Why a circular economy for the post-Brexit UK?

In the midst of the hyperbole ensuing from the environmental sector, including waste and resource management movers and shakers, one very important fact is being forgotten, namely that the UK was one of the first countries in the EU, some forty-plus years ago, to introduce detailed framework legislation to specifically address environmental issues in the form of the Control of Pollution Act, 1974. Indeed, this legislation provided the skeleton onto which the waste framework directive was bolted to, with its fundamental aims of protecting human health and the environment central pillars of ALL subsequent EU environmental legislation.

So why then do certain quarters insist the UK is incapable of developing its own ambitious environmental policies backed up with meaningful legislation and regulation? The answer is as usual a complex mix of vested interests, soothsayers and emphasis on reporting negatives.

A highly topical example is the Circular Economy Package, an ambitious attempt to shift emphasis away from end-of-life approaches to one of extracting the maximum value from resources throughout their life-cycle. However, confusion reigns as to how the United Kingdom can reap benefits from such an approach by being outside the European Union. Is this really the case?

To begin with, consider this from a simplistic view of international trade. Firstly, unlike many stories emanating from disgruntled ‘remainers’, trade between the EU and UK will not cease because of the referendum decision. Indeed, reports are surfacing of inward investment, job creation and recovery from the initial system shock witnessed in the recovery of the Pound.

Investment and capital flows will continue with their cyclical rhythm as long as there is confidence in the fundamentals of economics, namely decision-making, interaction and emergence (effects arising as a result of the interactions within a system). While the first of these may be somewhat called into question by the inherent uncertainty of taking a new path, the second and third remain as constants. For example; interaction within an economy happens at all scales from sole-trader to multi-national organisation and in doing so this interaction serves to produce emergent factors that would otherwise be absent (corporate liquidity, investment in infrastructure and environmental policies to name but a few).          

So what has this to do with circularity? Or the environmental issues associated with waste? To deal with these in turn, sticking with international trade and the pressing issue of packages of legislation progressing through the European Parliament, is that trade and legislation do not exist in isolation. Foremost, on a global scale, the EU and UK economies seek access to ALL markets if that provides a competitive advantage, typically short-lived. But more fundamentally, any package of legislation (particularly innovative ones) is open to being copied, adapted or remoulded to favour the specific economic circumstances of countries, sectors or individual businesses.

Some may argue that international trade produces a waste of resources and should be overhauled. Waste is an issue, undeniable, and yes much of it is the outcome of economic decision-making, but this is not the same as saying the system of trade is the cause of waste. It may be suggested this is duplicitous, but no, and for this reason: If we strip away the current system, there will still be waste of resources. Without straying into the realm of entropy, the reason is far simpler, namely: the attitudes, beliefs and behaviours which form the accepted norm (e.g. customary behaviour within a defined system) will still be in place and if unchanged will come to the fore within the new system through repeated patterns of behaviour.

But, change on the scale of a momentous event like Brexit offers a divergent path to become available. The opportunity for the UK to innovate is significant, a good starting point may be to rethink waste. The sector has proposed for many years the validity of categorising wastes as secondary resources with little concrete change. If implemented as policy, one outcome may be to create greater certainty in materials supplies which may catalyse the cascade cycles proposed by the likes of the Ellen MacArthur Foundation. Alternatively, there may be an opportunity to explore in more detail Accenture’s five circular economy business models, finding ways to align these with policies aimed at reducing the environmental impact of doing business.

In short, a challenge is posed to all economic sectors by Brexit, but perhaps most acutely to the waste and resource management sector, and that is be open to real change and look for new ways of seeing and valuing flows within the systems we interact with (a key area of focus for Ricardo-AEA led by our Circular Economy team). In doing so, better decision-making can ensue and this will generate greater interactions and ultimately produce emergent outcomes which have the potential to boost trade, protect the environment and improve human health.