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Six trends in circular economy legislation to watch out for in 2024

Six trends in circular economy legislation to watch out for in 2024
This article was first published by Social Europe.

The close of 2023 confirmed what many have feared: the year was the hottest on record—and climate talks in Dubai provided little in the way of satisfaction, with European representatives calling a draft deal on fossil fuels ‘unacceptable’ and ‘disappointing’. The globe’s extraction and consumption of materials—heavily linked to greenhouse gas emissions—has also continued to spiral, with consumption over the last six years nearly on par with that of the entire 20th century.

The circular economy has been posited as a solution to our climate woes, offering a toolbox of solutions to do more with less, slashing emissions, pollution and material use. But although it’s reached ‘megatrend’ status—the volume of discussions, debates and articles on the topic nearly tripled over the past five years—the world is becoming less circular year on year. This is according to the Circularity Gap Report 2024, launched by Circle Economy Foundation. The report calls for bold action to heavily reduce material consumption, noting the pivotal role of policymakers in the transition: although some burgeoning policies are nudging us in the right direction—the EU’s upcoming Green Claims directive and ecodesign regulation, for example—more are needed worldwide to drive the circular transition.

It’s time to ‘walk the talk’, the report urges, outlining six policies governments around the world must explore to advance the global transition to a circular economy:

Set strict environmental product standards. This covers all manner of policies: from mandating material- and energy-efficient manufacturing processes, to banning planned obsolescence and designing for durability, repairability and—if necessary—recycling. Banning the destruction of unsold and returned goods should also be front of mind: Amazon grew to (even greater) infamy, for example, after the reveal that the company destroys millions of items of unsold stock each year—with goods poignantly described as being sent ’straight off the production line and into the bin’. The EU’s recent ban on the destruction of unsold clothing, set to kick off in 2025 for big businesses, is a step in the right direction and paves the way to widen the ban to other product groups.

Role out environmental ‘scores’ for all products on the market. Today’s consumers have been shown to increasingly favour sustainable products, with nearly 90% of Gen X consumers willing to pay more for them. Environmental ‘scores’ that help consumers choose between product offerings—and stave off companies’ rampant greenwashing efforts—can nudge shoppers in the right direction: food labels, for example, may include environmental and social impacts in addition to nutritional information. However, current labelling and certification schemes are highly fragmented—with hundreds existing across Europe, and many centring on just one aspect of sustainability. Launched decades ago, the EU’s Ecolabel programme represents an early effort to harmonise this, although many product groups still aren’t covered—and recognition outside of Europe may be limited. A unified, life-cycle-based approach to ecolabelling may still be yet to come for many countries worldwide. In the EU, the upcoming Digital Product Passport will hopefully boost transparency in a harmonised system that shares product information for each step of the value chain, from extraction to production to end-of-life.

Photo by Nik on Unsplash

Develop and mainstream certifications and warranties for recycled materials. Recycled materials can boast significantly lower environmental impact than their virgin counterparts—but due to our current political and financial landscape, other incentives are often lacking. This is all too common in the materials- and emissions-intensive construction sector, for example, where opting for recycled materials seems to many like more trouble than it’s worth—and is extra expensive to boot. Developing certifications for these materials can help validate their safety and quality, putting them on par with their virgin counterparts and lessening the stigma around their use.

Strengthen universal ‘Right to Repair’ legislation. We’re all familiar with the frustration of a year-old washing machine, vacuum or dishwasher inexplicably grinding to a halt, while your mother’s appliances—purchased circa 1970—dutifully plough on. ‘Planned obsolescence’ now seems ubiquitous, affecting 99% of products and costing each European consumer up to €50,000 over their lifetime. Many common products—think laptops and mobile phones—are designed to prevent users from repairing them, or even from replacing their worn-down batteries, limiting products’ lifespans to that of its shortest-lived component. This creates mountains of waste: electronic waste is the EU’s fastest-growing waste stream, and less than 40% of it is currently recycled. While bans on planned obsolescence are certainly on the menu, ‘Right to Repair’ legislation will also have a crucial role in tackling this problem. The EU’s proposed directive—the result of considerable lobbying efforts from advocacy groups and EU Member States themselves—will facilitate this through a Europe-wide quality standard for repairs, ensuring consumers are up-to-date on producers’ repair obligations and even setting up online platforms to matchmake consumers with retailers and repair services. The goal: ensuring repair is more attractive, simple and affordable than buying new, so products can be kept in use for as long as possible.

Tighten producer responsibility regulations. Imagine if responsibility for the disposal of obsolete or broken products was shifted upstream: falling on producers rather than individuals or municipalities, in theory incentivising them to design lasting, easy-to-recyle products. This is what Extended Producer Responsibility (EPR) schemes aim to do; but although successful at improving waste collection and recycling, current iterations have failed to meaningfully extend product lifetimes or prevent waste. With new schemes rolling out around Europe—the Dutch EPR for textiles, for example, went into effect mid-2023—legislators have the chance to tweak regulations so that EPRs’ full potential is unlocked. Better governance, greater transparency and enforceability and the systemic inclusion of product design in schemes will all be crucial starting points.

Cut taxes on circular products and services—and increase them on linear ones. Policymakers should look to level the playing field and give planet-healthy products and services a fighting chance. Incentives like bonus cheques and reduced or zero tax on repair services and refurbished goods can help consumers make more sustainable choices: Sweden, for example, has already cut VAT rates for repair, while Austria, Germany and France now offer partial reimbursements to customers who take this route. In tandem, taxes can be leveraged to shift consumption patterns, especially amongst the ultra-wealthy: a tax on luxury goods, for example, could curb excess consumption while channelling extra revenue into public goods, from improved public transportation and healthcare to urban green spaces. Subsidies could also be shifted away from particularly high-impact activities and products: think meat, air travel and fast fashion, for example.

Not just policy: action on financial, social dimensions needed to drive true systemic change

This list was far from exhaustive—as explored in the Circularity Gap Report 2024, effective policies will vary broadly by sector and country, and what’s more: while talking about legislation is all well and good, rigorous implementation and monitoring will be key. Making policy work for planet and people can’t happen in a vacuum, either. The increasingly financialised economic system across the globe often means governments’ abilities to drive change and direct funding to the right places can be limited: although policy can set the right incentives in place, concerted action from international financial institutions and development banks, for example, will be crucial to practically enable the transition to a circular economy. The social dimension mustn’t be forgotten, either: millions of workers trained in circular skills will be needed around the world to take the circular economy from theory to action.

The biggest paradigm shift of the 21st century calls for all hands on deck.

Learn more

Circle Economy Foundation’s ‘report card’ for the global economy launches yearly in January. Learn more about how policy, finance and labour can accelerate the transition to a circular economy in the Circularity Gap Report 2024.

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