A Week of Circularity: Cities and SMEs Going Circular

The concept of generating circularity value has transitioned from a mere research and academic exercise to actionable, pragmatic, results-oriented use cases even for the most complex organizations, such as municipalities and small and middle enterprises. Cities and SMEs are the lifeblood of modern living, and serve as a consistent ground for experimentation in order to reduce environmental impact and create a healthier socio-economic backdrop for future generations. From Germany to Vietnam, and the Philippines, this week provides us with an opportunity to evaluate the progress made in exploring how the circular economy can establish the pillars of a more humane, sustainable, and fulfilling world right in our backyard.

?? The Science of Impact

Municipalities are complex systems. They are creators and re-modellers of urban environments. They retain a core role in the process of ongoing urbanization. They also host a wide range of human activities including services, government, education, commerce, markets, finance – the ideal setting for designing circularity solutions.

As of this week, the city of Munich has become the first city to have pioneered a Circularity Gap assessment, authored by the Circle Economy . The gist of it: Munich, one of Germany’s biggest and wealthiest cities, could sustain its economy with 43% less materials than it currently consumes, resulting in a reduction in its consumption-based CO2 emissions by 23%. A salient aspect of the analysis is that only two sectors are responsible for the bulk of emissions and material use: (1) The built environment—including construction and the use of buildings—and (2) Manufacturing. In aggregate, they account for over three-quarters of Munich’s material footprint and two-thirds of its carbon footprint.

Most importantly, Munich’s environmental impacts are far-reaching, involving much of its import value chain. In fact, for every 100 kilos of resources a Munich resident consumes, 52 kilos come from abroad.

By advancing circularity across five segments of its urban network of activities, Munich is set to reduce their environmental costs and create opportunities for businesses and talent to thrive.

?? Circularity Roadmaps Explained

This week's marks the 20th anniversary since launch of the Asia-Europe Environment Forum by the Asia-Europe Foundation - ASEFsd , the first inter-regional platform for knowledge-sharing and capacity building among EU and Asian policy makers, businesses and civil society on issues related to sustainable development, climate change and the role of SMEs. As part of their policy briefings, the Forum has made several contributions to the pragmatic review and analysis of SMEs as decarbonization enablers for the circular transition, starting from the agri-food industry. No surprise given that, when compared to larger competitors or corporate-owned businesses, SMEs hold a higher potential to successfully implement local production and consumption models while also promoting low-impact agricultural practices. SMEs are a significant component of the global economy. They represent 97% of all businesses in Asia and 99% of all non-financial companies in the EU (*credit to the European Commission and the ADB).

'Circular agri-food SMEs lack access to funding, financing and markets, which limit their chances to compete equally with other more carbon-intensive agri-food business models' ASEF Policy Briefing 2022        

As the policy briefing highlights, with food systems remaining highly inefficient, practices such as regenerative and precision agriculture have the potential to close the efficiency gap while also reducing the direct impacts on resource use and the environment.

In addition, with the collaboration of the ASEM SMEs Eco-Innovation Center (ASEIC) , this regional effort has developed a repository of tools and applications that open the door for SMEs that have struggled to make their presence in this space visible to nourish a response capability within their organization and end markets that favors circularity enablement and positions them for climate neutrality.

?? Investing in the Circular Economy

Increasingly, circularity is becoming a core tenet of sustainable development agenda in emerging economies. Last week, during the Vietnam Circular Economy Forum 2023 in Hanoi, the message from the Ministry of Natural Resources and Environment of Vietnam was that of supportive public interventions to sustain the early circularity initiatives in the country.

'Specific policies will serve as a launching pad for enterprises and industrial parks to promote circular business practices in the most effective way' (Deputy PM Tr?n H?ng Hà)        

According to the Deputy PM, 40 years of development based on natural resources and cheap labor have propelled Vietnam in an upward trending socio-economic development trajectory. However, as many other countries, Vietnam is now coping with dramatic resource depletion, environmental degradation and the many perils of climate change.

Investors are taking note of the fact that Vietnam's economy is expected to be the fastest-growing in 2023 and 2024 compared to ASEAN-5 countries (namely, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) as advocated also by 世界银行 ’s most recent Taking Stock report in real GDP growth terms. Yet, acceleration in industrial development is set to keep generating environmental issues - from harmful air pollution to ocean ecosystem degradation and surface water pollution, mainly related to the rapid increase in plastic waste. As a consequence, natural capital management and circularity have continued to make shock waves in the design of the new environmental protection laws enacted by the Vietnamese government in recent years. The circular economy is now considered by the Vietnamese government as a green solution to deliver upon sustainable economic growth targets.

In 2020, Vietnam implemented the Law on Environmental Protection, according to which direct responsibilities are assigned across public agencies and the business community for implementation of circular economy measures. In 2022, it was followed by Decree 08/2022/ND-CP which provided more detailed directives on criteria and measures, roadmap responsibilities and incentive mechanisms to support the development of a circular economy. These actions have been followed by closer international cooperation to accelerate the transition toward circularity starting with the Japanese International Cooperation Agency, the Government of Canada and Switzerland. Such cooperation agreements are particularly relevant at a time when the services sector – think logistics and transport services – are seen as direct beneficiaries and future contributors to Vietnam’s economic transformation.

What’s next?

According to Le Khanh Lam, Chairman of RSM Vietnam , a detailed impact assessment should be conducted before any products are actively promoted through legislation to establish the environmental impact under all possible scenarios. Investors screening for high-quality assets that support the transition in emerging markets will be watching further developments closely- especially after foreign commitments fell 10%+ in 2022 to less than US$28 billion in direct investment (the lowest amount in five years). ?

?? You don't want to miss this week...

From Cebu City (Philippines) to Almere (The Netherlands), this week offers new opportunities to connect with fellow circularity practitioners both in person and in hybrid mode.

Discover, grow and leave your mark!

November 28th – 30th: Waste No More + 4th International Conference on Circular Economy-Based Waste Management (Cebu City, Philippines). The annual Waste No More conference aims to encourage international communication, collaboration and networking to advance knowledge and promote values, attitudes, commitment, and skills needed to address emerging issues on waste management and protection of the environment through circularity. This year’s theme: Make a Change Now is an urgent call to action. The amount of waste generated affects the environment in multiple ways: its contribution to the worsening climate crisis, its negative impact on wildlife and the natural environment, and its detriment to public health. Among others, the conference program includes hands-on case studies on the assessment of materials recovery operations using material flow and cost-benefit analysis; an evaluation of the issues surrounding environmental literacy and insights from perception-based analyses in highly urbanized areas; local innovations such as a rice straw case study for bioenergy (the Case of Laguna and Nueva Ecija, Philippines); and a review of rapid risk assessment tools in open dumpsites by AMH Philippines, Inc.

November 30th: Climate Resilience Masterclass (Hybrid, Green Building Council of Australia ). This in-depth masterclass will explore the challenges presented by the impacts of climate change and the opportunities to mitigate them.? Through a mix of presentations, breakout groups and open discussion, you will gain insight from experts who have first-hand experience to address the common pain points that arise when preparing for climate and operational risk. Key discussion points will include: (i) Understanding the critical need for stakeholder engagement at the planning stage and best practice for implementation; (ii) Navigating climate adaptation of existing assets and working within limitations; (iii) Operational considerations on how to embed resilience and adaptation in design, planning and due diligence? Notable presenters: Brett Ellis ESM , Managing Director, ResilientCo ; Renae Walton , Principal Climate Adaptation Officer, City of Port Phillip ; Paul Himberger , Sustainability and Research Manager, Landcom .

November 30th: HOOP Lunch Talk – Best Practices from Almere: The Raw Material Collective* (Hybrid, Brussels). Part of the HOOP Project ’s 30-minute exchange about the urban circular bioeconomy, this lunch talk will be led by Leon Joore , CEO of Millvision . Leon will explore how the Raw Material Collective (GCA, Grondstoffen Collectief Almere) focuses on process and product development, and makes the first steps of transforming raw materials in new products. To learn more about the circular economy roadmap of the Municipality of Almere please visit the HOOP Project site.

Note (*): This event is only for members of the HOOP Network of Cities and Regions.

Off to another impactful week!