Why the transition needs circularity

Managing our changing natural environment is a pressing challenge for all businesses. For many, the obstacles in the way of a net-zero economy are becoming clearer than ever before – and importantly, so are many of the solutions.

Amid the growing proliferation of decarbonisation activities, the concept of a circular economy looms as a simple way for business to understand the transition.

At Planet Ark’s Circularity conference in November, stakeholders from across industry, government, academia and NGOs came together to share their latest thinking. Three central obstacles underpinned that thinking: the broad challenges of climate change, biodiversity loss and toxic pollution.

The circular economy can help combat each of these challenges. Its animating principles – eliminating waste, circulating products (at their highest value) and regenerating nature - are increasingly being applied across many industries, and are under active consideration in others.

As manufacturers across several industries put greater emphasis on upstream design, the economy can begin to close the ‘materials loop’ and keep waste out of incinerators and landfill.

Source: Doughnut Economics, by Kate Raworth

More than just a nice-to-have, circularity represents the kind of thinking required if the world is to meet the goals of the Paris Agreement.

With energy creating approximately 70 per cent of global emissions, according to the latest UN Emissions Gap Report, circular activities can plug the gap that the energy transition can’t fill alone. The rest must come from improved land and waste management, and circular principles being rolled out across food and manufacturing supply chains.

Opportunity, not obstacle

As the audience at Circularity were reminded by the former chief executive of Australia’s CSIRO, Larry Marshall, sustainability is “not a tax - it’s an opportunity for growth”.

A key part of ANZ’s climate and environment strategy is to support household, business and financial practices that improve environmental sustainability. As a bank, we know the right kind of financing can support many solutions on the path to net zero emissions. Decarbonisation activities, including leaning into renewable energy opportunities, optimising energy efficiency and embracing electrification, are top of mind for many businesses and their leaders.

Opportunities in nature supportive activities such as reforestation and pollution removal continue to grow. Vitally, circular economy activities, such as supporting the sharing, maintenance, reuse, refurbishment and recycling of products, continue to be an increasing area of focus.

Riding the wave

Embracing the circular model won’t be easy, but change is already happening. With businesses large and small rolling out circular economy solutions, the question is no longer ‘how do we catch the wave?’, but rather, ‘how do we ride it to prosperity?’.

Better commercialisation pipelines are crucial. The business community has an opportunity to work more closely with our world-leading scientists, ensuring research and innovation can be commercialised quickly and efficiently.

Some areas are easier to tackle than others. Plastic recycling and food waste are simple wins for businesses looking to meet public expectations around climate, nature and circularity.

These opportunities are more easily achieved when approached cooperatively. As the Circularity 2024 attendees were told, the world needs partnerships if the promise of circularity is to be achieved.

Make no mistake, there will be serious challenges along the way to a net-zero carbon, nature-positive and circular economy. But with the right solutions – and the right partners – opportunities for sustainable growth continue to emerge.

Holly Taylor is an Associate Director of Sustainable Finance at ANZ Institutional