Perspective for “The New Circular Economy Goals Developing in India”, Horasis India Meeting from our Executive Director

Our Executive Director Ms. Bonnie Liao has been invited to join the Horasis India Meeting with the topic “The New Circular Economy Goals Developing in India”, which she shared her thoughts on how circular economy measures or models can actually retain the added value of goods as long as possible, while reducing waste and keeping the value of plastics in our economy, without harming our natural environment. Know more about her perspective and thoughts by reading her meeting speech!

Meeting Speech:

Good morning everyone, I am Bonnie Liao, the Founding member and Executive Director of Social Enterprise Research Academy, I am glad to be joining you all from Hong Kong today to discuss on this meaningful topic of The New Circular Economy Goals Developing in India.

Social Enterprise Research Academy was established in 2014, with the mission statement of “Harness the Market to Bring Social Caring”, we aim to create a cross-sectoral platform with business, academia, social and political sectors to foster communications and to gather sustainability elites from various industries into one unparalleled high-value networking platform that foster social responsibility and sustainable development in Asian communities. Over the years, we have untied more than 10,000 business leaders and organizations via hosting international summits with world-class speakers and our presence is extending to 13 cities.

SERA  is dedicated to the continual social responsibility, development, promotion and application of Social Caring Pledge Framework and the 6 principles based on SDGs, and to broaden the international perspective of industry leaders and give back to our society.

Since we are one of the service providers of United Nations Principles for Responsible Investment (UNPRI) since 2015, we aim to promote ESG, standing for environmental, social and governance issues into mainstream investment decision – making and ownership. Under huge imapct of the Covid 19 pandemic, we have customized our research and offline teaching materials to meet the huge market demand for ESG professionals worldwide through an unique online training program. Our Certified ESG Leader program (CESGL) provides profound knowledge to help CEOs and senior managers to establish the ESG management system, auditing and reporting. After successfully completing the online training program and assessment, the participants will be awarded our certified ESG Leader designation, (CESGL) for all professional purposes.

In fact, more and more stock exchanges are requiring ESG reporting to promote sustainability. However, there is a need for the development, implementation and maintenance of an ESG management system for improving the sustainable performance, rather than merely ESG reporting. In today’s topic, I would be mentioning how ESG management system could be contributing in the achievement of new circular economy too, based on the plastic industry.

In today’s discussion, we aim to look into how circular economy measures or models can actually retain the added value of goods as long as possible, reducing waste and keeping the value of plastics in our economy, without harming our natural environment. In the report called, Circular Economy Roadmap for Plastics in India, prepared by The Energy and Resources Institute in 2021, it strongly emphasizes that in order to achieve the transition to circular plastics economy in India, it requires extensive financial and regulatory linkages between key stakeholders, who are including regulators, policymakers, corporates, and financial institutions, supported by innovative technological and financial solutions. Why would the report be suggesting “Financial and Regulatory linkages”?

Looking from regulatiory wise, the Government of India through its Plastics Waste Management Rules, 2016 has mandated Extended Producer Responsibility (EPR) that incorporates circularity by making manufacturers of products responsible for collecting and processing their products upon the end of their lifetime. The objective of EPR is to minimize the total environmental impact of waste materials from a product and encourage manufacturers to create markets for reuse or recycling of materials.

However, the policy push towards resource efficiency and circular economy in plastics is also relatively new and lacks a systematic approach. Specifically, there is not much emphasis on unlocking the market potential of secondary plastics (recycled plastics).

• it is lacking of strict enforcement of waste collection and disposal, then the EPR implementation is more like a CSR initiative. Open dumping and clogging of drains with plastic waste is still prevalent, segregation of waste at source and segregated collection, especially in rural areas, is non-existent.

The reason behind such unorganized, informal mechanical recycling regardless of policy in place is “financially” it is not well linked:

  • the lack of investment and funding to set up proper waste management infrastructure including operational costs of transporting waste for reprocessing;
  • Chemical recycling requiring large investments
  • Lack of market-based instruments and regulatory measures for effective functioning of business models
  • Economically challenging to set up standard prices of plastic waste as raw material and market for recycled products

In fact, to achieve a circular ecoenomy, it requires coorporation between stakeholders across the plastics value chain.

So the key question is how can the policy makers, environmental regulations and financial markets redirect capital flow from public-private-nonprofit sectors to finance for environmental sustainability and circular economy initiatives?

The answer is Green Financing so as to increase proportionate transfromative investment at sectoral level to meet the country’s climate goals. Especially with slowdown created by the COVID-19 pandemic, the government has to find new and alternative ways to incentivize private sector participation to scale up investments for a sustainable and transformational impact. Therefore, identifying and analyzing key sources of finance, the instruments used for mobilizing and disbursing funds, and their ultimate beneficiaries become critical for diagnosis, planning and monitoring green investments in the country.

However, in the Landscape of Green Finance in India, undertaken by Climate Policy Initiative pinpoints the barriers in measuring green finance flows in India:

  • Non-availability of data on the disbursement of funds at multiple levels within the value chain.
  • Non-standardised reporting of data due to the lack of a harmonized green finance taxonomy in the country.
  • Large variations in granularity, format, and categorization of data at the state-level.
  • Data confidentiality issues arising from the absence of climate-related financial disclosure policy in the country.

There is a growing recognition amongst the plastic industry across the value chain to drive change upstream, midstream, and complement the efforts being made downstream. In the coming session, I would further elaborate some points on how can we overcome the barriers in green finance so as to achieve the circular economy goals.

  • India needs an integrated domestic measurement, reporting and verification (MRV) system, similar to ESG system to streamline green finance attributes, identify financial constraints and enhance transparency. A comprehensive climate budget tagging framework should be developed to track climate-related expenditures in national budget systems to take advantage of already mainstreamed climate action through policy formulation, and help further mainstreaming.
  • We have to achieve it by law and similar to global stock exchange markets’ regulations, we have to disclose reports with taxonomy, that have definitions and indicators, so that we can do benchmarking and monitoring to foster the transformation process.
    The Indian taxonomy regulation can establish environmental objectives:
    1. The ban on certain single-use plastic products
    2. Phasing out certain types of plastics
    3. Setting waste reduction targets
    4. Recycling contents for key products
    5. Expanding the use of bio-based and compostable materials
    6. Improving waste collection and treatment
  • Most importantly, we have to set up independent Rating Agency, to resolve and rectify the current data granularity issue.

Public sector undertaking (PSUs) plays an important role in mobilizing and increasing green capital flows. The creation of dedicated Public sector undertaking PSUs has been a catalyst. PSUs are important channels for the disbursement of funds for the central and state governments, bond markets, and international development agencies. They also operate as a critical source of green finance themselves. Further utilizing this as a policy approach with enhanced responsibility for each Public sector undertaking PSU should be encouraged, but by explicitly adjusting the mandates and leveraging upon expertise and reach to enhance private sector participation.

Action Agenda for Sustainable Financing

  • Establish a unified India Classification system of sustainable economic activities for plastics.
  • Improve disclosure requirements on how investors integrate environmental objectives in their risk processes.
  • Create a new category of benchmarks which help investors compare the sustainable financial returns of their investments.
  • Protecting private investors by avoiding risks of greenwashing.
  • Providing the basis for further policy action in the area of sustainable financing, including standards, labels and any potential changes to prudential rules.

Sustainable Capital Market: Policy-makers 

  • Taxation
    • Tax incentives for sustainable development
    • Environmental tax for emission and pollution
  • Legal Obligation
    • Environmental laws
    • Product Eco-responsibility Ordinance
    • The license to operate
  • Disclosure
    • Stock market listing rule
    • Sustainability standards and reporting
  • Fiscal Policy
    • Government purchasing power
    • Sustainability projects and investment
  • Fiduciary Duty
    • Policy guidance for investors
    • Responsible code of practice
  • Partnership
    • Multi-stakeholder partnership
    • Cross Sector partnership
  • Sustainability Statistics
    • KPIs
    • Sustainability Performance
  • Sustainability Indexes
    • SRI index
    • ESG index

In Hong Kong, we are also need to reverse supply chain and recovering valuables: such as on energy and materials, extending product life and secondary applications. In one of the report by Greeners Action in 2019, saying over 46 Million single-use plastics are disposed in Hong Kong every week. Although there’s advocacy No Straw Campaign and Plastic Bag charges policy, I hope the impact could be extended to other Plastic utensils such as fork and cups etc.

As everybody knows, land shortage has always been an issue in HK. In Feb 2021, HK Environmental Bureau issued Waste Blueprint for Hong Kong in 2035, it mentioned that we hope to have Less over-reliance on landfilling, so that enable optimal use of local land resources. I hope that could be achieved, and that by reducing carbon emissions, Hong Kong’s pursuit of the goal of carbon neutrality could be realized.

Please watch the meeting recap from this YouTube link!