Barrier Analysis Dialogue Series Ep.1: "Making Circular Economy Work through Product Policies"

Published on February 27, 2022
March 22
1:00 AM to 3:00 AM (UTC)

• To accrue policymakers, experts, businesses and practitioners passionate about SPP and EL to influence consumption patterns to minimize the environmental damage caused by goods and services

• To be inspired by country cases on policies, regulations, best practices, and business models that foster the implementation of EL and SPP

• To expand understanding and learn about common barriers in their implementation and possible strategies for successfully overcoming these barriers

In unregulated markets, environmental and social costs of the production of a product or delivery of a service are not borne completely by the companies responsible for bringing them to the market. These costs are rather passed on to the society and future generations. This possibility of externalizing the environmental and social costs of products and services is one of the major hurdles for overcoming the unsustainable linear take-make-waste economy. Companies’ efforts to reduce the environmental impact, resource and energy consumption of their products and services do not offer them enough economic incentives and competitive advantages in the market.

Also, in our current make-take-waste economy the value of a product is generated by selling it. This generates incentives to design products with low material and production costs, while the durability or the use-costs (e.g. energy consumption) of a product is of less relevance. Therefore, products break easily and are inefficient. On the consumer side, the value generation through selling creates an incentive to buy low-cost, i.e. the most competitive product at the point of sale. This type of value creation incentivizes more externalization of environmental costs and is called split-incentive dilemma.

Externalized costs incentivized by the split-incentive dilemma are key reasons that the market share of sustainable products continues to be very low. The vision of making a circular economy a societal norm is still quite far from being realized, if we don’t change the incentives in the economy.

In this episode, we will discuss how some companies with progressive and innovative ideas and policymakers are working in conjunction to support the transition to a circular economy. The episode will look into their specific strategies and challenges in overcoming the barrier of competing with unsustainable business models in the market and hear about requirements for creating a level-playing field by internalizing the external costs.