Firms call on MPs to support circular economy

The government should be implementing legislation to ensure products are designed to be resource efficient, say leading businesses

Consumer goods giant Unilever, high street chain Boots and waste firm Veolia are among the companies urging the government to do more to break down the barriers facing firms wanting to adopt a more circular business model.

The firms are all members of the UK circular economy taskforce, set up after the publication of Defra's resource security action plan last April. In its first report, "Resource resilient UK", the taskforce says companies are increasingly aware of the impact resource security is having on their operations, particularly rising materials costs. However, it also warns that firms considering moving to a more circular business model are being hampered by difficulties in retrieving materials from products and by market barriers resulting in firms not able to capture the "full value of recovered resources".

"Our analysis shows that companies in the UK want, and need, to avoid resource security risks," said the report's author Dustin Benton. "There's a lot businesses can do on their own, but the government needs to help."

The report concludes that the government should support research into how the UK economy is exposed as access to materials, such as rare earth elements, aluminium, copper and oil, becomes harder, focusing particularly on industrial sectors expected to lead future economic growth.

Existing legislation should be applied more rigorously to ensure that manufacturers are designing products in a way that eases the recovery of materials, and competition laws should be clarified to enable firms to work together to retrieve and reuse materials, states the report.

It also recommends that the government works to broker greater collaboration on resource issues across supply chains.

Businesses, meanwhile, should be publishing details for investors of where resources, including water and land, pose a "high impact risk" to their operations.

Companies should also be measuring the impact of the materials they use, according to the report. It suggests using the "environmentally weighted material consumption" technique to measure the impacts of each tonne of raw material used by the business.

The taskforce's report followed a statement from companies, including Sky, Marks and Spencer, MITIE and The Co-operative, urging the government to commission an independent review of how resource security and climate change are impacting the UK economy's growth.

The document, led by green business think tank the Aldersgate group, warned that resource security was already having a tangible impact on UK firms, arguing that high prices were the cause of almost a third of profit warnings issued by FTSE 350 companies during 2011.

In calling on policymakers to take action, the firms urged the government to learn the lessons of the financial crisis caused by the banking sector. "If 2008 taught us anything, it is that we must deeply enhance our understanding and management of systemic risks to the UK's economy," they said in a statement. "[The] government has a critical role to play in assessing the likely impacts of resource insecurity and climate change on our national economic prospects."