Legislation as a driving force for circularity


Circular economy

Although environmental laws are nothing new, recent years have seen increased legislative activity as a lever to address climate change. Philip Mossop, COO at climate-tech firm Pentatonic explains how we got here, and why it’s vital to keep up with the growing raft of mandates.

Laws relating to the natural environment can be traced back over 2,000 years to rules in Imperial China around hunting birds and burning forests. Ancient Rome had regulations to determine urban cleanliness, air, and water pollution.

The rapid industrialisation of the 18th and 19th centuries brought significant environmental and health consequences for new urban populations. Western governments began passing laws to regulate coal smoke from factory chimneys, manage deforestation, control alkali manufacturing emissions, and limit river discharge.

Of course, these early efforts were understandably piecemeal, and focused on immediate problems and localised needs, rather than achieving a wider ecological balance.

Post-war perspectives


The recognisable roots of modern environmentalism were established post-World War II, during a period of flourishing research, public awareness campaigns, and the birth of several conservationist organisations.

Spurred into action by the “Great Smog of London” in 1952, the UK government passed the City of London (Various Powers) Act in 1954 and two Clean Air Acts (1956 and 1968) to try and combat air pollution. Householders were also offered incentives to burn cleaner fuels.

Subsequent progressive milestones such as the first Earth Day, the 1972 United Nations Conference on the Human Environment, and the creation of the Intergovernmental Panel on Climate Change (IPCC) in 1988, followed.

Philip Mossop has examined how circular the main political parties are.

These were juxtaposed, however, against a backdrop of environmental warnings such as the development of the ozone hole above Antarctica – discovered in 1985 – and a growing recognition of rising global temperatures during the decade.

In turn, legislation became increasingly global and consequential. The 1987 Montreal and 1997 Kyoto Protocols paved the way for the 2015 Paris Treaty to mitigate human impact on climate and the environment.

The years since have seen a growing raft of legislation across the globe aimed at addressing environmental damage from pollution and emissions, much of which mandates significant change for businesses. It’s a dynamic and complex landscape, but companies must navigate it to maintain their competitive position and reputation.

The current picture

Net zero

At an umbrella level, the UK’s commitment to achieving net-zero greenhouse gas emissions by 2050 is underpinned by several policy strategies. 

The recent Environment Act encompasses areas such as air and water quality, waste management, and improvements to the natural environment. A mandatory Biodiversity Net Gain requirement has also been introduced, and deposit return scheme (DRS) and extended producer responsibility (EPR) requirements for packaging are incoming.

The EU’s wide-ranging European Green Deal sets the roadmap for progress towards climate neutrality by 2050, protects biodiversity, and guides the transition to resource-efficient, circular production. 

Several consequential initiatives have emerged from the Green Deal: the Circular Economy Action Plan, the Green Industrial Plan, and the Biodiversity Strategy, for example. These high-level strategies influence the present legislative landscape. For example, current negotiations for the related Ecodesign for Sustainable Products Regulation, and numerous legislations targeting emissions, are now drawing to a close.

Also, EU proposals to improve resource efficiency and reduce pollution are under discussion: from supporting repair, to increasing circularity and limiting vehicle-related waste. In addition, the UK’s post-Brexit review and alignment process with EU legislation continues to influence its environmental law.

Beyond Europe, commitments to environmental policy continue to gather pace, from North America’s policies on emissions and clean energy and Asia’s efforts in pollution control and resource conservation; to South America and Africa making strides in biodiversity, sustainable agriculture, and renewables.

Gaining visibility

AI Legislation tracker

Although much of the contemporary legislation is promoting a shift to circular operating principles, something that the vast majority of businesses would support, many are struggling to keep up with the evolving legal picture.

KMPG research has shown that three-quarters of companies are unready to have environmental, social and governance (ESG) data audited in preparation for new regulations, while a British Chambers of Commerce study reports that many businesses don’t understand net zero targets.

Of course, introducing sustainable operating processes to meet net zero targets already requires investment at all levels, down to the individual company. Organisations also face additional fines for non-compliance with many new and upcoming legislative items – as well as the attendant reputational fallout from public reprimands.

Larger organisations have dedicated resources to spend on compliance strategies, but that’s not the case for everybody. The more companies that can successfully navigate this dynamic legislative challenge, the better, from a sustainability perspective.

Introducing sustainable operating processes to meet net zero targets already requires investment at all levels.

We created our Legislation Tracker to speed organisations of all sizes to certainty on these issues, and promote early action on environmental regulations, theoretically scaling the mandates’ impact.

The tool, available at no cost, aims to help organisations understand how legislation will impact their operations. An intuitive interface – supported by search, filter, and chatbot functions – helps users track laws and updates without requiring prior legal knowledge.

Companies can ask the Legislation Tracker to summarise official documents, clarify vital obligations, and define compliance and implementation requirements. Published legislation is also available via PDF download and direct link to the original lawmaking body. 

The tracker is part of our modular circularity platform, a suite of tools used by the world’s largest brands to scale sustainability transformation.

On the horizon

Wind turbines

There’s no shortage of legislative activity to monitor in the near term, with agreements close on several anticipated developments.

For example, look out for the adoption of the updated Waste Shipment Regulation – which will increase scrutiny on waste management practices by tackling illegal waste shipments, and driving reuse and recycling.

Also, expect movement on the new Corporate Sustainability Due Diligence Directive, which aims to identify, address and monitor environmental and social supply chain impact – with the potential for significant penalties (up to 5% of net turnover) for non-compliance.

Targets resulting from existing legislation are also on the horizon. UK companies will need to start paying packaging EPR fees, in addition to the reporting, by 2025. By the end of that year, at least 65% of all packaging waste must be recycled in the EU (under the Packaging and Packaging Waste Regulation).

The model will also gain further momentum in the US, as several states are currently at different stages of implementation. 

For example, the California Senate Bill 54 compels companies to significantly reduce all single-use plastics and packaging, imposing penalties of up to $50,000 daily, per violation, for non-compliance. Since 1 January 2024 it has required companies producing or selling single-use packaging in the state to form and join a non-profit Producer Responsibility Organisation (PRO), which requires them to cover costs of packaging waste management and comply with targets across recycling rate and source reduction.

In addition, large corporations doing business in California will need to start capturing Scope 1 and 2 emissions data during their 2025 fiscal year, under the state’s Senate Bill 253 ready for 2026 disclosure.

Although this is just a selection of highlights to consider as we move towards the second quarter of 2024, it illustrates the complexity and pace of change within the industrial landscape, and underscores the extent to which legislation has become a driving force for the circular economy. 

As a result, tracking and responding to environmental law is now an important strategic activity for organisations across all sectors.

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