Capturing the benefits of a Circular Economy: A Bangladesh Perspective

Author: Mrs Layla Ara

Is there a certain method for businesses to maintain profits while lowering wastage and reliance on limited natural resources? 

A circular economic model, which has been the subject of a lot of attention in recent years, may be part of the solution. A circular economy is a closed and regenerative economic model that focuses on the creation, use, and re-use of products and materials for as long as possible while keeping the environment in mind. It is based on three principles, all driven by design: eliminating waste and pollution, keeping products and materials in use, and regenerating natural systems, according to the Ellen MacArthur Foundation. A circular economic model extends a linear economy approach by providing a new line of thinking (or process) in which raw materials are transformed into a product that is re-used at the end of its life cycle rather than being wasted. The elimination of waste is the major objective of transitioning into this economic model. For example, in 2015, as part of a major study with Mckinsey Global Institute, it was demonstrated that such an approach could boost Europe’s resource productivity by 3 percent by 2030, generating cost savings of €600 billion a year and €1.8 trillion more in other economic benefits. 

For Bangladesh, a decade of robust economic growth has hurled the country towards middle-income status by 2034. When we consider the circular economy's potential for Bangladesh, the possibilities are undeniably vast. With a population of 165 million people, it is the world's eighth most populous and sixth most densely inhabited country, with little natural resources. Bangladesh generates 149.7 kg of waste per inhabitant per year, according to Waste Atlas. Research has indicated that post-harvest loss of agricultural produce in the country is around 30% to 40%, and food wastage is over 5.5% of total production. Wastage and inefficiency in daily life is also unrestricted. The case for industrial waste is even more severe, as the waste generation rate of Bangladeshi industries is increasing and it is projected to reach 47, 064 tons per day by 2025. Bangladesh's capital Dhaka, the centre of trade and business thanks to its long river routes, is now suffering due to extreme river pollution. 

A move to a circular economic model has the potential to minimize the usage of scarce raw materials and eventual waste, resulting in favourable effects not only on the environment but also on untapped sources of usable resources. A stress on innovation, particularly business model innovation, is required because the primary goal is to use materials for as long as feasible. To transition from the traditional to the circular economy, there is a requirement of more technical adaptation for a digitally equipped economic system. More employment is expected to be created as a result of sustainability innovation, which will transform waste material into income streams, save money via the use of creative technology, and provide a new approach to tackle some of the world's most pressing issues, both locally and worldwide. Even though our greenhouse gas emissions from industrial production are far lower than those of many developed nations, they may still be reduced even further.

The Role of Business and Finance 

The circular economy redefines the approach to value creation. The financial sector, particularly from a de-risking perspective, can be a catalyst in unlocking opportunities while supporting clients in readjusting their business strategies. Companies that shift towards a circular model can increase their medium- to long-term competitiveness, becoming more appealing to financial institutions in terms of funding and financial support, while creating a positive impact within local communities. The circular economy also offers a major opportunity for the financial sector to deliver on climate commitments and other ESG objectives, whilst tapping into sources of new and better growth and long-term value creation. The adoption of circular practices has the potential to reduce risk and increase resilience through business model diversification, decoupling economic growth from resource use and environmental impact, and a better anticipation of stricter regulation and changing customer preferences. 

The opportunities to invest in the circular economy can be found across almost every sector. However, to redirect capital at scale, more transparent and consistent data on circularity performance is crucial. Improving future data quality and availability by scaling dedicated circularity measurement tools, and integrating circularity metrics into reporting and disclosure frameworks, can support finance and investment decision making and circular economy adoption by policymakers, business, and the financial sector. Finance has a critical role to play in building a more sustainable, healthy and resilient future. Scaling the circular economy helps to achieve this, while unlocking new and better growth opportunities for businesses of all sizes as they transition. A circular economy gives us the tools to tackle climate change and biodiversity loss together. It can scale fast across industries to create value and jobs, while increasing the resilience of supply chains and delivering massive economic growth potential. 

Sources

McKinsey Quarterly

The Daily Star

Ellen MacArthur Foundation

The Financial Express