Friday 29 Mar 2024
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This article first appeared in Forum, The Edge Malaysia Weekly on April 19, 2021 - April 25, 2021

The circular economy is an alternative to the current economic model of consumption, which relies heavily on the use of finite resources and results in unnecessary waste. It embodies the idea that the “take-make-waste” management of products and materials can be changed to the “reduce-redesign-reuse” model to make economic systems less reliant on the extraction of virgin raw materials, deliver greater value from those materials and reuse resources, wherever possible.

According to the World Economic Forum (WEF), the economic benefit of transitioning to this new business model is estimated to be worth more than US$1 trillion (RM4.1 trillion) in material savings, with huge potential for innovation, job creation and economic growth.

The circular economy initiative offers to solve problems, not shift problems or negatively impact other environmental or social dimensions. The concept of net positive simply means putting more back into the environment or society than a company takes out, with a resulting positive corporate footprint.

A group of researchers led by the University of Warwick has concluded that a circular economy can help the world recover from the Covid-19 pandemic, while helping nations achieve their net-zero carbon emission goals.

To drive impact and actions, it is essential to provide stakeholders with knowledge, incentives and alternative models. This process can start from the very beginning of a product’s life cycle, with smart product design and production processes to help save resources, avoid inefficient waste management and create new business opportunities. Policymakers, companies and civil society need to work together to accelerate the transition to a circular economy.

The role of policymakers

Governments and municipal authorities must take an integrated approach to encourage waste separation, focusing on the four factors that underpin success: economic incentives, customised facilities, engaging communication and legal enforcement.

While some initiatives were already underway prior to the pandemic, now is an opportune time to further align and integrate policies with sustainability principles and embed resilience and long-term value creation in this approach.

In Malaysia, the government launched the Roadmap Towards Zero Single-Use Plastics 2018-2030 to help reduce the use of plastics. While the “no plastic straw” practice continues, businesses and consumers need to be more proactive in implementing the second phase, which includes the use of biodegradable and compostable products such as food packaging and cutlery.

Pollution levies imposed should be managed in a transparent manner and used to redress plastic pollution, fund the research and development of eco-friendly alternatives, incentivise manufacturers and increase communication, education and public awareness activities.

With the cooperation of the United Nations, Malaysia will establish the MySDG Trust Fund, with an initial allocation of RM20 million to encourage local companies to embrace sustainable goals. The government will also continue with the Green Technology Financing Scheme 3.0, with a fund size of RM2 billion for two years up to 2022.

Strategic partnerships

Public-private partnership is a key catalyst in driving innovation and coordinating a systemic transition to sustainable production and consumption.

Urban agriculture such as rooftop greenhouses, community farming and vertical farms are fast becoming a mainstay in township planning to enhance food security, reduce temperatures in densely populated cities and build sustainable food ecosystems with low carbon footprints. In September 2020, Penang launched its first self-sustaining community urban farm and aims to launch a further 100 community farm hubs by 2023. The collaboration between Chief Minister Incorporated (CMI), Universiti Pendidikan Sultan Idris (UPSI) and Think City can feed up to 400 households per harvest.

Meanwhile, the Ministry of Federal Territories plans to start a commercial-size urban farm project in Putrajaya. Currently, there are 45 locations in Kuala Lumpur carrying out urban farming. It will not be long when every municipality incorporates vertical farming into its civic infrastructure, offering the perfect opportunity to build strategic partnerships, integrate social values into environmental infrastructure and bolster community sustainability.

The role of the investor community

According to research by the Ellen MacArthur Foundation, the circular economy financing market is taking off, and the past 18 months have seen a steep increase in the creation of debt and equity instruments related to the circular economy. The total amount of assets managed through public equity funds has increased sixfold since the beginning of 2020, from US$300 million to more than US$2 billion.

With billions of people still excluded from access to decent work, opportunities and goods and services, a special breed of innovators called “impact or social entrepreneurs” is coming up with better answers to global problems and driving progress towards the UN Sustainable Development Goals. While many of such companies involved in the circular economy are niche businesses, the investor community can play a key role in helping these entrepreneurs scale effective solutions.

With a global human population growth of around 83 million annually, the rising risks of resource scarcity and pollution continue to threaten the sustainability of not just cities but wider communities that suffer from environmental degradation.

Moving towards a circular economy will not only reduce our reliance on virgin raw materials and reduce waste in landfills but also reduce our dependence on imports, lead to cost savings in terms of raw materials and drive job creation in remanufacturing. To fully transition to and realise the potential of a circular economy, there needs to be commitment and sustained efforts by all stakeholders.


Arina Kok is a director of Ernst & Young Advisory Services Sdn Bhd’s climate change and sustainability services (CCaSS) practice. The views expressed are those of the author and do not necessarily reflect the views of the global EY organisation or its member firms. This is the first of a three-part series on sustainability in conjunction with Earth Day 2021.

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