Sustainable value chains and circular economy: an opportunity to reset the economy after COVID-19

As governments’ response to COVID-19 turns increasingly to the economic recovery, a key challenge is to prevent future shocks and to build resilience. Acknowledging the role of ecosystem degradation in spreading pandemics, as well as how pollution and inadequate access to water exacerbate related health hazards, and the fact that the environmental and notably the climate crisis has become one of the top risks to the global economy[1], we need a transformation with sustainability as a priority.

The promotion of sustainable products across key value chains, in line with the new EU Action Plan on Circular Economy, can help address this challenge. ‘Sustainable products’ means, for example, products that are durable, reusable, upgradable, reparable, do not include hazardous chemicals, are energy and resource efficient and, overall, have low carbon and environmental footprints.

Developing value chains for these products can create more decent jobs per euro invested in stimulus packages to rebuild the economy. This is the case for sectors of significant importance to many developing countries, such as food, construction/buildings and tourism, as analysed by the One Planet Network[2]:

Food: Shifting to sustainable food systems in which resource efficiency is a core element would help restore forests, freshwater resources and vital ecosystems. It would add value worth over USD 2 trillion by 2030 and create millions of jobs, mainly in developing countries, while also enhancing the resilience of food value chains.

Buildings: Investing in sustainable buildings has the co-benefit of creating jobs, especially at the local level. It has been estimated that, for every USD 1 million invested in building energy efficiency retrofits, 10-14 direct jobs and 3-4 indirect jobs would be created.

Tourism: A sector that accounts for 10 % of total global employment yet relies on the quality of the environment in which it functions. This means that adopting resource efficiency and circularity measures in businesses and organisations operating in tourism destinations is key for safeguarding the biodiversity and environment that maintains their competitiveness.

The EU has gained experience in circular economy through initiatives like the SWITCH regional programmes, which have supported the implementation of the Extended Producer Responsibility Principle in India, sharing economy approaches in Kenya, and the regulation and standards for the use of secondary materials in Mongolia, among other projects. Practical solutions, like using furniture from recycled plastics in schools in Uruguay, setting up cooperatives for waste and scrap dealers in Ghana, and promoting industrial symbioses for waste management in Mauritius, show that a circular economy transition is not driven by ideology, but by scientific evidence and economic logic.