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EU legislation needed to support business moves towards greater resource productivity

last modified Jan 07, 2019 03:34 PM
15 September 2017 – Leading European businesses are adopting new business models that deliver greater resource productivity and reduce waste, but European Member States urgently need to introduce policies to support and accelerate this transition and maximise the potential economic benefits, according to a new report from The Prince of Wales’s Corporate Leaders Group (CLG).

The report, European industry in the 21st century: New models for resource productivity, is being launched today at an event at the Stora Enso Headquarters in Helsinki that features high level speakers from the European Commission, Finnish National Government and leading businesses.

All fourteen companies interviewed for the report are changing the way they operate: designing products to use fewer materials and last longer, choosing bio-based inputs, and reusing or recycling waste. They are responding to a context of diminishing natural resources, increasing supply chain vulnerability, and the need to reduce carbon dioxide emissions and environmental impact. The benefits include cost savings, enhanced reputation, and consumer loyalty.

Seppo Parvi, CFO of Stora Enso said:

"For businesses looking to reduce their exposure to supply risks, enter new markets and reduce their carbon footprint, developing new business models based on renewable materials and circular economy principles can bring very real economic and brand benefits. However, stricter policies - for example new ´eco-design´ and public procurements requirements that drive the prioritisation of materials and services with a low carbon footprint - are much needed to catalyse a further market pull and consequently achieve wider societal benefits."

Many companies said that recycling was not enough, and that they recognised the need to focus more on ways to design waste out of the system.

Mat Roberts, Group Director of Sustainability Strategy at Interserve said:

“70% of circular economy policy is currently on end life, maybe 15% on input, and the other 15% on the design phase. Ideally, it should be nearer 5% responsibility left for end of life decisions.”

Some companies, such as Philips Lighting, are moving from selling a product to selling a function, or level of performance, which reduces inputs and waste, and allows the company to incentivise resource efficiency. Others are investing in ‘industrial symbiosis’ - for example ACCIONA’s renewable electricity by-products were traditionally sent to landfill but are now sold as fertilizer additives, avoiding 27,000 metric tonnes of landfill each year and saving $1.4 million annually.

This shift towards a more careful use of materials offers significant benefits for companies prepared to innovate. The EU Commission estimates that waste prevention, eco-design, re-use and similar measures could bring net savings of €600 billion, or 8% of annual turnover, for businesses in the EU, and reduce annual greenhouse gas emissions by 2-4 %. If 95% of mobile phones were collected, this could generate savings on manufacturing material costs of more than €1 billion.

However, there are a number of obstacles including:

  • Overly restrictive, complex or unharmonised policies.
  • Insufficient demand or knowledge on the part of consumers.
  • Getting consumers, policymakers and companies to think in a circular rather than linear way.
  • Shifting the focus from waste to resources.

Natasa Sbrizaj, Public Policy & Government Affairs Manager for 3M said:

“We would like the EU and its Member States to be more progressive and less voluntary in their approach if public procurement is to really bite across the EU. Additionally, if the EU is serious about driving a circular economy, it needs to provide legislation that prompts and enables companies to change current behaviour.”

Companies interviewed agreed on the need for more effective EU policies including minimum design requirements; harmonised regulations on waste; targeted tax measures for disposable items or to encourage repairs e.g. removing tax on labour; more sophisticated end of life landfill and incineration policies to boost secondary materials market; and higher public procurement criteria.

Jill Duggan, Director of the CLG said:

“There are many reasons to make more efficient use of our resources.  Alongside the environmental impact of extracting resources, there are those associated with their disposal at end of life.  Smart businesses are rejecting the traditional linear model of production, consumption and waste, and pursuing greater resource productivity - and responsibility. But legislation is needed to shift incentives, remove obstacles, and support these initial moves. The EU has recently watered down its proposals on this issue. The new EU Industrial Strategy next spring is their chance to correct course.”