Circular Business Models Are Helping Developing Countries Take Climate Action Beyond Aid

By Christian Jahn

With the COP26 Climate Change Conference in Glasgow underway, action on climate change has never been more urgent. Lower income countries attending the summit will be asking for more support to adapt to climate change. 

Despite contributing very little to climate change compared to emerging economies and industrialized countries, it is these low-income countries that tend to bear the earliest and heaviest burdens of climate-induced disasters.

There is an opportunity for lower income countries to tackle climate action through new business models, not just through aid. This path has the added benefit of using climate action as the catalyst to create jobs, improve livelihoods, build resilience, and contribute to economic growth. 

Any new financing pledged at COP26 can, and should, support these businesses to help build resilience and grow their economies in more sustainable ways.

Take solar power. Two out of three people in Africa lack access to electricity, and countries like India continue to experience power shortages affecting the everyday lives of people. In Nigeria, the government is aiming to alleviate problems created by a lack of access to electricity, as well as pollution, with their Solar Power Naija project which aims to provide electricity to 25 million Nigerians while also creating 250,000 jobs. It does this by providing low-interest loans to businesses operating in solar power. 

India is also leading the way in the new energy revolution. Prime Minister Modi has even said India is on track to top its renewable energy targets before 2022. The Indian business Encourage Capital, provides rooftop solar finance solutions for small- and medium-sized enterprises. These enterprises are critical to India’s industrialization, accounting for 45 per cent of industrial output. With finance from Encourage Capital they can abandon older, inefficient means of consuming energy, and help drive India’s clean energy ambitions. 

Circular business models – such as recycling – also offer huge scope to reduce emissions, while also providing livelihood opportunities. Alpha Polyplast, one of the first recycling companies in Zambia, employs over 300 people from low-income families to collect PET bottles for recycling. By having contracts with larger companies such as Coca-Cola, Alpha Polyplast can provide a reliable source of income to their employees. 

Elsewhere, the Philippine Reef and Rainforest Conservation Foundation is working with sari-sari (convenience) stores to reduce single-use plastic waste from their operations.  Not only are they reducing waste, but they also inspire consumers to support “wala usik”, a Hiligaynon/Bisaya phrase for circular practices where “nothing is wasted”, allowing the natural ecosystems to thrive.

Agriculture is yet another sector that can benefit from these circular business models. One of the stated goals of COP26 is building resilient agriculture. From storms to droughts and monsoons, and extreme heat – these are just some of the potential risks that will affect agricultural development such as crop productivity, livestock, and food security. Implementing climate-smart agricultural practices will go a long way to help address the interlinked challenges of poverty, food security and climate change. 

For Kennemer Foods International in the Philippines, resilience against climate change will mean surviving through longer periods of excess rains as well as drought. They work with farmers to implement pragmatic measures to address these issues such as increasing the absorption and water holding capacities of the soil by planting shade trees and using cover crops which help preserve soil humidity, improve soil structure, lessen the need for weed management and help improve nitrogen absorption by tree crops.

Rice is the primary source of energy for over half of the world’s people, yet worsening droughts in Thailand could mean that in two to three years there may not be enough water for rice farming. Companies such as the Thai Rice NAMA project are hoping to rectify this by working with farmers to introduce climate smart practices such as Alternate Wetting Drying, whereby rice fields are subjected to alternating flooding and drying, rather than continuous flooding, which reduces the water used in rice farming by 50 per cent.

Innovative business models which inherently align with climate action can also improve the lives of low-income communities. These new approaches can create triple wins: profit for business, better living conditions for the poor, and reduced government expenditure. 

By combining climate goals with social impact, businesses can help ensure that the most vulnerable to climate threats are not left behind. The real challenge at COP26 and beyond, is ensuring that climate finance reaches those most in need at the speed and scale required.

About the Author

Christian Jahn, Executive Director of the Inclusive Business Action Network (iBAN).