Lack of investment holding back innovation – and green solutions

Government regulation to make big business adopt a recycling mindset will ensure Australia becomes a truly circular economy.

Water, waste and energy management group Veolia Australia and New Zealand CEO Richard Kirkman.

The world’s economy is built on buying things, from rissoles to Rolls-Royces. But it all comes at a price, and not just in dollars. Everything we buy – even digital currency – uses water, energy and materials for its production, with a toll on our finite resources.

The loudest responses to this dilemma of diminishing resources have been calls to cut back, stop production, be more frugal. No one has yet explained how we do that and maintain economic growth. But there is a way, and it lives in the Venn diagram where policy and innovation meet.

We can see the power of policy today, where it is pivoting us from fossil fuels to renewable alternatives. We can pull off a similar heist for materials and water, design out waste, and create a circular economy.

Small-scale product innovations, such as making paper from plant crops, won’t cut it. We need policy-driven, system-wide change that turbocharges innovation. Delivering that change starts with measurement, because we can’t change what we can’t measure.

Three-step plan

First, we must measure the impact of what we buy. Just as we have an energy efficiency tag on a new freezer, we need to have water, materials and energy consumption information about everything we consume.

This tag doesn’t have to be complex, but it must include labelling and tracking to increase transparency and reduce greenwashing. The consumer doesn’t need everything listed on a label, but the reuser, repairer or recycler does. Something as simple as a QR code can supply that product information.

 

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Second, we must avoid making things that don’t work and can’t be recycled. That’s goodbye to paper straws that mush in your drink and hello to upscaling success stories, such as genuinely biodegradable bamboo straws.

Third, we need to innovate upstream processes and make them more circular. Imagine a distillery wants to double production, but the local creek has no more potable water. It can use waste hops to make biogas. That biogas can be converted to energy to clean the water, while solid waste can fire a biomass boiler to power the process. This would double production and halve use of water, waste and energy. That’s the scaled opportunity and innovation potential a circular approach offers.

Can we recycle our way to a better future?

Around now, somebody usually says, “We can’t recycle our way out of this.” Yes, we can. With the right policy we can build innovative systems that include reduction, prevention, repair and reuse, plus recycling of water, materials and energy. During my PhD at Imperial College London, one policy stood out as the rocket fuel for Australia’s circular economy revolution at scale across every business sector: mandated product stewardship legislation. Put simply, it is about taking control and responsibility for what you make. Just as it’s unacceptable to litter, it becomes unacceptable to make a product that has out-of-control consumption and no end-of-life options.

It means all goods and packaging have end-of-life disposal in their design and all components can be recycled or reused. The carrot and stick in the legislation is that the cost of disposal must be included in the price of the product, influencing its make-up and driving investment in innovation.

Introducing meaningful legislation

A lack of large-scale investment in the ideas of Australia’s best and brightest has been the albatross around the neck of innovation. Our position on the global innovation index has remained becalmed at around 24 (of 48 high-income economies) for the past seven years, even though Australia has the right set of skills, values and mindset to climb the rankings.

Product stewardship legislation is the closest thing we have to a silver bullet to change that. It would force the hand of the supply chain, set a level playing field and provide a platform for long-term investment. It would help Australia hit sustainability targets and create incentives for large businesses to expand R&D budgets to scale original ideas, shrinking the valley of death between promising pilot projects and innovation at scale.

For manufacturers it would lead to innovative product designs; for consumers, renewed purchasing power; for local authorities, a revolution in collection systems; and in the waste sector, the best recycling and recovery technology reaching our shores.

In countries where product stewardship legislation has been adopted, entire supply chains have evolved. Take Europe, for example, and the supply chains for clothing, electrical equipment and printer ink cartridges. Those cartridges are collected right across Europe and gold is extracted, creating a golden circular economy.

In Australia, product stewardship legislation has been delivered in narrow areas and, for the most part, voluntarily, with a focus on collecting recyclable materials rather than driving product design. Without a legislative imperative inclusive of rewards and penalties, product stewardship schemes produce little more than a mirage of progress and drive little innovation. The only successful product stewardship in Australia is the “mandated” container deposit schemes active in most states. These mandated schemes have seen producers modify their goods for easy collection and recycling.

Mandatory legislation gets big business involved, and that matters. When it comes to innovation we often focus on start-ups, but Australian Bureau of Statistics innovation activity figures show the highest level of innovation in the Australian economy comes from businesses with more than 200 employees – in short, the big end of town. That’s why we must replace voluntary product stewardship with mandatory codes, tipping the commercialisation equation in the direction of our best and brightest thinkers.

It will put the wind back into our innovation sails and allow Australia and its technology, services, processes and new products to reach a global market, all while positioning us as a world leader in innovation.

Dr Richard Kirkman is the ANZ CEO and managing director of Veolia. This article first appeared in The Australian’s Top 100 Innovators 2024 magazine available here.