1. Circular economies reduce waste

Climate change and resource scarcity are driving the move to a circular economy, where goods are recycled, refurbished and reused. In Australia, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) is exploring ways to reduce the total waste generated per person by 10% by 2030. It is aiming to achieve an 80% average resource recovery rate from all waste streams in the same period. Currently, just 8.6% of the global economy is circular, a figure experts say must double by 2032 to keep the world on track to limit global warming to 1.5°C.

2. A circular future requires bold government leadership

The New Zealand Government has come under some criticism for its approach to a circular economy, with experts saying it isn’t charting a clear path, but instead promoting a ‘business as usual’ approach where communities, councils and government are left to clean up after industry. At present, New Zealand sends 12.59 million tonnes of waste to landfill and generates 7.14 tonnes of CO2 emissions per capita, which is globally small, but high per person. Enacting a circular economy could be worth NZ$8.8 billion for Auckland alone by 2030. Australia isn’t doing much better, generating 17.1 tonnes of CO2 per capita and producing more than 78 million tonnes of municipal solid waste each year. The average Australian produces 540kg of rubbish each year, while the average household throws out 1.2 tonnes of waste every 12 months.

3. The automotive market is moving fast

Already, 10% of the total turnover of spare parts in the car market comes from reworked parts provided by used vehicles. Automotive giant Stellantis, which has brands including Jeep, Peugeot, Maserati and Fiat, has created a new business unit dedicated to fostering a circular economy. The department is intended to help the company reach carbon neutrality by 2038 – as well as drive profits, with the unit expected to net EUR€2 billion per year.

4. A ‘4R’ mindset is required

There are four key aspects to making the circular economy work, generally known as the ‘4R’ approach. This methodology includes ‘remain’, which takes old parts for equipment and refurbishes them; ‘repair’, which is a largely similar concept to remain; ‘resume’, which repurposes items for other uses, such as taking end-of-life electric car batteries and using them for fixed domestic storage; and finally, ‘recycle,’ where end of life goods are broken down into their components and the materials reused for new goods.

5. Accountants are well placed to measure social as well as economic impacts

Accountants can use their skills to assess the social worth of a circular economy, including elements like clean air and water and a reduction in global warming. The Coalition Circular Accounting (CCA) was founded by the Royal Netherlands Institute of Chartered Accountants (NBA) and Circle Economy in 2019 to identify accounting-related challenges in the circular economy including redefining value, impact and risk.

From CA Library