From waste to wealth: towards a circular economy
VIETNAM, October 9 – As environmental concerns increase and resources run out, we need to shift to a new model of consumption, which can support the economy and help the planet: the circular economy. Tim Evans, CEO of HSBC Vietnam, talks about the opportunities and challenges of a circular economy.
Sanctuary: The concept of circular economy is attracting more and more attention. What is that?
There are many definitions of what the circular economy is. For HSBC, the circular economy is an alternative business model to the linear model, which consists of make, use and dispose. It promotes sustainable development by designing products, systems and processes focused on recycling and reuse, waste reduction, conservation of natural resources and efficiency gains.
The concept of circularity is that we are moving from a world where we make-consume-dispose to a world where there are fewer leaks, where waste can be fed back into the system as raw materials, where products and systems are designed to be easier to recycle, and where we use much more than just consume and throw away. Transitioning to a circular economic model can help preserve scarce resources, protect our environment, unlock potential for sustainable economic development and improve our quality of life.
Sanctuary: Why is it essential for us to switch to a new consumption model?
The truth is that we consume a lot and waste a lot. Think about the resources you’ve consumed over the past week: the clothes you’ve bought, the food you’ve eaten, the distance you’ve walked. Think of everything you have thrown away: single-use plastic items like bags, bottles, coffee cups, straws, boxes, spoons, etc.
Not only that, but the extraction, processing and manufacturing of goods for society accounts for 62% of global greenhouse gas emissions. Excess emissions come from inefficient use of resources and waste, contributing an estimated 1.6 billion tonnes of carbon emissions generated from solid waste management alone, which is equivalent to 350 million cars on the road.
It also generates significant amounts of waste and pollution. Currently, 60% of discarded materials are either sent to landfills or incinerated, damaging the natural environment. According to the World Bank, this is all the more alarming given that global waste generation is expected to increase by 70% by 2050.
Do we need to extract from the natural environment at the rate we currently do? Can we achieve net zero emissions without zero waste? The answer is no. The only thing we can do is switch to the circular economy.
Sanctuary: What’s wrong with the linear model?
Under the current model, natural resources are under pressure. Over the next decade, millions more people around the world are expected to become “middle class” consumers, pushing global consumption higher. Given the limited resources at our disposal, a new model of economic prosperity becomes even more necessary. Today’s linear world is unsustainable as the number of resources extracted from our planet increases by almost 2% every year.
A linear economy follows the “take-make-dispose” approach – raw materials are collected and then transformed into used products until they are disposed of as waste. Left unchecked, the linear economy will produce as many products as possible, damaging the environment through rampant resource extraction, excessive carbon emissions, unwanted pollution and excessive waste.
Unlike the linear economy, the circular economy requires a paradigm shift where resources are reused for as long as possible by maximizing the reuse of consumer goods and actively recycling unwanted materials.
Sanctuary: How far have we gone?
Despite the enormous benefits that a circular economy can bring, the world is still only 9% circular. Much more needs to be done to move a significant part of the world away from a linear model.
Sanctuary: It seems that companies are reacting positively to circularity.
It’s true. We can see more and more companies getting started with enthusiasm, from technology companies developing new materials, products or processes to a closed-loop model to companies committed to the transition to the sustainable circular approach. Opportunities abound both for businesses and investors.
Sanctuary: What role can a circular economy play in tackling plastic pollution, one of the most pressing environmental issues?
Let’s take a look at one of the most used items in the world: beverage bottles. Currently, large amounts of plastic packaging are used for beverage bottles. Using more recycled materials is one way to solve plastic pollution. Other solutions include refillable packaging designs, which go beyond beverage bottles. The idea may also be feasible across a wide range of food products, with consumers bringing their own containers to fill rice, cereal, etc.
UK food retailer Waitrose has launched a refill trial in supermarkets. This new system significantly reduces packaging waste and economically benefits consumers, as most refillable products will be sold at a lower price given the absence of packaging costs (up to 15% discount).
This way, companies can make their initial products more sustainable and of higher quality with a design that facilitates reuse or recycling, supporting the transition to a circular model while reducing plastic pollution.
Sanctuary: The path to circularity is not simple. What challenges await us?
The first is the cost. New processes and technologies require considerable investment. Fortunately, more and more financial organizations recognize the urgent need to go circular. For example, HSBC will arrange $12 billion in direct and indirect green finance for Việt Nam by 2030. We have helped many clients like Vinh Hoan, Dohaco, Leo Paper Products (Việt Nam) etc., to take circularity seriously.
Sanctuary: What about the role of governments?
Their role is essential to promote the progress of the circular economy. A few countries like the Netherlands are much further along in developing policies around a circular economy, targeting 50% circular by 2030 and 100% by 2050. Many countries, like the UK, China and Denmark, have integrated the circular transition into their national policy. strategies to accelerate the adoption of circularity.
Elsewhere, economies recognize that the circular economy could be key to their future growth prospects. This includes Việt Nam, where the government recently approved a program to develop the circular economy in the country, setting ambitious goals for the country. By 2025, it aims to reuse, recycle and treat 85% of the plastic waste generated, to reduce plastic waste in the seas and oceans by 50% and to reduce the volume of non-biodegradable plastic bags and plastic products disposables used in daily life.
The volume of municipal solid waste collected and treated according to the standards and criteria of circular economy models should reach 50% by 2030, with 100% urban organic waste and 70% rural organic waste recycled.
In truth, the transition to a circular economy requires active participation and cooperation in all economic aspects of businesses and consumers. We all have a role to play. A simple first step that we can all take is to take concrete steps to waste less and reuse/recycle more. VNS