Malaysian companies need to grapple with the imperative of transitioning to a circular economy, necessitating transformative changes and new business models.
Exploring the shift to a circular economy and overcoming the ‘chicken or the egg’ dilemma
AS THE urgency of sustainability intensifies, Malaysian companies are faced with a critical challenge: transitioning to a circular economy.
The circular economy focuses on keeping resources in use for as long as possible, extracting maximum value from them before recovering and regenerating materials at the end of their life cycles.
In the July issue of StarESG we explored how the circular economy seeks to gradually decouple economic growth from the consumption of finite resources with a fundamental principle of designing waste and pollution out of the system.
Star Media Group also recently held its Circular Economy Conference 2023 (CEC 2023) on Aug 15 which gathered industry experts to create a platform of discussion to redefine growth and focus on positive society-wide benefits enabled by a circular economy.
However, this transformation requires a reimagining of traditional business models, addressing issues such as planned obsolescence.
This is a policy of planning or designing a product with an artificially limited shelf life, and is often brought up when talking about tech. But this principle can be applied to any product.
Changing consumer behaviour
For Malaysia, the nation is still in its infancy stage of the circular economy and consumer behaviour also needs time to evolve as well.
Comparing current Malaysian consumer behaviour with mature markets in Europe and the United States underscores a disparity in sustainable consumption patterns.
Convincing businesses to adopt sustainable practices requires overcoming resistance and fostering a new mindset that prioritises resource efficiency, waste reduction and innovative business approaches.
To fully embrace a circular economy, Malaysian consumers also need to shift their mindset and approach to consumer products; valuing quality, durability and responsible consumption over convenience.
Our fast-moving-consumer-goods (FMCG) sector is known for its rapid turnover of goods, often resulting in extensive resource consumption and waste generation.
The challenges in shifting towards a circular economy in Malaysia’s FMCG industry are manifold. These include redefining production processes, adopting sustainable packaging, addressing consumer behaviours, and integrating circular practices into a traditionally linear system.
During the session on “Addressing planned obsolescence is key to a greener circular economy”, Circular City founder Tim Parker shared his company’s method in addressing single-use plastics for food and beverage (F&B) providers in Hong Kong.
This is a model of “Products as a Service” (PaaS) solution and emerges as a powerful tool to drive the circular economy agenda within the FMCG sector while addressing planned obsolescence.
Malaysia’s Roadmap Towards Zero Single-Use Plastics 2018-2030 aims to tackle single-use plastics pollution collaboratively, fostering a cleaner, healthier environment through phased actions.
Parker noted that to transition to a sustainable non-linear economy, the right infrastructure needs to be in place – from collections centres, to cleaning or recycling centres and return services.
“If there’s no infrastructure in place to enable the full loop, it makes it very challenging. To get the public to buy in you need a ‘carrot and stick’ approach,” he said.
According to Parker, we need incentives and laws to spur mass adoption of sustainable alternatives.
Originally a design educator in Asia, Parker stepped out of his education role to work on tech-based solutions to tackle Hong Kong’s plastics problem.
Circular City currently partners with F&B operators to provide innovative, reusable takeout packaging and tableware.
“One of the challenges we had, despite our products being durable and sustainable, is ‘perceived obsolescence’,” said Parker.
“In Hong Kong, there is the perception that reusable packaging can be contaminated and anything single-use is more hygienic and safer,” he explained, citing how the Covid-19 pandemic had affected the population’s mindset.
When it comes to the challenges for companies to pivot to PaaS, textile platform startup moreloop.ws co-founder and chief executive officer Amorpol Huvanandana said that the cost of introducing circular economy practices for smaller businesses would be the biggest hurdle.
“The cost of ‘re-’ anything; re-logistics, reusing, re-hygiene comes at a high cost,” he said.
“For a startup, you need some form of funding for it to make economic sense. Getting that sort of funding can be harder for smaller players,” he added.
Through moreloop.ws, Huvanandana and his team in Bangkok, Thailand, have helped prevent over 870 tonnes of carbon dioxide emissions, and have been upcycling used fabric since 2018.
Malaysian companies can explore new models of business to incentivise consumers to return products at the end of their useful life – much like how a few trade-in programmes are operating currently.
One example of this is InstaCash by CompAsia, a trade-in application which offers monetary rewards for selling old smart devices, thereby saving these devices (and their batteries) from reaching our landfills.
Inaction is a form of action
Companies can no longer afford to view sustainability as an optional add-on but must integrate it into their core strategies.
This necessitates a candid assessment of their operations, embracing the uncomfortable truth that the status quo is no longer tenable.
“The first thing any organisation has to do, big or small, is to get comfortable with the uncomfortable,” said circular economy consultancy firm Pentatonic chief executive officer Phillip Mossop.
During the session on “Your Circular Economy Roadmap – Developing your Internal Executors”, Mossop emphasised the need to accept operational risks to fully embrace and integrate circularity in a business’s operations, in what he calls an “honest (self) assessment.”
“Circularity doesn’t exist as a silo – it should exist throughout every department in an organisation, including the supply chain,” Mossop said.
“Then, you’re able to pinpoint and focus on whichever part of your operations that are incompatible with net circularity,” he added, noting the importance of top-down leadership in empowering departments.
Waiting for either consumer demand to surge before taking action or for competitors to make the first move risks perpetuating a cycle of inaction.
This necessitates a pivotal change where businesses must break free from the “chicken or the egg” dilemma that often stalls progress.
The panel noted this was exceptionally true for bigger companies who have the means to invest in sustainable alternatives but are sitting on the fence still.
To hear more on the topics of the CEC 2023, visit www.facebook.com/events.thestar
