this year and would come into force within two to four years.

It is said that this proposal could become one of the most important laws on the environment of this five-year term, such as the Energy Transition Law under François Hollande or the Grenelle 1 Law under Nicolas Sarkozy.

According to this law, producers will have to pay the environmental cost of their activities. With the “polluter-pays principle” they are required to manage and finance the end of the life of their products through eco-organizations. The stated objective is to gradually move from a linear economy (production, consumption, disposal) to a circular economy that promotes the recycling of goods and the reuse of their components. For example, the building sector will be obliged to carry out a diagnosis on the management of products, materials and waste resulting from the destruction or rehabilitation of buildings to better reuse and recycle them.

This law will also require better information on the environmental characteristics of products (labels), a reparability index, and the text proposes a modulation of product prices – up to 20% of the sales price excluding tax – according to the environmental footprint, via a bonus/charge applied to producers that can be passed on to the consumer.

Companies will need to manage these changes and adapt. For those behind the curve, the disruption will likely be more considerable.

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