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Circular Economy: Strategizing ESG I

Adopting a proactive Environmental, Social, Governance (ESG) strategy that is aligned with corporate objectives demonstrates to consumers that sustainability, of all aspects, is important. A gradual shift in focus from social, governmental, and consumer attention on the broader impact of organizations has led to an increased emphasis on the action’s organizations are undertaking to deliver on sustainability, as well as a higher level of accountability for organizations to report to. A well-developed ESG strategy can provide with a competitive advantage by meeting pre-tender and contractual requirements while highlighting a responsible approach to climate change, stakeholder wellbeing and governance requirements.

A strong ESG strategy also correlates with an increase in cost savings through improved process efficiencies to combat rising operating costs. Better business performance demonstrated through a strong ESG strategy also corresponds with a reduction in risk, through the development of stronger risk identification and management processes, enabling organization to drive informed and effective planning practices.

Economic activities are associated with negative externalities like land degradation, air, water, and noise pollution, the release of toxic substances, and greenhouse gas emissions. They not only disturb the ecological balance by disrupting the natural cycles, it impacts the flora and fauna including humans.


High material consumption, loss of nutrients and waste of products and materials are growing problems. These problems encompass an opportunity for the Indian industry to design solutions for refurbishing, remanufacturing, and recycling to keep products, components, and materials circulating and contributing to the economy.

What is a circular economy?

The circular economy aims to eliminate waste and pollution, keeping products and materials in use for as long as possible. It entails designing more durable, reusable, repairable and recyclable products that can be kept in circulation in the economy much longer than current, linear economy products. In a linear economy, resources are extracted, products manufactured, used and then thrown away. Optimizing the reuse of products to extend their lifecycle is an important aspect. Sharing models increases product utilization. Circular systems also maximize the value of biological materials and seek to address several resource challenges.

Materials in the circular economy don’t just age out as time passes; they’re consumed for exactly what they were designed to offer. This is a terrific guidepost for our behaviour not just at home, but in many industrial processes as well, because it makes sure we deplete a resource before discarding it.

Repurpose: Repurposing is the hallmark of a circular operation. It gives resources another life, and often lowers a business’s overhead when redistributing a product. At this stage, however, you may not be repurposing the same product you started with. You can also repurpose a byproduct.

Redistribute: Redistribution is critical to making sure a circular solution is sustainable from end to end; communities need a way of capturing the repurposed product and delivering it to the next customer.

India's policy framework to promote the circular economy is based on a multi-pronged approach that includes regulatory measures, financial incentives, awareness campaigns, and capacity building. In this section, some of the key policies and initiatives implemented by the Indian government to promote the circular economy are being explored.


(i) National Resource Efficiency Policy (NREP):

One of the most important policies to achieve the goal of a circular economy is the National Resource Efficiency Policy (NREP). The NREP was launched in 2019 with the objective of promoting sustainable production and consumption patterns, enhancing resource efficiency, and reducing the environmental impact of economic activities. The policy includes measures to encourage the adoption of circular business models, such as product-as-a-service, leasing, and sharing, and promotes the use of recycled materials. In addition to the NREP, the framework of Extended Producer Responsibility (EPR) is another element of the policies designed to facilitate the creation of a circular economy. EPR is a regulatory framework that makes manufacturers and producers responsible for the post-consumer waste generated by their products. The EPR framework encourages producers to adopt sustainable product design practices, increase the use of recycled materials, and support waste management and recycling initiatives.

(ii) Swachh Bharat Mission (SBM)

This is another critical policy intervention when it comes to aspects of waste segregation and recycling. The Swachh Bharat Mission was launched in 2014 with the objective of promoting cleanliness, hygiene, and waste management. The mission includes initiatives to promote waste segregation, recycling, and composting, and aims to make India a "zero-waste" country. A reduction in waste generation is central to the goal of a circular economy.

(iii) Atal Innovation Mission

Another policy intervention which stands out in terms of its rationale for a circular economy is the Atal Innovation Mission. The Atal Innovation Mission was launched in 2016 to promote innovation and entrepreneurship in India. The mission includes initiatives to support the development of circular business models and encourage the adoption of sustainable technologies.

(iv) Financial Incentives

In addition to these policy initiatives, a number of interventions have been made which revolve around financial incentives for the efficient utilization of resources. In line with these, the Indian government has implemented various financial incentives to encourage the adoption of circular business models and promote sustainable consumption patterns. These incentives include tax benefits, subsidies, and low-interest loans to the recycling industry.


Traditionally, manufacturing companies follow a linear model of work which involves extracting natural resources to make products. Such products are used for a limited period of time before being discarded as waste. The idea of Circular Economy is to unburden manufacturers, lessen the waste stream and shrink the community’s carbon footprint as the way to innovate a practice for businesses to adopt.

Increased environmental degradation and impending resource scarcity has made it imperative for businesses to adopt a ‘circular’ model. This involves

i) using resources efficiently and prioritising renewable inputs

ii) maximising a product’s usage and longevity to extract the maximum value,

iii) recovering and reusing by-products and waste to manufacture new materials or products.

An economy achieving full circularity is an ideal. It enables stakeholders to aim high when setting their vision, priorities and strategies for inculcating circular practices within their industries and societies for a better future. Through circular practices and business models – reduce, replace, regenerate biomass, repair, refurbish, re-manufacture, reuse and recycle, product-as-service, and waste-to-energy – everything gets additional lifetimes, is reused as an input material, part or component, or energy source, or as a last resort, disposed of. The retained value in products and resources continue to create new business opportunities, income and jobs many times, and not only once as in a linear industrial system, where products usually end up in landfills at the end of their first life with negative impacts on health and the environment.


The goal of recovering as many resources as possible in a production process implies a change of mindset and the adoption of a new business model by the company, generating economic benefits that were not possible to achieve with the previous model. In addition, new economic and supply chain paradigms can generate a different relationship with the territory with greater corporate responsibility, generating positive externalities within the society in which the company is located and new development conditions for workers and for the industrial sector itself. The Circular Economy is thus an important building block to succeed in meeting the principles of sustainable development, with concrete application in most industrial supply chains, especially those with a high rate of resource waste and raw material consumption (mining, textiles, construction, packaging, electronics, to name a few).







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