PETALING JAYA: With the threat of climate change and diminishing natural resources ever growing, transitioning towards a circular economic model has become increasingly important for businesses to stay sustainable and profitable.
To address this, 26 speakers from globally recognised businesses came together at the Circular Economy Conference 2023 on Aug 15 to discuss the challenges faced by businesses in adopting the circular model and the possible solutions to these challenges.
UOB Malaysia managing director and country head of wholesale banking, Andy Cheah, said a circular economy’s importance lies in both its environmental benefits and its ability to decouple economic growth from the depletion of natural resources.
“Unlike the traditional linear economy, which follows a ‘take-make-dispose’ pattern, the circular economy seeks to create a closed-loop system in which resources are continuously recycled, reused and regenerated.
“This encourages sustainable production and consumption, reduces waste and pollution, and promotes resource efficiency, all while reducing our reliance on raw materials and energy-intensive production processes,” he said in his opening speech at the conference.
In his keynote address, Local Government Development Minister Nga Kor Ming said the circular economy would also aid in reducing the cost of waste management in the country.
“The Malaysian government spent RM592mil in 2020 and RM610mil in 2021 for waste collection alone, while another RM83mil and RM85mil were spent on landfill operations cost in 2020 and 2021 – with the cost only forecast to rise each year if we stick to the traditional linear (economy),” he said.
He added that his ministry was in the process of getting approval from the Cabinet for the establishment of the Circular Economy Council for Solid Waste to further push for the adoption of the circular economic model across the country.
“The council will be a platform for policymakers, researchers, private sectors and stakeholders to share their experiences, ideas, and find solutions for the various challenges in implementing a circular economy,” he said.
The first panel discussion featured PwC Malaysia’s social impact, sustainability and climate change director Malar Odayap-pan, Bangkok-based mattress subscription provider nornnorn’s founder Nophol Techaphangam and digital technology platform provider Dialog Eseco Sdn Bhd executive director Dr S. Sri Umeswara discussing how businesses could ensure the financial viability of their circular models.
Odayappan said a holistic business assessment through comprehensive stakeholder consultation was key to transitioning towards a circular economic model.
“Once the transitional roadmap is in effect, it is key to frequently review its measurable progress and to consult with the relevant stakeholders on the results.
“Stakeholders include not just the government but also those within the company as well as other industry leaders to ensure that the roadmap is working,” she said.
Techaphangam suggested businesses also work on identifying the pain points commonly faced by consumers, which could then be turned into new business opportunities.
“For example, my business was born from the fact that the affordability of new mattresses and proper disposal of old mattresses was a major financial pain for consumers and other businesses alike.
“This way, we addressed not just the waste within our business but also issues faced by our stakeholders,” he said.
Umeswara said there was a false perception that transitioning to a circular economy model needed to be large scale and high cost.“Sometimes, even small changes in the supply chain can make a lot of difference in moving towards a more circular economy model while also gaining the capability to, directly and indirectly, support a lot of other areas without even realising it,” he said.
Speaking on Green Financing Initiatives for businesses, the second panel featured UOB Malaysia managing director and country head of commercial banking Beh Wee Khee, Malaysian Green Technology and Climate Change (MGTC) Corporation senior director of green growth group Kamaradzaman Mohd Bakri and SME Association of Malaysia president Datuk William Ng.
Ng said most SMEs (small and medium enterprises) were reluctant to transition to a circular economy because of a lack of motivation, knowledge or finances.
He added that high transitional costs combined with the lack of internal expertise in SMEs to recognise the long-term benefits of a circular economy caused many to only focus on the regulatory challenges of not decarbonising.
Beh agreed, saying banks like UOB are now playing a key role in helping businesses obtain the financing and know-how to transition to a circular economy.
“Banks are coming in to provide customised financing solutions for businesses to meet the transitional challenges of their specific industries.
“We’re also working very closely with industry leaders and associations to share our thought leadership on environmental, social and governance (ESG) topics,” he said.
Kamaradzaman said it was important to explain existing schemes like the recently enhanced green technology financing scheme (GTFS) by the government to assist companies in their transition to a circular economy.
He said the Finance Ministry had also approved a RM1bil fund for a new 1.5% rebate guarantee for (green) project owners that would be officially announced soon by MGTC.
The third panel discussion focused on the role of fast-moving consumer goods (FMCG) in the circular economy and the need for an Extended Producer Responsibility (EPR) alliance within the industry.
Malaysian Recycling Alliance Bhd’s (Marea) former general manager Pauline Goh said there was a need for an EPR mandate policy due to low adoption among businesses in Malaysia.
“Despite there being thousands of FMCG companies in Malaysia, only 13 have joined Marea’s voluntary EPR implementation.
“Even some multinational businesses who practise EPR in their home countries are not doing the same when they operate here,” she added.
Acknowledging this, La Terra Mart founder David Ward said raising consumer awareness of environmental issues could help a country’s shift towards a circular economy.
“Around seven out of 10 people in the United States are already buying from or want to buy from businesses that are socially or environmentally-minded and are willing to pay, in some instances, up to 60% more for these products.
“This has caused brands themselves to take the initiative to make these adjustments and changes (towards a circular economy).
“In the last three years alone, these businesses made up around 55% of the entire FMCG sector’s growth despite only producing around 16% of products in the United States,” he said.
Universal Robina Corporation’s corporate development and external affairs senior vice-president Laurent Levan agreed, saying that collaborations between those businesses and the government would be the key step towards a circular economy.
“With more businesses voluntarily self-implementing EPR, developing effective EPR legislation will become easier as the number of consultable stakeholders increases,” he said, adding that without legislation, innovation towards circularity would not be scalable or sustainable.
The fourth panel discussion featured fabric upcycling platform Moreloop co-founder Amorpol Huvanandana, digital circular marketplace Lahdang co-founder Reza Bath and Hong Kong-based circular tech startup Circular City founder Tim Parker discussing how to address planned obsolescence in a circular economy.
Bath said what was needed were increased public awareness and education on understanding the value of their old electronics and other goods.
“I have seen too many cases of people who either toss out or hoard their old unused electronics without realising the worth of the components within them that could have been recycled to make something new,” he said.
Parker agreed, saying that a large-scale effort that combined new government policies and increased funding for circular economic infrastructure would be necessary.
“There has to be a policy to either incentivise people to shift to a circular economy lifestyle or punish those who refuse the change or, better yet, one that does both at the same time.
“Combined with making circular economy infrastructure, like recycling bins, more accessible and widespread would be essential to helping the public shift to a circular economic society,” he said.
Huvanandana also agreed and said businesses could play a role in educating the public.
“Outside of using the right materials to make their products last longer, businesses should also consider placing informative, easy-to-read labels on their products that teach customers how to take care of their newly-purchased products.
“These labels should also contain clear instructions on how to recycle the product once it’s past its shelf life,” he said.
The fifth panel discussed the development of internal executors for a circular economy roadmap with corporate services provider Boardroom chief executive officer Samantha Tai Yit Chan, circularity transformation platform Pentatonic chief operating officer Philip Mossop and sustainable food packaging solutions provider Tetra Pak’s Asean sustainability director Terrynz Tan.
Tai said that the key to an effective circular economy roadmap was setting realistic goals for the business and staff.
“Shifting to a circular economy requires a significant paradigm shift in core values for a business, which is why the goals must be specific, measurable, achievable, relevant and time-bound.
“These goals must be set according to the capabilities of the business, and external expertise should be brought in if required,” she said.
Mossop agreed, noting that encouraging risk-taking among employees would also be useful in driving the development of these goals.
“Organisation leaders must work together with the innovators at all levels so that they can better acknowledge the risks, the appetite for change and find ways to then work together,” he said.
Tan added that a holistic approach would also be key in ensuring the roadmap’s successful implementation.
“Leaders must ensure that any new changes or policies are fully embedded into business operations and strategy in order to drive a complete cultural change within the business.
“Every employee must also be trained to understand their contribution towards the transition to a circular economy and the bigger picture of sustainability,” she added.
This year’s conference was part of the Star Media Group’s continued knowledge-sharing initiative in advancing the ESG agenda and was supported by platinum sponsor UOB Malaysia.
Those keen to watch the conference themselves can check out its full recording at The Star’s L!VEonWEB YouTube channel at bit.lyCircularEconomyConference2023.
Source: The Star