Government urged to support circular economy as world hits Earth Overshoot Day

The UK Government has been urged to support circular economy businesses as the world reaches Earth Overshoot Day.

The landmark date falls on August 2 this year, marking when humanity’s demand on nature exceeds Earth’s biocapacity for the year.

It comes as a report from Green Alliance found that UK Government policies are among the factors preventing innovative businesses from scaling the circular economy and stopping business models from being adopted more widely.

The campaign group spoke to 10 companies, which are cutting carbon and reducing waste, finding that a lack of understanding and imagination among policy makers as well as ingrained consumer behaviours are also barriers to preventing growth.

The circular economy aims to keep materials and products in use at their highest value for as long as possible, through better design as well as reuse, repair, remanufacturing and recycling.

Techbuyer – a company that buys, decommissions, refurbishes and then sells used business technology – said that tax rules mean businesses and their consumers pay a disproportionate amount in VAT on resold goods, which are taxed several times.

It also said that despite a 24% increased turnover in 2022 and diverting a million kilograms of e-waste from landfill, the market is limited by attitudes towards refurbished equipment, including a belief that it is lower quality or less reliable.

Richard Kenny, group sustainability director, said: “The business case is clear from an economic point of view in that you’re fundamentally turning waste into profit.”

Meanwhile, the Little Loop, a firm that rents children’s clothing, claims to have prevented 120 tonnes of CO2 emissions and saved five million litres of water since 2019 as well as saved parents hundreds of pounds a year.

But the business said its growth is held back by ingrained habits of buying new, as well as competition with cheap and often lower quality goods.

It also said companies that lease goods are often disadvantaged compared to competitors who sell them, because they hold too many assets to be eligible for some tax reliefs.

Founder Charlotte Morley said: “There’s just not enough patient capital out there, people who are prepared to invest in a business that doesn’t become a unicorn overnight.”

Meanwhile, problems facing resale companies like Bambino Mio, which sells reusable nappies, include poor circular logistics for collection, cleaning and redistribution, higher upfront costs and consumer concerns around convenience and cultural inertia.

Guy Schanschieff, founder of Bambino Mio, said: “Over the last 25 years we have diverted over two billion nappies from landfill… but that figure should be an annual figure or even a monthly figure in terms of where we want to get to.”

Previous Green Alliance research found that the circular economy could support more than 470,000 jobs across the economy and that these would particularly benefit areas suffering high unemployment.

Meanwhile, the Mission Zero review led by Tory MP Chris Skidmore argued that the Government needs “a new long-term national mission” to bring about a circular economy, ensuring it is integral to industrial policy.

The Committee on Climate Change has also called policy on resource efficiency “insufficient” and called for the UK Government to develop “concrete policies at pace”.

Jasmine Dhaliwal, policy assistant at Green Alliance, said: “People want to do the right thing for the environment – but sometimes it’s hard to make greener choices.”

She added that businesses say “cultural inertia and government policies are holding them back”.

“Policymakers often assume consumers are primarily motivated by cost, but that’s not the whole picture,” she said.

“If they are given the support to scale, circular businesses would be better placed to encourage green choices, and they could transform the UK’s economy.”

Earth Overshoot Day 2023, which is calculated by the Global Footprint Network each year, comes five days later than last year.

But the organisation warned that this is owed to integrating improved datasets and that genuine advancements towards reducing humanity’s impact amounts to less than one day.

It says that overshoot reduction is currently too slow and reaching the UN’s target of reducing carbon emissions by 43% worldwide by 2030 compared to 2010 requires moving Earth Overshoot Day by 19 days annually for the next seven years.

Steve Tebbe, CEO of Global Footprint Network, said: “The biggest risk, apart from ecological overshoot itself, lies in complacency towards this crisis.

“Entities that act now are not just safeguarding the environment but future-proofing their economy and the wellbeing of their residents.”

The organisation said simple changes could move the date significantly, including increasing global low-carbon electricity sources, halving food waste and tree intercropping.

A Department for Environment, Farming and Rural Affairs spokesperson said: “We have announced new plans to deliver on this Government’s long-term aim to use fewer new resources, drive up the repair and reuse of existing materials, and increase recycling.

“The ‘Maximising Resources, Minimising Waste’ programme, backed by Government funding, will help keep products and materials in circulation and at their highest value.

“We remain committed to delivering on our pledge to eliminate avoidable waste by 2050 and recycle 65% of municipal waste by 2035.”