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Circular Economy as an Essential Tool for Sustainable Management

Authors: Claudia Grey, Francois Guzman

Worldwide, 2.01 billion tons of municipal solid waste are produced, and only the 16% of that total is recycled. According to the Pan American Health Organization in Latin America each person produces 0.77 kg of urban solid waste per day. The solid waste management in Peru is not far away from this reality, actually, we are in the bottom of the ranking list. There are eight Peruvian departments (Arequipa, Moquegua, Puno, Tacna, Madre de Dios, Ucayali, Lambayeque and Tumbes) that do not have a proper landfill. In the capital city, the most important river, Rimac, has 91 spots that, in accordance with the Peruvian Ministry of Environment (MINAM), are clandestine dumps that ultimately take the rubbish to the sea.

The current system of linear economy that we have adopted as a society is the reason of this problem, with large companies being the ones who produce and discard the most. Therefore, they become the main antagonist. A linear economy consists in extracting resources, manufacturing, using and disposal. For that reason, this model has become unsustainable. Thus, the circular economy comes across as an innovative alternative that rethinks this product chain and transforms it into a circular model. The concept of circular economy talks about a new way to design, make and use things within sustainable boundaries. In the case of companies, instead of just producing, they should redesign better products that will have a larger life cycle, which also would allow companies to save money by re-entering waste into their production processes to reuse over again.

According to the Ellen MacArthur Foundation – an organization whose mission is to accelerate the transition to a circular economy –the concept of circular economy is based on three main principles. The first is to design out waste and pollution, which means that the circular economy starts in the designing. Thus, the company has to generate the proper conditions for the biological and technological recourses to stay as much time as possible in the market. The second keeps products and materials in use. This means optimizing the performance of products and materials in order to maximize the number of uses that can be given to a resource; on top of that, dematerialization should be promoted by giving more importance to the service rather than the source that provides it. Finally, the last principle is to regenerate natural systems. No process is 100% efficient, which means that at some point, waste would be produced. But if a product is properly designed, meaning its components could be reused in another business and so that later it would be easy to decompose, the product would not only do less harm, but it would aim to do better to the environment.

There are several strategies than producers and users can incorporate in any phase of a product’s life cycle (extraction, manufacture, distribution, sales, use, and disposal) to sponsor circular economy. Some of the examples may include:

  • Eco-innovation: having the premise of sustainability in the value chain.

  • Eco-design: incorporating environmental criteria in the design.

  • Industrial symbiosis: turning some industry’s waste is another’s resource.

  • Remanufacturing: avoiding technical obsolescence by providing new upgrades.

  • Servitization: giving more value to the service itself than the product that offers the service.

  • Valorization: before any disposal, it is more important to recover the components or the energetic value from it, among others.

The Circular Economy and the SDGs

On the other hand, the 2030 Agenda as a global action plan to mitigate the effects of climate change, was signed in 2015 by the 193 member states of the United Nations in order to guide policies, plans, programs and national projects, among others, towards sustainable development through its 17 SDGs (Sustainable Development Goals) and 169 targets.

Although the 2030 Agenda does not make explicit reference to the circular economy, both aim to achieve a transition towards a new economic, social – where society develops new activities with a new attitude –, and environmental model that operates primary resources to avoid production of unusable waste at best.

When relating both topics, a direct benefit connection of circular economy can be achieved in the following SDGs:

  • SDG 7 (Affordable and Clean Energy): Seeking to constrain the usage of fossil energy that is not renewable or sustainable over time by prioritizing the use of sustainable energy.

  • SDG 8 (Decent Work and Economic Growth): According to the report “Jobs in a net-zero emissions future in Latin America and the Caribbean” of the Inter-American Development Bank (IDB), a green economy could create 15 million new net jobs in the region.

  • SDG 9 (Industry, Innovation and Infrastructure): In its first two targets, it mentions the development of sustainable infrastructure and the promotion of sustainable industries respectively, to then return to the CE in target 9.4 pointing out the effective use of resources.

  • SDG 12 (Responsible Consumption and Production): Target 12.5 specifically demands a substantial decrease in waste generation by 2030.

Thus, it can be appreciated that not only the implementation of the circular economy should have a direct and positive impact on the 2030 Agenda, but also it could benefit from possible indirect impact on issues such as agriculture, water and alliances between the public and private sectors.

How Is The Circular Economy Being Applied in Peru?

Since 2018, the Ministry of Economy and Finance has included the circular economy, through Supreme Decree No. 345-2018-EF in the National Policy on Competitiveness and Productivity, specifically in prioritizing objective 9 (OP9 in Spanish) which seeks to promote the environmental sustainability in the operation of economic activities. A year later, through Supreme Decree No. 237-2019-EF, the 2019-2030 National Competitiveness and Productivity Plan was approved detailing seven policy measures for the aforementioned OP9.

Subsequently, with Supreme Decree No. 003-2020-Produce of the Ministry of Production, the "Roadmap towards a Circular Economy in the Industry Sector" was published and it consists of four approaches – sustainable industrial production, sustainable consumption, waste management, and innovation and finance – which seek to provide the conditions for companies to progressively migrate to the circular model by optimizing resources and processes (Andina, 2020).

However, regarding the MINAM – key to achieving the adoption of this new economic model –, the advance towards the circular economy presents delays in the consolidation of up-to-date national policies that should define our position regarding climate change.

At the moment progress has been made within the Framework Law on Climate Change No. 30754 in 2018, plus an amendment in May of this year to the Law of Integral Management of Solid Waste that rethinks how waste from an industrial activity should be conceived as raw material for the same or other industries, a key point that did not appear previously. Likewise MINAM has been promoting the Clean Production Agreements (APL) on solid waste, through which companies sign a voluntary agreement to improve their production conditions by joining efforts and alliances towards a circular economy. Although currently only 7 companies have signed APL with the sector, including: Natura, Coca Cola and Arca Continental Lindley, Textil Amazonas, Aceros Arequipa, Backus, and Pamolsa.

Last but not least, the constant effort of MINAM to promote the circular economy on its social networks through dynamic videos, webinars and promotional content cannot be left ignored either.

What has yet to be done? First of all the "National Policy for the Environment to 2030" approved in 2009 needs an urgent update, the signing of the "Peruvian Pact for a Circular Economy" – which seeks to be an instrument that encourages the inclusion of circular economy in the sectors of industry, fishing, agriculture and construction so that the circular economy is applied from the design and production stage instead of focusing only on recycling the waste already generated –, the "National Adaptation Plan" and the "Carbon Neutrality Technical Study" which are expected to be ready by the end of the year since both are the basis for updating the “National Strategy for Climate Change to 2050” that will be crafted next year.

Meanwhile, at the local level, it is necessary to have "Regional Climate Change Strategies" where the concept of circular economy is incorporated as a cross-cutting axis for reducing climate change and that also promote strategies that are adapted to the needs of each region of the country. It is also necessary for MINAM to encourage more municipalities to apply the “Programs for Segregation at Source and Selective Collection of Solid Waste,” since to date only 210 municipalities out of 1874 have been implementing them. Although in the framework of the COVID-19 pandemic, recycling was temporarily inactive in the months of March to May. Concerning this, in order to promote recycling at the voluntary and household level, MINAM made an alliance with the ecoins® Peru program. The program consists on the use of a virtual currency that is obtained for each photo taken as proof of the recycling fulfilled with which you can get discounts on the purchase of products from Peruvian enterprises.Participation in this initiative is possible without the need to belong to a district participating in the segregation program.

Furthermore, regarding the international context, Vice Minister of Environemnt, Lies Linares, points out that there is a trend towards a circular economy: “the European Union has launched the "European Green Deal" which seeks carbon neutrality by 2050; while in Latin America there are countries like Colombia or Chile that are working on a roadmap and strategies to move towards this model of economic growth and protection of the environment” (MINAM, 2020). It is worth pointing out that President Xi Jinping has promised to achieve carbon neutrality by 2060 while intensifying its National Determining Contributions (NDCs) at the 75th session of the UN General Assembly.

Having stated the above, it should be emphasized that in order to achieve a successful transition to a circular economy it depends on everyone: the executive and legislative government, companies, and people to efficiently implement strategies that reduce the generation of solid waste because the planet is already at full capacity – take for instance the Great Pacific Garbage Patch. One must not forget, that the most important threats that we currently face, apart from the COVID-19 pandemic, is the impact of climate change on our ecosystem, health and daily activities. For this reason, it can be appreciated, although in slow progress, the assertive attitude of certain States that recognize the environmental problems created by a consumer society, and therefore assume a stronger commitment to implement the circular economy concept through the adoption of long-term national policies. Finally, reflect on what happens to the garbage generated when something is thrown away. Try to investigate if the material can be reused or recycled. Even more important, try to inquire whether it will end up at an official landfill in the city as its final destination, and if it does not... what happens and where does it go.



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