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Oxford Business Group

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Creating A Blueprint For A Sustainable Future In Latin America

As Latin America continues its economic recovery from Covid-19, countries in the region are increasingly looking towards the circular economy as a platform for sustainable future growth. A counterpoint to the “take, make and throw away” linear model, the circular economy denotes an economic system in which products and materials are kept in circulation for as long as possible. In designing things to be as durable, reusable and recyclable as possible, the model places a high importance on efficiency and ecological sustainability and is underpinned by a shift towards renewable energy sources.

While it had been gaining traction for some time, notions derived from the circular economy have been bolstered by the pandemic, as traditional supply chains associated with the linear economy faced significant disruptions.

In addition, the pandemic has been accompanied by an increase in waste. As OBG has detailed, Covid-19 has led to an increase in the production of single-use plastics, with reports of masks and plastic gloves washing up on beaches being a common occurrence over the past year.

In light of this, emerging markets around the world, including in Latin America, are turning towards circular economy solutions, not only to improve sustainability but also to provide a more resilient foundation for future economic growth.

A major step in this direction came in February this year with the launch of the Regional Coalition on Circular Economy, a Latin America and Caribbean-wide initiative led by the UN Environmental Programme, which aims to increase access to financing for sustainable projects.

The coalition is a welcome initiative, as just 2.2% of Covid-19 stimulus funding in Latin America and the Caribbean was spent on environmentally sustainable projects, according to research from the University of Oxford and the UN.

Recycling and reusing resources

While the establishment of initiatives at the intergovernmental level has signalled a shift in the approach towards the circular economy, a number of private sector and community organisations across the region have engaged in a series of smaller circular economy projects in recent years.

Related: The Plastics Sector Is Suffering As Oil Prices Rise One central focus is on recycling and the efficient use of resources.

For example, a 2019 report published by the UK-based Ellen MacArthur Foundation estimated that, while the transition to renewable energy and improved energy efficiency could help reduce 55% of the world’s emissions, adopting a circular economy approach to five industries – steel, cement, plastic, food and aluminium – could reduce emissions from the production of key materials by 40%, or 3.7bn tonnes, by 2050.

To this end, Coca-Cola has in recent years implemented a series of initiatives to improve the reuse and recycling of its packaging.

“Returnable bottles help to lower costs, and in Chile we even offer consumers the logistical services to take the returnable bottles back to our plants when purchased directly from our website,” Miguel Peirano, the CEO of Coca-Cola Andina, which operates in Argentina, Brazil, Chile and Paraguay, told OBG.

Another key Coca-Cola initiative in the region is that of the “universal bottle”. First launched in Brazil in 2018, the design – which uses bottles of the same colour, shape and size for different products – has been rolled out in various Latin American countries, among them Argentina, Chile, Colombia and Mexico.

The bottle accompanies a system that sees customers return the empty bottles to retailers, who then send them back to Coca-Cola upon the delivery of a new order. Coca-Cola then cleans the bottles, removes the labelling, refills them and rebrands them with a fresh label.

The strategy has proven to be hugely effective in reducing plastic waste. The company says that the bottles are reused up to 25 times, reducing overall plastic use by 90%.

“Launching a universal bottle type helps us to expand returnable offerings for low-volume brands, which is otherwise difficult, as they do not sell as much,” Peirano said.

Elsewhere, there are also efforts being made to improve the sustainability of the materials used in beverage packaging.

Related: Oil Major Exodus In Iraq Creates Opportunity For China

“Inevitably, the beverage production industry will need to look at reducing plastic use as part of our UN Sustainable Development Goals commitments. Although PET bottles will not disappear, they would need to transition into recycled PET bottles,” Augusto Bauer, deputy CEO of Peruvian beverage producer Grupo Aje, told OBG.

While there has been progress on this front, Bauer noted that significant investment was needed for the industry to meet its sustainability targets.

“While facilities across the region are being built to process plastic bottles, the biggest challenge is to bolster the capacity and capability of Peru’s and other countries’ underdeveloped recycling systems.”

4IR technologies central to green future

Another factor that is key to improving resource efficiency and meeting circular economy targets is the technological development associated with the Fourth Industrial Revolution (4iR).

With an estimated 113m people living in slums or substandard housing across the region, the 3D printing of low-cost houses – a process which uses a mix of concrete, water and other materials to build a house for as little as $4000 – is increasingly seen as a viable option to address housing shortages.

In El Salvador, pilot projects have been launched that use this approach to construct affordable housing for low-income families who have lost their homes due to natural disasters, while in Mexico an entirely new neighbourhood for 50 low-income families is being constructed using the 3D printing method.

The efficient use of building materials in 3D printing provides a stark counterpoint to more traditional methods. For example, in Chile 7.1m tonnes of waste are generated annually from the construction of authorised buildings alone, equal to all municipal domestic waste.

Elsewhere, circular economy solutions can also play a role in securing other everyday needs, such as clean water and sanitation.


For example, at the Atotonilco Wastewater Treatment Plant in Mexico, treated water is used to irrigate some 90,000 ha of agricultural land in the Mezquital Valley, while the sludge derived from the process is repurposed to produce electricity and thermal energy, and the biosolid by-products are used to enhance the soil in forests and agriculture.

The issue of water, in particular, is set to be a crucial one moving forward, with all bar six Latin American and Caribbean countries expected to be classified as water-scarce by 2025, according to the UN.

Economic benefits

Aside from the environmental impacts, proponents of the circular economy also point to the substantial economic benefits that come with adopting more sustainable economic models.

In a region badly hit by the economic fallout of the pandemic, the circular economy is seen as a way to build a more sustainable, more diverse and more resilient economic recovery.

While there will undoubtedly be shifts in the workforce as countries move away from heavy-polluting industries, research from the UN’s Economic Development Division of the Economic Commission for Latin America and the Caribbean estimated that the adoption of a circular economy scenario could create up to 4.8m jobs across the region by 2030, through the development and expansion of recycling, repair, waste management and remanufacturing industries, among others.

In another report, published by the UN Environment Programme, it is estimated that Latin America and the Caribbean as a whole could save up to $621bn annually and generate 7.7m new jobs if the energy and transport sectors achieved emissions neutrality by 2050.

Meanwhile on a single-country level, Chile has set a target of creating more than 180,000 formal jobs in the circular economy by 2040, while the World Bank has calculated that reaching carbon neutrality would bolster the country’s GDP by 4.4% by 2050.

By Oxford Business Group

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