PARTNER CONTENT
PwC
NIKKEI FORUM FUTURE OF ASIA

Circular Economy Support for Asian Growth

Introduction

The culminating session of this year’s Nikkei Future of Asia conference addressed circular economy ramifications for Asian growth. It was a discussion among three participants: Tengku Zafrul Tengku Aziz, Malaysia’s minister of investment, trade and industry; Akimoto Uchikawa, the president and CEO of the Japanese materials manufacturer Teijin; and Yuki Isogai, the lead partner of the Sustainability Center of Excellence at the PwC Japan Group. The three discussed the mechanisms of the circular economy, obstacles to fulfilling circular economy objectives, and means of overcoming those obstacles. Their discussion took place on May 24, the second day of the two-day conference.

THE FUTURE OF ASIA

Placing the issues in perspective

Yuki Isogai

Yuki Isogai, Lead Partner, Sustainability Center of Excellence, PwC Japan Group

As the lead partner of the PwC Japan Group’s Sustainability Center of Excellence, Isogai is responsible for supporting clients in developing their sustainability vision and strategy, promoting sustainable business transformation, and building sustainability risk management systems. She opened the discussion with a succinct encapsulation of the circular economy: “Don’t use things that we don’t really need. When we do use things, use them as long as possible. And when we’re done with things, find ways to reuse them.”

Isogai added that the circular economy is especially important in Southeast Asia. “Economic development and population growth are bound to continue in Southeast Asia. And the circular economy will become more important than ever in the light of geopolitical risk and resource depletion.”

THE FUTURE OF ASIA

A matter of raising awareness or of
making low-cost financing available

Tengku Zafrul Tengku Aziz

Tengku Zafrul Tengku Aziz, Minister of Investment,
Trade and Industry, Malaysia

Zafrul then placed the circular economy in the practical context of policymaking. “We need to be sure when we talk about the circular economy,” he cautioned, “that we understand the landscape. When you look at ASEAN, the economies are diverse. Each country is at a different stage of development. When you introduce policies, you need to bear in mind that there will be countries that might not be ready to invest as much as others.

“Policymakers need to address three considerations. One is capacity building: instilling the right knowledge, the right expertise. But to have capacity building, you need to have investment resources, financing. We need to determine whether companies have sufficient financial support to transition and embrace the circular economy. The third consideration is cost. Is the cost of building the circular economy going to be transferred to consumers? If it is, are they going to accept it? Government has a fiscal and nonfiscal role to play in regard to all three considerations. That can be a matter of raising awareness, for example, or of making low-cost financing available.”

THE FUTURE OF ASIA

Increasingly sophisticated recycling technology

Akimoto Uchikawa

Akimoto Uchikawa, President and CEO, Teijin

Teijin’s Uchikawa shared some initiatives at his company toward achieving the circular economy. “We started marketing polyester fibers derived from used polyethylene terephthalate (PET) bottles about 30 years ago, the first in our industry to do so. The recycled polyester fiber has been become material for such items as school and industrial uniforms. We have also developed more sophisticated chemical recycling technology for polyester fibers, which decomposes the used polyester fibers to the molecular level.” Uchikawa mentioned, too, Teijin technology for cascade recycling, as in transforming used carbon fiber composites from the aerospace industry into materials for the automotive industry, and for closed-loop recycling.

The Teijin CEO voiced a commitment to contributing to Asia through technology. He noted that the manufacturing sector in Asia is under pressure to meet the increasing demand with limited resources and that innovation is a key to overcoming that challenge.

Isogai highlighted challenges that have prevented the type of recycling described by Uchikawa from taking hold more broadly in Southeast Asia. She pointed out that “the recycling rate for waste remains extremely low in ASEAN” and emphasized the “importance of developing the recycling and waste management industry.” Isogai also called for a transition process different from that of the Western nations.

“Coal-fired power generation, which emits greenhouse gases, faces strong opposition, but simply decommissioning ASEAN’s power plants is unrealistic, as they are younger than those in the European Union and the United States.” Isogai noted that, on the other hand, “Asia has higher greenhouse gas emissions from agriculture compared with other regions. And shifting toward the circular economy in that sector would be effective in reducing those emissions. We need to analyze the situation in Asia and consider specific measures accordingly.”

THE FUTURE OF ASIA

Something that has to be done

Isogai reiterated the special importance of the circular economy for the ASEAN countries, which are experiencing remarkable economic growth. She suggested that the circular economy, which circulates resources while generating material wealth, is the most effective model for economic growth.

Uchikawa cited circular economy challenges that the manufacturing sector faces. “Our materials contribute to decarbonization, for example, by increasing the fuel efficiency of aircraft. However, decreasing the CO2 emissions in production process to zero is challenging. We therefore need to work together on decarbonizing throughout the supply chain. We need to shape a structure where the entire supply chain shares in the CO2 reductions.” Uchikawa also emphasized the importance of cross-sector initiatives for establishing traceability for recycled materials with an eye to identifying suitability for recycling based on usage history. “The manufacturing sector is the hub,” he continued, “for achieving the circular economy in Asia. Business opportunities will arise in the circular economy transformation through repeated trial and error.”

Zafrul summarized the challenge of bringing about the circular economy as daunting yet absolutely necessary. “If
the demand side is not there, there will be difficulty. You can talk about companies or countries having the right
frameworks. ASEAN has a circular economy framework that was introduced in 2021. But at the end of the day,
everything is about implementation, execution of the policies. That will take time, but this focus on the circular
economy is paramount, something that has to be done.”

NIIKEI FUTUER OF ASIA

The Executive Sustainability Forum

Japanese business leaders actively engaged in sustainability management launched the private-lead platform, the Executive Sustainability Forum, in 2022 (Secretariat: PwC Japan Group). The forum discusses topics related to advancing the circular economy and carbon neutrality in ASEAN, addressing the pressing need to help corporations cope with a double challenge: shaping their operations, products, and services to comply with international protocols for sustainability, while also accommodating local challenges and realities in Japan and other Asian economies.

Taking part in the forum as founding members are CEOs and other senior executives from 13 leading Japanese corporations, including the PwC Japan Group. They gather twice annually to discuss sustainability issues and publish joint statements addressing those challenges.

During its three meetings to date, the forum has examined the decarbonization landscape in ASEAN and Japanese business’s role, the circular economy in Japan and the ASEAN region, and the collaboration between Japan and ASEAN companies in shaping the future of the circular economy. In January 2024, the Executive Sustainability Forum released a comprehensive position paper, “Joint Statement on the Circular Economy and Carbon Neutrality,” and PwC published a circular economy research report, “Toward Sustainable Growth in ASEAN.”

The forum has discussed approaches to reconciling growth and sustainability in ASEAN, identifying and acting on opportunities for forging cross-border alliances among Asian companies of all sizes, investigating ways for Japanese and ASEAN companies to lead in new markets, interacting with global and ASEAN leaders, and disseminating their findings and proposals through press releases and presentations at international conferences.

PwC
TOP