Daily Times

The concept of “synergy” is a tried and tested success formula for the effective and efficient achievement of any goal. It can be understood as the effect that occurs when the interaction or cooperation of various components gives rise to a whole, which is greater than the simple sum of the individual actions of these components.

Unfortunately, mankind has adopted an opposing approach towards economic development; based on inherently disconnected and self-serving profit maximisation strategies. The linear model of economic development that exists in almost all global economies adopts a “take-make-waste” approach towards resource consumption. It has an almost non-existent synergy of resource production and consumption within various economic sectors. This approach has resulted in present-day challenges of climate change, environmental degradation and resource degeneration that plague the planet. Instead of the linear economic model, nature has taught us the synergistic concept of “circular economy” as the sustainable solution to various environmental and social problems.

The natural world is the perfect example of a circular economy, where everything, even after its lifetime, becomes a source for something else. The concept of a circular economy is restorative and regenerative. It is based on re-imagining the relationship between resources; by making one industry’s output as another industry’s input. In a circular economy, manufacturers design waste; re-use, re-purpose, re-imagine, recycle and regenerate materials and systems to reduce the industry’s impact on the natural environment. An example of this concept is the use of biomass from the agriculture sector into the chemical feedstock for products, bioplastic production, or converting it into fuels for transport, heat and electricity generation. Under the circular economic model, manufacturers are replacing the ownership-based models with usage-based services, such as selling driving time instead of selling cars. This encourages businesses to develop products with longer usage life and offer new services, such as predictive maintenance or fuel-efficiency support. The Circular Supply Chains allow value-chain partners to use recycled materials repeatedly. This saves costs and brings predictability to supply chains. For example, a sustainable textile manufacturer acquires eco-friendly raw materials such as organic cotton, which minimises environmental damage and reduces resource consumption. Similarly, green construction industries use eco-friendly building materials like greywater, green bricks and cement from green vendors.

The natural world is the perfect example of a circular economy, where everything becomes a source for something else

In Pakistan, almost all the economic sectors follow the “take-make-waste” approach of the linear economic model. There is no synergy between any industries for a cyclical sharing of various inputs and outputs. The “Clean and Green” vision of Pakistani Prime Minister, Mr Imran Khan, cannot be realised with the current linear economic model prevailing in Pakistan. Transformation towards a Circular Economic Model may provide countries like Pakistan, which are suffering from chronic resource shortages and serious financial constraints, a way out of their economic stagnation and perpetual poverty. In the Circular Economy, waste is eliminated, products and materials are kept in use throughout their product lifecycle and natural systems are regenerated. Governments should actively encourage the adoption of circular economy principles and practices. This would lead to greater resource efficiency and reduced waste generation through products and services that are designed for circularity and shifting to sustainable business models. The green economic transformation requires the development of a circular economic system led by government regulations, industry-standard development, business incentives, green & sustainable financing, awareness and knowledge creation among stakeholders and innovation within enterprises.

The State Bank of Pakistan has a key role in developing a circular economy through Green Banking adoption. Green financing, an integral part of Green Banking, should be provided to innovative enterprises adopting the principles and practices of circular economy in their business model. The government should give various tax incentives or other benefits to businesses adopting Circular Economic Principles for creating environmental & social sustainability. Banks can prioritise specific economic sectors such as Micro, Small and Medium Enterprises (MSME) at the start-up or scale-up stage, women-owned small enterprises, and agriculture & livestock sectors for circular economy-based projects through green financing. Low-interest loans under Green Financing schemes can be provided to set up waste recovery plants. Waste glass, for example, can be transformed into new glass, recycling paper, bioplastic production, eco-friendly SME enterprises and channel financing for green supply chain partners. The current government should focus on developing waste-to-energy and waste heat-recovery setups serving the dual purpose of energy generation and waste recycling or proper disposal. Various industries can adopt the circular economic model by creating a cyclical resource acquisition, consumption and recycling process. The banking industry may provide incentives to consumers for returning the expired credit/debit cards to the bank for recycling purposes instead of disposing of them improperly. This would reduce the country’s plastic pollution.

This economic transformation is not an overnight process, nor does it depend solely on industrial restructuring. Circular Economy is a powerful ideology and an essential part of sustainability today. But it needs to be developed further in Pakistan and create a change in the mindset, behaviour and priorities of all the concerned stakeholders. It is high time that we start reimagining the relationship between resources in daily lives and the corporate sector. Following this, we would be able to reimagine the future for our next generations.

The writer works as a Chief Manager-Green Banking Officer at Bank AL Habib Limited. He can be contacted at aasimalibukhari@yahoo.com