In a world faced with resource scarcity, and climate and economic challenges, leading governments and companies globally have begun to realize that the “take-make-dispose” model is environmentally harmful, unsustainable, inefficient and economically risky.  With Ontario finalizing their Circular Economy Strategy, “Waste-Free Ontario: Building the Circular Economy”, and with the new Waste Free Ontario Act of 2016, the province is joining leading jurisdictions globally in a move towards zero waste targets and a more cradle-to-cradle approach to economic development and climate action.  Ontario’s goal is a circular economy system where nothing is wasted, landfill is the last resort, carbon emissions are minimized and valuable materials are regenerated and put back into the economy, i.e., sustainable materials management.  This closes the loop of design, production, consumption, and waste management to encourage resource efficiency, mitigate risks, and answers growing stakeholder concerns, including those of consumers, corporate buyers and investors. Ontario hopes that the strategy, supporting programs, legislation and economy instruments, will ultimately keep resources in the system as long as possible to drive a sustainable, circular and competitive economy.

The Move to Full Extended Producer Responsibility (EPR)

For businesses, this development is a game changer. The provincial government’s circular economy policy will help incent businesses to change their product and service models. It will place the full cost and environmental responsibility on producers with respect to the collection, sorting and treatment of recyclables.  Although this may sound like added costs for producers, the shift from the monopolized Industry Stewardship Organizations towards an open and competitive system of multiple Producer Responsibility Organizations and/or individual company programs is expected to increase innovation, increase the level of service, and reduce costs.  In addition, Ontario’s circular economy policies and forthcoming economic incentives will encourage producers to consider upstream initiatives that rethink product and packaging design, encourage operational efficiency and increase overall product life expectancy.

The Circular Economy Business Model: Mitigating Risks and Capitalizing on Opportunities

With government adopting circular economy policies and legislation, companies will need to adopt new business models that align with an emerging reality that discourages waste and encourages resource efficiency with design and innovation. Through this life cycle oriented approach, businesses can explore ways to become more cost efficient, carbon conscious and competitive. It is also imperative that industry stewards – producers and retailers – adopt a circular business approach across their value chain in order to mitigate reputational, supply chain, financial, environmental and regulatory risks.

Those who do not take action may lose competitiveness with reductions in access to capital, customers and markets.