6.1
What is a circular economy?
The circular economy seeks to reduce the environmental impacts of production and consumption through the more efficient use of resources. While there is no universally agreed definition of precisely what the circular economy means and exactly what it encompasses, it has become widely understood by these three principles:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems
Source: OCSE
It requires keeping products, components and materials in use for as long as possible. This occurs through purposeful design of products to be durable, repairable and upgradable, with all components and materials able to be remanufactured or recycled at the end of a product’s life. Waste is either designed out from the beginning of the production process or reimagined as a resource to make new products or materials, preventing the extraction of raw materials.
The concept represents a fundamental shift in how our society operates; transitioning from the current linear ‘take–make–waste’ economic model where materials are extracted, made into products, and discarded as waste at the product’s end-of-life. This linear model has led to an inefficient use of natural resources, a culture of consumerism and a predisposition towards waste.
This chapter provides an overview of the circular economy concept, drawing upon international examples to demonstrate its application. It highlights actions occurring within the ACT region across government, industry and community to transition the ACT to a circular economy and points towards potential opportunities to accelerate this transition.
The ‘9Rs’ of a circular economy
The widely recognised “3Rs” (reduce, reuse, recycle) of the waste hierarchy has evolved into the comprehensive “9Rs” that incorporates a broader range of circular strategies. The 9Rs aim to enhance resource efficiency, minimise waste and facilitate the circular flow of materials and resources.
They include refuse, rethink, reduce, reuse, repair, refurbish, remanufacture, repurpose, recycle and recover. This framework can serve as a valuable tool to identify circular potentials of a product across its life cycle to avoid resource consumption and waste generation.
- The refuse, rethink and reduce strategies aim to avoid or reduce the amount of material used and eliminate waste in the design stage.
- If these strategies cannot be applied, the reuse, repair, refurbish, remanufacture and repurpose strategies aim to keep materials circulating to avoid further resource extraction.
- If these strategies cannot be applied, recycle or recover can be used to secure the raw materials of products or product parts that are no longer functional for reuse.
The 9Rs are explored further below, illustrating how the various strategies can be applied throughout the life cycle of a bike. The recover strategy has not been included as it is not a key focus within the ACT.
6.2
Why do we need a circular economy?
The linear ‘take–make–waste’ economic model is dependent upon resource consumption for economic growth. Extracting and processing natural resources is energy and material intensive and creates significant environmental damage. The United Nations has declared that unsustainable material consumption and production patterns are the root cause of the triple planetary crisis — climate change, biodiversity loss and pollution. A 2019 report published by the International Resource Panel found that around 90% of global biodiversity loss and water stress, and a significant proportion of harmful emissions that are driving climate change, is caused by the way we extract and process natural resources.
As of 2017, the global economy consumes over 100 billion tonnes of materials each year, with only 10.7% of waste recycled into new products. Approximately 52.6 billion tonnes of materials entering the global economy every year are used for short-lived products, reaching their end-of-use typically within a year. Without concerted action to curb unsustainable resource consumption, global material use is projected to increase to 190 billion tonnes each year by 2060.
High-income countries, such as Australia, have much higher levels of resource consumption compared to low- and middle-income countries. Australia has the third highest material consumption rate in the world at 38 tonnes per capita, which is well above the global average of 12 tonnes per capita. In the ACT, we need an area approximately nine times the size of the ACT to provide the resources, goods and services we consume and use and to regulate our pollution (see Human settlements). Based on these findings, it’s clear our current resource use is unsustainable.
By transforming our relationship with materials to use less, use longer and use again, the circular economy curbs over-extraction of resources and helps keep human activity within planetary boundaries. Circular economy activities also drive reductions in greenhouse gas emissions including scope 3 emissions. Through reusing, repairing and refurbishing products rather than replacing them, fewer products need to be manufactured, which reduces the associated energy and emissions. As a result, the global transition to a circular economy could reduce global emissions by 39%.
6.3
What does a circular economy look like?
A circular economy is not about end-of-life waste management or recycling strategies. While recycling is important in diverting consumer waste away from landfill, it only deals with products at their end-of-life. The circular economy instead considers the entire life cycle of a product — from material sourcing to end-of-life disposal — to eliminate waste, extend product longevity and maximise the reuse of products, components, and materials.
This will require profound changes to how we design, manufacture, sell, use and dispose of products. This will call for innovations in product design and business models to embed circular principles; policy and legislation to shape business decision-making and transform supply chains to consider the environmental impacts of production; and behavioural and cultural change to reduce consumption and increase habits of reuse and repair. This will need to be paired with fundamental systems change to redress economic structures that encourage excessive consumption and overextraction of resources.
The broad roles of key actors in the transition to a circular economy (government, business and community) are outlined below, followed by several examples to illustrate how circular principles are being applied around the world.
Government
Governments create the conditions for a circular economy to thrive. This occurs through setting ambitious policies, providing financial incentives to businesses and consumers, investing in targeted waste infrastructure and driving demand for circular products and business models through procurement practices. Governments can also drive fundamental changes to business practices through regulatory measures such as setting extended producer responsibility requirements, where suppliers bear responsibility for the environmental impacts of their products throughout the entire life cycle.
Business
Businesses and industry drive innovations in product design to use fewer or recycled materials, and to be durable, reusable, repairable, upgradable, with all components and materials able to be disassembled and recycled. Businesses can adopt circular business models that encourage intense and efficient product use, such as sharing or leasing models, or providing products-as-a-service, retaining responsibility for the product’s maintenance, repair and disposal. Businesses can also provide infrastructure to collect, refurbish and recycle end-of-life products, components and materials for use in new products.
Community
Communities drive behaviour change, energise the sharing economy, create second-hand marketplaces and push governments to change unsustainable linear practices. Each of us can make informed choices around what we buy, how we use products and how we dispose of them. This includes:
- buying less, borrowing and/or sharing items
- buying products that are second-hand, durable and recyclable
- selling or donating old usable products instead of throwing into landfill, and
- repairing broken products and/or using them for as long as possible
For more, see Buy Nothing, Community Toolbox Canberra and Repair Cafes in Canberra.
Right to repair movement
Repair is fundamental to the circular economy as it keeps products, components and materials in use by prolonging their lifespan for as long as possible. However, everyday products are becoming harder to repair. Products can be designed with limited repairability, vital parts are often inaccessible, and consumers often have limited repair options besides authorised repair outlets. This results in wasteful outcomes as it becomes cheaper and easier to throw products away and replace entirely.
The right to repair movement seeks to remedy these issues, advocating for consumers’ rights to repair and access to repair services at competitive prices. It aims to improve product design to enhance repairability and to secure access to spare parts, tools and repair manuals to enable consumers and independent repairers to repair products. This movement has galvanised multiple countries and jurisdictions to introducing legislation enshrining the right to repair.
In July 2021, the Australian Productivity Commission conducted an inquiry on the issue of right to repair in Australia; examining the barriers and enablers of competition in repair markets, and the costs and benefits of implementing right to repair legislation. The findings of the inquiry found “significant and unnecessary barriers” to consumer’ right to repair in Australia. While stopping short in recommending the introduction of legislation, the inquiry recommended a suite of measures to safeguard Australian consumers’ ability to access durable products that can be repaired, replaced or refunded under existing Australian Consumer Law consumer guarantees.
The recommendations included mandating product package labelling that indicates the durability and repairability of a product; warranties to ensure consumers retain their rights to repair, replacement or refund regardless of using independent repairers or spare parts; and penalties on suppliers and manufacturers who do not comply.
Circular procurement
Circular procurement is an approach to purchasing goods and services that accelerates the transition to a circular economy. The Municipality of Aalborg in Denmark was one of the first local authorities in Europe to incorporate circular principles into procurement practices. In 2017, the local government put out a call for tender to provide furniture to 54 schools over a three-year period.The procurers adopted a co-design methodology, collaborating with researchers from the University of Aalborg and market suppliers to develop the criteria for the tender and assess local suppliers’ capabilities to respond to the circular requirements.
The call for tender included specific clauses designed to prolong the furniture’s lifespan. This included the requirement for user-friendly maintenance guides, availability of spare parts and the ability to disassemble the products and replace individual components. In regard to repairs, social clauses were incorporated into the tender, guaranteeing social enterprises were to handle repairs. The procurement conditions mandated that all furniture reaching its end-of-life, and unable to be reused or refurbished, must be completely recycled. During the evaluation phase, the award criteria for ‘circular economy’ was weighted the highest at 40%, while other aspects like consultancy, quality and price were each assigned 20%.
Reuse, repair and share
The City of Portland, Oregon, USA has fostered a rich culture of reuse, repair and share activities. The local government established Resourceful PDX, a program that provides tips and ideas for how local residents can reduce consumption of new material goods and incorporate reuse, repair and share activities into the daily lives; an online directory to promote local businesses and organisations that provide these services; and grants and funding to support projects that contribute to renting, sharing, fixing and reusing goods.
In 2021, the local government commissioned a needs assessment of local reuse, repair and share organisations to understand how the local government could support the growing circular economy sector. Five areas of support were identified through the assessment: 1) space, location, and storage; 2) equity diversity and inclusion; 3) communications and marketing; 4) capacity building and staffing support; and 5) funding and grants.
Following this assessment, seven reuse, repair and share organisations formed the Reuse Collective to collaborate with local government to address issues raised in the assessment. This collective comprises a bike repair shop, a second-hand furniture and household bank, an electronics reuse and repair centre, an organisation that diverts construction and demolition material from going to landfill and repair cafes.
Circular design
In March 2022, the European Commission introduced a proposal for the Ecodesign for Sustainable Products Regulation (ESPR) under their Circular Economy Action Plan to ensure sustainable products are the norm on the EU market, regardless of whether they are produced inside or outside the EU. When implemented, the ESPR will set eco-design performance requirements to make products more durable, reliable, reusable, upgradable, repairable, easier to maintain, refurbish and recycle, and energy and resource efficient. All products will be required to have a Digital Product Passport, which will provide information on the product’s life cycle and environmental impact. These ‘passports’ will also provide information on the product’s durability, repairability, recycled content and availability of spare parts to ensure consumers can make informed purchasing decisions.
6.4
What is happening for Australia’s circular economy?
The circular economy concept has gained considerable attention within Australia in recent years, with multiple policies developing at local, state/territory and federal levels. In June 2023, environment ministers from each Australian state and territory reiterated their commitment to transition Australia to a circular economy by 2030, as originally set out in the National Waste Policy 2018. The major policies and initiatives led by the Commonwealth Government that facilitate the transition to a circular economy are detailed in Table 1.
Table 1. Summary of major circular economy policies and initiatives led by the Commonwealth Government
| Policy/initiative | Description |
|---|---|
| National Waste Policy 2018 | The policy updated the previous National Waste Policy 2009 to reflect contemporary challenges in waste management, resource recovery and the global shift towards a circular economy. It sets a national framework for action by governments, businesses, and the waste and resource recovery industries to achieve sustainable waste management and a circular economy by 2030. |
| National Waste Policy Action Plan 2019 | The action plan presents targets and actions to implement the National Waste Policy. These include:
|
| Circular Economy Ministerial Advisory Group | The advisory group was established in November 2022 to advise the Commonwealth Minister for the Environment and Water on the opportunities, challenges and actions required to transition Australia to a circular economy by 2030. |
| Recycling Modernisation Fund | The fund was established by the Commonwealth Government to respond to the nationwide waste export ban introduced in 2020. The fund has $250 million available to invest in infrastructure to expand Australia’s ability to sort, process and remanufacture recycled materials. |
| Food Waste for Healthy Soils Fund | The fund was established by the Commonwealth Government to contribute to the national goal of increasing the organic waste recycling rate from 47% to 80% by 2030. The fund has $67 million available to support projects such as infrastructure upgrades or developments that divert organic waste from landfill. |
| Recycling and Waste Reduction Act 2020 | The Act provides the framework for voluntary, co-regulatory or mandatory product stewardship schemes to effectively manage the environmental, health and safety impacts of products, especially their disposal. It also provided the legislative framework to ban the export of waste glass, plastics, tyres and paper. |
| National Product Stewardship Investment Fund | The fund has $26 million available to support industry-led product stewardship schemes in Australia and to increase the recycling rates of these schemes. |
6.5
Where is Canberra’s circular economy up to?
Source: Richie Southerton
The circular economy is nascent in the ACT region. In August 2023, the final ACT Circular Economy Strategy and Action Plan 2023–30 (Circular Economy Strategy) was released. It sets the vision, strategic objectives and focus areas to make the ACT economy more circular through to 2030. The six key focus areas outlined in the Circular Economy Strategy include procurement skills, innovation and governance, food and organics, built environment, consumer goods, emerging and problematic waste streams and creating space to showcase commitment to the circular economy. Associated action plans for each focus area have been developed to guide actions over the coming years to transition the ACT to a circular economy.
The Circular Economy Act 2023 sets a framework for future regulations to require businesses to have a separate collection for co-mingled recycling and organic waste collection, as well as a food waste reduction plan. In addition, the legislation builds upon the phase-out of single-use plastics and extends power to ban other problematic, non-plastic products. This delivers the circular economy legislation commitment under the Parliamentary and Governing Agreement for the 10th ACT Legislative Assembly.
Other ACT Government-led initiatives contributing to a circular economy in the ACT include:
- Love Food, Hate Waste is an ACT Government behaviour change program to help reduce food waste at home through ideas, facts and resources for meal planning, effective food storage and recipes for leftovers.
- The Plastic Reduction Act 2021 has resulted in the ban of single-use plastic items such as takeaway containers, cutlery, polystyrene products and packaging.
- The ACT Government commenced a mattress recycling initiative with Soft Landing in 2016, which recovers up to 75% of mattress components. Soft landing recycled 42,985 mattresses in 2019–20, 44,870 mattresses in 2020–21 and 43,742 2021–22.
- The Commonwealth Government and ACT Government have co-invested $23 million through the Recycling Modernisation Fund for the construction of a new Materials Recovery Facility in Hume. The facility, which sorts material from the household yellow bins, will improve the separation and processing of recycling streams such as paper, glass and plastic.
- The Commonwealth Government has allocated $13 million from the Food Waste for Healthy Soils Fund for the construction of a large-scale Food Organics and Garden Organics (FOGO) composting facility. Once completed, the facility is expected to process up to 50,000 tonnes of local organic waste each year collected through the FOGO kerbside waste collection program.
Outside of ACT Government actions, businesses and community initiatives are driving the transition to a circular economy. Repair cafes have proliferated across the ACT, offering volunteer assistance and skill-sharing to repair broken items. Online marketplaces such as Buy Nothing groups on Facebook have emerged as vibrant spaces for passing on second-hand goods and sharing appliances. Community-led initiatives such as the Community Toolbox, a shared tool and equipment library, are activating the sharing economy.
Businesses are embracing circular economy principles, including The Green Shed which operates as a reuse centre and diverts 8,000 tonnes per year of unwanted items from landfill, including furniture, bikes, clothes and building materials to sell second-hand. Thor’s Hammer salvages over 1,000 tonnes of timber per year to create recycled furniture and building materials. Global Worming and Two Before Ten are working to create an ecosystem of food and garden waste recycling.
Mapping the circular economy ecosystem of the ACT region
The ACT circular economy ecosystem map below seeks to build awareness of the breadth and depth of circular economy action taking place in the ACT region across government, industry and the community. Through a combination of desktop analysis and survey data, the map identifies the critical actors within the ACT circular economy, which of the 9Rs (refuse, rethink, reduce, reuse, repair, refurbish, remanufacture, repurpose and recycle) each actor contributes to, and the interrelationships between these actors.
The map contains 130 nodes (including 121 organisations and nine R strategies) and 353 ties. The black lines (ties) indicate which of the 9Rs each organisation contributes to, while the green ties represent the affiliations between organisations. The colour of each node is classified by the type of organisation in accordance with the legend. The size of each R-strategy node reflects the number of incoming ties, that is the larger nodes have a higher amount of relevant activity occurring within the ACT.
The map is equipped with interactive features. Click on the R strategies on the left-hand side to isolate each strategy and identify which organisations contribute to its delivery in the ACT. To view full-screen, click the button on the top-left. To investigate more closely, zoom in and out using the buttons on the bottom-right corner.
Figure 1: Map of the circular economy ecosystem in the ACT.
Source: GHD
Overall, the map highlights that there is strong engagement across the range of circular strategies within the ACT. Traditional waste management strategies such as ‘recycle’ are well represented with 38 incoming ties, alongside higher-order circular strategies such as ‘rethink’ (36 incoming ties), ‘reuse’ (38 incoming times) and ‘reduce’ (32 incoming ties). The strategies ‘remanufacture’, ‘refurbish’, and ‘refuse’ are the least engaged with and require increased engagement and focus within the ACT.
6.6
Opportunities to accelerate the transition to a circular economy
Build industry and business capability for the circular economy
The Procurement, Skills, Innovation and Governance Action Plan within the Circular Economy Strategy outlines key actions to encourage growth within the ACT circular economy business sector, including grants programs and skills training. While commendable, there is a gap to support businesses incorporate circular principles into existing practices. Building industry and capability within the ACT region will be critical to facilitate the development of a local circular economy industry and to respond to ACT Government circular procurement tenders (see below).
The ACT Government could emulate other jurisdictions’ capacity-building programs that support businesses identify opportunities to embed circular business models and practices. For example, Zero Waste Scotland’s Circular Economy Business Support Service provides one-to-one tailored advice to small and medium-sized enterprises across all sectors to innovate the design and delivery of products, services and business models to become more circular. A similar business support program could be established within ACT Government to provide best practice guidance on circular business models, sustainable sourcing of materials and collaborating with other suppliers to create closed-loop systems.
Increase reuse of materials within the construction and demolition sector
The built environment is a major contributor to resource consumption and climate change, accounting for 40% of energy-related global carbon emissions and 50% of all materials consumed. According to the 2018 National Waste Policy Report, 20.4 million tonnes of waste are produced by the construction and demolition industries in Australia every year, which corresponds to almost one-third of all waste produced in the country. Reusing and recycling construction materials is a key intervention to reduce material consumption, which also has co-benefits for emissions reductions.
The Built Environment Action Plan within the Circular Economy Strategy emphasises the use of recycled material in civil infrastructure projects. Action 3.4 and 3.5 specifies undertaking trials to evaluate the suitability of recycled materials in the construction of civil and open space assets, which will inform the adoption of minimum recycled content standards within the ACT Municipal Infrastructure Design Standards and Technical Specifications. Furthermore, in accordance with Action 3.6, reused and recycled material will be prioritised where suitable during Light Rail Stage 2, while excess waste and materials produced during the project will be made available for reuse. Action 3.16 proposes exploring options to establish a Circular Resource Hub for the Suburban Land Agency to store salvaged materials to be reused in future built form projects.
To improve the reuse of materials across the construction and demolition sector in the ACT, improved partnerships between key stakeholders such as demolition businesses, recycling centres and builders required. Thor’s Hammer presents a successful model for independently building relationships with demolition companies, though these partnerships could be proactively fostered by ACT Government initiatives. For example, ACT Government-supported discussions between key ACT construction and demolition stakeholders will foster partnerships along the supply chain to maximise opportunities to reuse materials and find solutions to overcome barriers. These barriers include lack of appropriate facilities to sort through materials, limited capacity across the industry to remanufacture waste into reusable materials, and the absence of shared storage options for reclaimed materials.
Conduct and publish regular waste audits
In 2022, ACT Government audited kerbside domestic waste, landfill and transfer station waste and the Hume Material Recovery Facility inputs and outputs. The data captured from these audits is used to understand waste flows in the ACT and inform waste policy and investment decisions, including the delivery of targeted infrastructure and services to manage problematic waste streams. The previous audits were undertaken in 2014, meaning there was a period of eight years without data to inform decision-making. To ensure effective waste management in the ACT, these audits need to be conducted and published every two years.
In addition, the information obtained from these audits can be used for targeted educative purposes. For example, the most recent kerbside domestic waste audit found that on average 9.4% of general waste in single-unit dwellings are materials that should be in the commingled recycling bin. As a result, if all currently accepted recyclables were placed in the commingled bins the landfill diversion of waste produced by ACT households could increase from 24% to 33%. This highlights the need for education campaigns, such as raising the visibility of the Recyclopaedia resource, to increase public knowledge of what can and cannot be recycled.
6.7
What can the ACT Government do to improve its own circularity?
Circular public procurement
Public procurement is a powerful lever to support the transition to a circular economy. The ACT Government spends approximately $2 billion each year on the provision of goods, services and works. It can leverage this high purchasing power to preference circular products, materials and services and procure from business models that are based on resource-efficient solutions. This will drive demand within the local economy and encourage shifts in ACT residents’ consumption practices to circular goods and services.
Circular procurement is an approach to purchasing works, goods and services that accelerates the transition to a circular economy. It aims to reduce reliance on raw materials, keep materials in use for longer and support businesses which promote circular business models. On the other hand, sustainable procurement encompasses a broader perspective, considering the environmental, social, and economic aspects of procurement decisions. While circular and sustainable procurement have distinct objectives, both challenge the overarching value-for-money principle by considering a wide range of outcomes and benefits that can be achieved through procurement.
In practice, circular procurement can include rethinking the need for purchase, choosing services instead of products, using shared ownership models, purchasing recycled content products and/or reuse or refurbishment of existing assets. This can be implemented through contractual arrangements that enhance circularity (e.g., supplier take-back systems, product-as-service, rental or leasing options) or setting circular criteria for products and services that suppliers must meet to be successful (e.g., products must be durable, repairable, reusable, contain recycled material, able to be disassembled etc.).
ACT Government has made important steps to embed circular principles into government procurement processes. The Government Procurement (Charter of Procurement Values) Direction 2020 sets out six fundamental values that the ACT Government should uphold within procurement processes. Under this directive, all government processes are required to consider and, when appropriate, apply one or more of these values to their procurement activities. One of these values, “Environmental Responsibility”, specifically recognises the role of procurement in accelerating the transition to a circular economy.
The Circular Economy Strategy recognises the role of public procurement in supporting the circular economy. The use of procurement is emphasised within the realm of the built environment, where public procurement can be leveraged to increase the use of recycled and reused materials in large-scale infrastructure and civil works project. Additionally, Action 1.1 of the Procurement, Skills, Information and Governance Action Plan specifies the development of a Circular Economy in Procurement guide, to assist ACT Government procurement officials implement circular procurement processes. This guide is due to be released in 2024.
While these actions represent a significant step in harnessing public procurement to support the ACT’s circular economy, there are still underexplored opportunities. This includes undertaking a comprehensive assessment of ACT Government spending categories to determine which services and products are most-resource intensive and hold high potential to apply circular economy criteria in procurement processes. For example, spending categories such as office furniture, uniforms, ICT, transport and food and packaging are commonly targeted for circular procurement practices in other countries and jurisdictions.
Once these spending areas are identified, circular procurement pilots should be conducted. This should involve public procurement officers engaging with market suppliers to collaboratively set circular requirements that can be realistically responded to. As the circular economy in the ACT evolves and more circular options become available, the level of ambition can be raised over time by increasing the minimum requirements in future tenders.
Best practices identified during these pilots should be shared across the ACT Public Service, promoting knowledge exchange and replication of successful tenders. Additional training and support in tandem with the Circular Economy in Procurement guide would work to build necessary capability and working knowledge of the circular economy, ensuring that circular principles are effectively embedded into procurement processes.
Expert Comment
Procurement can change the world
Dr Katherine Trebeck, The Next Economy
Procurement can change the world because it can change the economy, and to a great extent the economy shapes our lives and our environment.
In countries like Australia, government spending constitutes a considerable portion of a region’s economy. Those who decide the way in which this spend is deployed — where and to whom the money goes — have the potential to reshape economic activity, and therefore social and environmental outcomes.
In each jurisdiction, elected officials set goals and direction. In turn, government procurement officers, via their instructions, pre-qualifying questionnaires, decision-making criteria and selection decisions, encourage certain sorts of behaviour from those entities bidding for contracts and supplying goods and services.
Within these procurement processes, procurers can either adopt a narrow view of ‘cost and benefit’ that effectively externalises any impact on the environment (i.e., dismisses such impact as irrelevant) and misses opportunities to build in social benefits. Or they can look upstream to recognise and ensure negative impacts of an activity on our living planet are counted (and reduced) and that the potential for benefits beyond the immediate delivery of a good or service are deliberately sought.
All this adds up to change the incentives to which enterprises wishing to contract to governments will respond. In particular, procurement officers can encourage enterprises to adopt circular processes of product design and production. Circular processes must be the future of economic activity: the time of linear production and consumption systems has past, leaving great damage in its wake.
While there are notable examples of businesses in the ACT which understand the need to shift to a circular economy and have concertedly undertaken to operate in a way that keeps resources in circulation longer, for every such leader there will always be a laggard. This is where government needs to step in. On the one hand it needs to regulate to ensure minimum standards, and on the other hand positively encourage those standards — and more — via levers such as procurement.
Here, the circular economy agenda can learn from examples from around the world which demonstrate the extent to which procurement can be transformative:
- The idea of Community Wealth Building shows how procurement can redirect flows of money in a locality, ensuring more of it stays local, is reinvested and supports a vibrant economy from the community up, rather than passively waiting for wealth to trickle down. The towns of Preston in the north of England and Cleveland in the US showcase the power of this approach to bring benefits such as ‘good growth’, mental health improvements and increased subjective wellbeing.
- The UK Government has recently laid out measures that ‘require businesses to commit to net zero by 2050 and [to] publish clear and credible carbon reduction plans before they can bid for major government contracts’. This harnessing of procurement to compel bolder action by enterprises on some of society’s most pressing problems builds on the UK’s efforts to derive social value from government spend. The Public Services (Social Value) Act ‘requires commissioners who procure services to consider social, economic and environmental benefits’. Ways they can do this include support for small businesses, creating employment opportunities for disadvantaged people and working to reduce environmental damage.
- For several decades now, Scotland’s Sustainable Procurement Duty has required that public agencies consider how their purchases can enhance social, environment and economic wellbeing where the work is taking place, particularly looking for opportunities to reduce inequality. Procuring agencies are encouraged to involve small businesses and the third sector in delivery of good or services. The Scottish Government’s Partnership for Procurement supports and coordinate third sector entities to win Scottish Government contracts, while the use of ‘life cycle impact mapping’ in the duty will bring circular economy practice to the fore.
- The mayor of New York City, Bill de Blasio, bolstered the Minority and Women-Owned Business Enterprise Program when he took office in 2014. Recognising procurement as a tool to address inequality, the program sought to support enterprises led by people of colour and by women win tenders from city authorities. NYC contracts going to businesses owned by minority groups or women increased by 57% in de Blasio’s first year.
- Turning to the circular economy itself, the Canadian city of Toronto has a ‘Circular Economy Procurement Implementation Plan and Framework’. Its aim is to ‘leverage the City of Toronto’s purchasing power to drive waste reduction, economic growth and social prosperity through a circular economy approach’. Via pilots it will develop metrics and undertake market engagement to inform its circular economy procurement policy. The vision is for ‘circular economy principles [to be] applied to the City’s purchasing decisions, driving waste reduction, economic growth and social impact’.
Australia certainly isn’t sitting on its hands when it comes to harnessing the power of procurement. The OECD has written favourably of Australia’s Indigenous Procurement Policy (IPP), highlighting that ‘As at 18 July 2019, since the IPP’s introduction in 2015, more than 1,550 Indigenous businesses have won over 13,700 contracts under the Indigenous Procurement Policy (IPP) totalling more than $2.2 billion’. The ACT Legislative Assembly has recently been consulting how to ‘put gender on the tender’ via the proposed Women in Construction Procurement Policy. This would encourage recruitment of more women into all areas of construction: firms seeking to win large ACT Government construction contracts would need to set targets for how many women they will employ in respective job categories and also to ensure working conditions are supportive of women. This suggests a willingness in the ACT Government to harness the tools of procurement to encourage the sort of priorities, decisions and activities which will make the construction industry in the ACT more diverse. The policy will change workplace norms. It will start to dismantle ‘occupational segregation’ and perhaps, in time, attitudes themselves.
The ACT needs and deserves not only a more gender equal economy but also an economy that shares and cherishes resources. That means procurement needs to be harnessed to encourage the economic activities that do this. And in turn this means asking questions such as who owns the business? How do they treat the environment? Do they take account of the full cost of their economic activities? Who do they employ? And what sort of business model and ownership structure have they adopted? Essentially, what sort of enterprises does the ACT need more of to build an economy that meets the needs of people and planet?
But procurement decisions cannot stretch too far beyond what enterprises are able to deliver. Skills matter. Innovation matters. Knowledge matters. Here, Scotland provides an example of the sort of ‘wrap around’ efforts to cultivate a circular economy. Zero Waste Scotland was established to share knowledge and support circular economy innovation. It also has developed a Circular Economy Education and Skills Hub ‘to embed low carbon and circular economy skills and thinking in Scotland’s existing and future workforce, including the next generation of business leaders, designers, and innovators’. This is supported by Skills Development Scotland via its ‘Climate Emergency Action Plan’ and creation of a Head of Green Skills role.
There is plenty of evidence that linear production systems have had their day. There is also plenty of evidence that procurement is an effective tool to shape economic activity, so it is more in line with what people and planet need in the 21st century. Bringing the two together can harness the potential of procurement to encourage more circular production and consumption systems in the ACT, and in doing so, begin to change the world.
6.8
Sustainable and circular
It is important to acknowledge that the circular economy alone cannot solve the problems linked to consumption. Even with the implementation of circular strategies, each manufactured product still requires resources and energy, inevitably creating an environmental impact.
For instance, the process of recovering materials for reuse in another product could involve energy-intensive processes, which still leads to environmental damage. Even electrification technologies, such as wind turbines and electric vehicles, while representing a positive shift to renewable energy and the reduction of carbon emissions, still require resource inputs that are non-replenishing in the form of metals, concrete and land.
In addition, while these technological improvements have led to reduced emissions and environmental impacts, the worldwide growth in affluence and corresponding increase in consumption rates have outpaced these gains, driving up the impacts. Therefore, in order to truly reduce our environmental impact, we must change our societal values and reduce our consumption patterns until they fall within planetary boundaries, while fulfilling human needs.
Expert Comment
How economic growth models drive unsustainable consumption and planetary health inequity
Nick Frank, Megan Arthur and Sharon Friel, Planetary Health Equity Hothouse, School of Regulation and Global Governance, Australian National University
Excessive consumption by industrialised societies is causing a range of negative global environmental and social consequences. The over-extraction of mineral resources and the exploitation of natural resources that is required to meet the supply and demand for goods and services, as well as the environmental degradation and pollution caused by resource use and manufacturing, is harming the planet and people’s wellbeing.
The solution to excessive consumption must not rely on changes to individual behaviours.
These unsustainable patterns of consumption are enabled by a global consumptogenic system — the web of institutions, actors, policies, political and commercial processes, norms and behaviours that promote and reward the excessive production and consumption of goods and services.
This consumptogenic system extends far beyond any individual and threatens planetary health equity, defined as the sustainable and equitable enjoyment of the environment and good health. Without a healthy environment, there will be poor human health and social disruption, which will have impacts on disadvantaged populations in particular. Transforming this consumptogenic system is essential for the health of people and the planet.
Underpinning this consumptogenic system is a market-based economic model built on unlimited economic growth. In Australia, our growth model is driven largely by domestic demand and household consumption. Put another way, economic growth in Australia relies on high levels of consumption of goods and services by households. To give some perspective, in Australia, domestic consumption accounted for 41.7% of growth between 2009–18, compared to only 12.5% in Sweden. This type of economic growth has detrimental environmental, social, and health consequences. Australia’s growth model has generated social inequity as well as negative environmental outcomes including some of the highest per capita greenhouse gas emissions globally.
One example of how this consumptogenic system affects inequity and adverse environmental impact is through property prices. A permissive credit environment, characterised by low interest rates and easy access to credit, combined with regulatory and fiscal policy designed to encourage property ownership has generated soaring property prices. By incentivising the purchase of property over and above all other assets, households are encouraged to buy the largest and most expensive homes that they can afford. In turn, this has resulted in Australian’s owning some of the largest per capita homes on the planet.
These trends are not compatible with addressing climate change or fostering planetary health equity. Firstly, high property prices can undermine social equity as property ownership, and associated gains, is higher amongst the middle- and upper-income groups, and housing insecurity has significant negative impacts on health. Secondly, large homes have direct environmental impacts since house size is one of the primary determinants of domestic energy consumption.
Australia’s debt-fuelled consumption-based growth model is not a fait accompli. Rather, it is supported and maintained by a growth coalition of economic interests.These include firms and business coalitions in the financial services, real estate, insurance, and construction sectors; middle and upper-class property owners; and labour employed in the construction sector. In one clear example of these interests, the finance, insurance and construction sectors regularly top lists of financial contributions to political campaigns. The result of these relationships is to entrench a growth model that does not generate optimal outcomes for people or our planet, often through deepening inequities.
This situation of excessive consumption can be rectified — growth models can be replaced by new models and other interests can be listened to. Other possible models include de-growth, green growth, wellbeing budgets, and circular economies. These models provide various pathways for broad systemic change to the consumptogenic system. The Australian growth model is becoming increasingly flawed, particularly as climate change disruptions escalate. This presents an opportunity to reorient the growth model away from its consumptogenic trajectory and towards a more sustainable, equitable and healthier system. While individual action by citizens is crucial to reduce excessive consumption, the onus on individuals is unfair considering the power and scale of the consumptogenic system within which our society currently operates.
State and Territory governments need to make a start.
Returning to the example of housing and property prices, governments can create and implement policy levers to disincentivise large home sizes, boost renewable energy sources and ensure stringent building regulations to limit emissions, as well as enact policy measures to ensure housing quality and security. Governance that puts people and the planet first must focus on addressing the system-wide drivers and the powerful economic and political vested interests that drive unlimited economic growth through household consumption. Individual citizens, while focusing on climate change action in their own personal lives, can also support change by encouraging government and the private sector to urgently adopt more progressive and planet-focused policies and practices.
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