An Inclusive Circular Economy: Priorities for Developing Countries – Chatham House

Chatham House, The Royal Institute of International Affairs, published the research paper on 22 May, 2019.

Developing economies will struggle to grow sustainably without significant investment in recycling, reusing and repairing used raw materials and products. This paper looks at opportunities to coordinate regional trade policies and investment programmes to rapidly scale up the circular economy in the developing world.

Action is required on three fronts:

1. Aligning the CE with existing policy priorities in developing countries. To integrate the CE within high-level industrial strategies and investment planning, decision-makers need confidence that CE approaches are consistent with sustainable development objectives, including driving resilient economic growth and providing opportunities for the most vulnerable people. National governments in developing countries should identify synergies between the CE and existing national plans, and undertake an assessment of the scale of opportunity in transitioning to a CE across key sectors of the economy. Donor governments should support the CE as an industrial development strategy in developing countries, mobilizing funds to support the pioneering and scaling up of CE activities.

2. Investing in the fundamentals to support the transition to the CE in developing countries. Robust governance frameworks, inclusive policies and partnerships at national, regional and international level will be needed to create an enabling environment for the testing and rolling out of CE activities, and to mitigate potential environmental and health risks from poor waste management. National governments in developing countries should identify priority reforms to domestic policy in support of CE activities; investors should develop cooperative and blended finance mechanisms to support and de-risk early investment in CE value chains; and intergovernmental organizations such as UNIDO and UNEP, with the support of G20 governments, should launch a global ‘circular economy accelerator network’ to pilot innovative policy interventions and build capacity among developing-country private-sector suppliers.

3. Supporting an inclusive global CE agenda that promotes partnership and collaboration. Trade and cooperation are key ingredients for accelerating the CE in developing economies, and harnessing opportunities for innovation will depend on leveraging foreign investment. As important as financial and material flows will be the exchange of knowledge and lesson-learning between those implementing the CE and those looking for evidence of effective strategies and interventions. Developed-country governments should identify early opportunities for ‘triple-win’ collaboration with developing countries to deliver on trade, the CE and broader sustainability goals; while multilateral development banks should align investments in climate resilience, biodiversity protection and sustainable development with the CE.

The EU and China, as global CE front-runners, should commit to deeper dialogues with developing countries. Regional forums, such as the Regional 3R Forum in Asia and the Pacific and the African Circular Economy Alliance, should engage proactively in knowledge- and lesson-sharing at an international level. G20 governments should demonstrate leadership in cooperative action in support of the CE. Global trade bodies should spearhead the development of common standards for internationally traded waste and secondary materials.