Although more businesses are realising the need to become increasingly energy efficient and attempt to be part of the circular economy by way of reusing and recycling material, the lack of funding to sustain this economy hinders businesses from adapting.
This was observed during the Global Economic Symposium, held in Germany last month, by the Recycling and Economic Development Initiative of South Africa (Redisa) during a panel discussion focused on reassessing waste management and the circular economy, with Redisa indicating that a circular economy was not only a necessity at a macrolevel but also profitable.
“If you take into account all the externalities that effectively subsidise widespread linear economy practices, one realises the profitability of the circular economy,” said Redisa CEO Herman Erdmann, noting that, for instance, “when we package water in plastic bottles that become waste, which ‘someone’ has to pick up and manage, the utility of the plastic bottle is being subsidised by organisations – typically local or regional governments – which deal with waste collection”.
Moreover, he said, Redisa’s model proposed that the cost of all the externalities be incorporated into the cost of production through a fee that was added to production costs and paid to the extended producer responsibility organisation.
Adding to this, Erdmann pointed out that assessing all these costs could be difficult and at times controversial. However, the estimation could be greatly simplified by calculating what it cost to institute a reverse logistics network to gather all discarded material as well as to support effective recycling and recovery.
“We believe that it is essential for producers to be held accountable for the lifetime cost of their products and that the cost should be included in the production cost, which means that the producers should pay it forward,” he said.
Further, Redisa highlighted that it found strong evidence that, even without invoking the spectre of resource exhaustion, achieving circularity in the economy generated economic activity, created jobs, avoided negative externalities and was net-positive to the gross domestic product.
Thus, Redisa has developed a model for circularity on a macroscale, using waste tyres as proof of concept. Two-and-a- half years from being given the formal mandate to start operation of the model, it moved the percentage of waste tyres being dealt with from 4% to 70% and created over 2 500 jobs and more than 200 small and medium-sized enterprises.
By the end of 2017, Redisa plans to reach a target of 100% diversion.