Episode 4: 2032 and Beyond - Why (and How) Brisbane 2032 will use circular economy models

Mike Duggan

Hello and welcome to Ashurst business agenda. This is the latest episode of 2032 and Beyond, our podcast mini-series focusing on the Brisbane 2032 Olympic and Paralympic Games. I'm Mike Duggan. I'm a director at Ashurst's Risk Advisory practice here in Brisbane.

In this podcast series, we're taking a detailed look at a range of important issues which touch on the preparations for, delivery of, and legacy flowing from the 2032 games. As a firm Ashurst has experience in the delivery of recent major games projects, including mandates for the Sydney Olympics, London 2012 Games and Tokyo Games.

In this episode, you'll hear my discussion with two expert speakers: Andrew McCormack, a partner in Ashurst's Project and Energy Transition Team, and Jodie Bricout who is a circular economy expert and the leader of Aurecon's dedicated Circular Economy team.

Together, we explored the circular economy, and the integral parts circular approaches must play in helping Brisbane 2032 realise its climate positive and broader sustainability commitments.

And so, without further ado, let's jump in and hear the conversation.

Mike Duggan

Jodie let's start with you first. Can you define for us what is meant by circular economy?

Jodie Bricout

Thanks, Mike. Well, that must be my favourite question. I love circular economy. It's basically looking at how can we thrive in this future climate and resource-constrained world by doing three things in a systems approach: What we're trying to do is remove waste and pollution from inception, so designing out. Secondly, once we've got things in the system, we're trying to retain their value for as long as possible. We're trying to slow things down, use them longer, recycle them, keep all these products and valuable things in our economy for as long as possible. And thirdly, and possibly most importantly, it's regenerating nature as well, because if we're not actually giving back to this fabulous ecosystem that is cleaning our air and cleaning our water, etc, we can't really function in balance with our world in this future that we're heading into.

Mike Duggan

Andrew, if I can come to you now, collaboration appears to be paramount in creating the circular systems that Jodie was just talking about. At the centre of collaboration is trust among those collaborating. How can legal advisors help those parties (who might really be competitors or participants at different points in the supply chain) feel comfortable to share data and remove barriers to innovation in this space?

Andrew McCormack

That's a great question, Mike. I mean, what you're really asking me is how do you get people to trust one another? If I give you a wholesome and fulsome answer to that I suspect that I’ll be a very, very rich man. But there are a few mechanisms that I think are worth mentioning here.

The first is that parties can use simple things like confidentiality agreements, to be clear, between themselves amongst what information they're passing between each other is confidential, what it can be used for and who it can be disclosed to, and therefore, who can't be disclosed to.

There's also usually some benefit in considering if there's going to be any new intellectual property created through the collaboration that's about to occur. And if there is, then trying to deal with who should own that intellectual property, if it's to be jointly developed? Will it be jointly owned? And can it only be jointly used? Or does each individual entity have the ability to use whatever's developed, moving forward. And I suppose the issue with both of those two approaches, as we can sort of tell by talking about them, is they're both actually quite adversarial. They don't seem on their face to promote trust, they're the party saying, “This is what I can do. This is what you can do.”

What I think is always really important in any of these arrangements is to have some sort of commercial framework document, it might be a memorandum of understanding or a term sheet or something that actually sets out “What are we going to do? What is it we're trying to do? What is the timetable for as doing it in?” And that clarifies, what is each party going to bring to the collaboration in terms of time and resources or even finance, and what are both parties hoping to get out of it?

And having that document can provide a nice framework and a reference point to allow the parties to work together on that project. Moving forward, it gives them a point of reference. And also, you can make parts of it legally binding if, for example, you wanted to put the confidentiality and IP arrangements in there, whilst having the rest of it have a less formal relationship.

Mike Duggan

I see. So trust and relationships are obviously so important.

Jodie, Brisbane 2032 is the first Games to contractually commit to being climate positive. This will require adopting circular approaches, not only for the operation of the Games, but also for the development of infrastructure, including sourcing and resource management. Why is it important for industry and government to work together to bring this to fruition and how can it really be achieved?

Jodie Bricout

Circular economy principles are underpinned by total systems transformation, intentional design and innovative business models. It's really about shifting society's “take/make/waste” mindset towards a circular “design-out/retain/regenerate” system. This really needs business and policymakers to be working together for it to happen. We can't possibly move towards a circular economy in isolation – collaboration is vital. Andrew’s already talked about some of the ways of doing that. It's also important that we're collaborating so that we're not just building capacity and infrastructure for these two events that are happening in southeast Queensland, but for the whole region, and why not Queensland or Australia completely?

How can this be done? For Brisbane to achieve its climate positive aspirations for the 2032 Games, it's going to need strong circular economy action plans developed with industry that actually shape the way things are procured and whole of infrastructure design with really clear targets, especially around design for legacy. What's going to happen post-Olympics? Everything around material selection, reuse, recycling, and finally waste. Making digital solutions are going to be really important to track the products and materials for future maintenance, reuse and recycling, such as through material banks and material passports linked to digital twins, for example. We hope that will be standard by 2032, but we really need to be designing it in now. That need to bring supply chain along will be absolutely enormous.

Thinking beyond infrastructure for a second, I just got back recently from France and the Paris Olympics have this really impressive program that they're working on at the moment with all their merchandising suppliers. Hundreds of SMEs across France, understanding the environmental impacts of the products that they're actually producing for the Olympics, and the committee and the organisers are upskilling those SMEs in understanding the environmental impacts of their products, making them more circular. That's really going to change the kind of products that they're putting on the market well above and beyond the Olympics there. And I've really liked this idea of working hand in hand with our SMEs and industries to actually shifts the way supply chains look in the future. It's pretty exciting.

Mike Duggan

Thank you, Jodie, those international examples that you've just brought up are brilliant, really kind of brings to life the entire circular economy challenge that we have.

Andrew, coming back to you, what sort of impact can we expect to see on contractual warranty and performance guarantee provisions in projects which promote or require the use of goods and materials sourced from this circular economy?

Andrew McCormack

Well Mike, I think it's probably important to recognise that project owners will still expect performance, making a choice, a positive choice to use/reuse/and or recyclable materials must not diminish the performance outputs that a particular project can achieve.

Having said that, I think that project owners will for various reasons, in the case of the Queensland Government, it will be largely driven by the commitments that they've made which Jodie referred to, but other project owners will be willing to accept price increases in the cost of a project in order to maximise the use of reusable or recyclable materials.

In that sense, it's going to be really important for the market to understand in the procurement documents that are issued, what are the minimum requirements for reused and recyclable materials, and also to understand what weighting will be applied in the bid evaluation phase to proponents who put forward solutions that maximise the use of reused and recyclable materials, because the greater the weighting, the greater the incentive there'll be for the market to respond with solutions that meet those policy objectives.

And in this sense, and it's something that we've explored in earlier podcasts, there's an opportunity for government-led procurements to try and move the dial on this issue and to prime the market so that they respond with an increased use of reusable and recyclable building materials. And a good example in fact came up only very very recently when the PVT or Project Validation Report was issued for the Gabba stadium redevelopment for the 2032 Olympics. And what that report said was, well, the preferred option, of those one of four options that were considered, was to actually demolish and entirely rebuild the Gabba stadium. Now, that doesn't sound like something that fits in well with the circular economy. But it was expressly stated in the report that the intention be to reuse as much as possible of the material from the existing Gabba stadium in the newly delivered Gabba stadium. So be it will be a key part of any bidding proponent to show how they're going to demonstrate recycling in that end and then I expect, as Jodie alluded to, how the materials they are going to use can be then used again themselves in the future.

Jodie Bricout

It's pretty exciting because states across Australia are working on this at different scales. Victoria has got their ‘recycled first’ policy, for example, everyone's sort of dabbling, and doing things slightly different with how they incorporate this into procurement. But the Games gives us such a focal point to really test out contracts at scale and really shift the dial.

Mike Duggan

Jodie, you recently talked to the CEO of ReLondon, Wayne Hubbard, when he was here in Australia. I know you had a great conversation about some of the lessons that were learned from London, particularly as his city hosted those Olympic and Paralympic Games in 2012. Maybe tell us a little bit about those key lessons that you learned?

Jodie Bricout

It was pretty interesting because those Games happened well before circular economy was a big focus. But already the London Games were designing all of the infrastructure that wasn't hard infrastructure to be removable and reusable. So actually, circular economy principles were very important. And also waste management principles. That was the first time that waste management was really considered at scale in the Olympics. Alot happened during that period.

And nowadays, there's a dedicated agency, ReLondon, working to change the behaviour of nine million people who live in London across 600 neighbourhoods at scale, to really implement circular economy. It's this really interesting interface between infrastructure and behaviour. But what Wayne's organisation is doing in a big way is actually financing businesses to provide circular economy solutions. It's quite interesting that link between infrastructure, big business, SMEs, providing interesting, unique solutions and linking into behaviour change and how you and I interact with the goods around us.

A really important aspect of London's progress towards becoming more circular was in 2017, they developed a Circular Economy Route Map. These things build on each other, right? In 2017, London was developing a circular economy roadmap. And during the engagement process for that route map, industry identified that a circular economy statement at planning phase could be a really interesting mechanism by which we just ask systematically all these circular economy questions. And we actually collect data on them. And we understand what's working and what's not.

Zoom forward to now and circular economy statements are part of the planning regime for strategic projects in London. Every project has to ask things like: why the development is needed, what measures are going to be put in place to reduce the impact, things like buildings and material banks, designing in layers, and then once the development is built, they actually have to assess how it went. Did it reach its targets, provide a bill of materials and lessons learned. They're actually already having some projects that are being rejected, that they say, ‘Well, actually, we're not going to let you knock down that building, because we think you can rehabilitate it instead’. But also, they're starting to collect all this data around what works in circular infrastructure as well.

We're starting to see some really interesting insights coming out of London. And it might be a bit controversial but it's interesting to think about would the Gabba have been able to be demolished if it had had to do a circular economy statement, as is the case in London now.

Mike Duggan

And Andrew, obviously with those big strategic projects, there's got to be contracting structures and contractual mechanisms that might help to promote the adoption of the circular systems that are there to support those projects. You want to tell us a little bit about what those could look like?

Andrew McCormack

Well, you might not be surprised by my answer, which is that collaborative contracting structures such as alliances or partnering or other relationship contracts are, by their nature, less adversarial, more collaborative and faster. They in fact encourage people working together. They established collaborative working groups, they have project governance which is accountable for outcomes and they promote information sharing best for project behaviours and really generate a lot more trust than a traditional adversarial contracting structure.

Within those structures, we're likely to see the increased use of KPI mechanisms, which are intended to promote positive behaviour. KPIs (key performance indicator) setting goals and targets for the use of reused or recyclable or both. Materials are both at the front end and in terms of what is done with those materials, when they finish their useful life in that form. These are what I would term ‘the carrot rather than stick’ approaches. They're aimed at incentivising the desired behaviour, rather than mandating that behaviour. Or on the contrary, prohibiting some alternative undesirable behaviour. But I suspect that to get the behavioural shift that we're looking for, it's likely to require a combination of both the carrot and the stick.

And in this regard, it's probably worth noting the potential impact of EPR legislation (Extended Producer Responsibility) in the years ahead. In Australia, this is perhaps better known as product stewardship. That's another way of saying taking responsibility for the lifecycle impacts of products and materials.
In this sphere, the relevant federal legislation is the Recycling and Waste Reduction Act. And the objective of that piece of legislation is to encourage manufacturers of products, importers of products and distributors of products to take responsibility of those products on a whole-of-life basis.

There are three types of regimes, which can be established under this legislation: voluntary, co-regulatory, and mandatory. And let's look at each of those in turn. A voluntary regime involves accrediting certain voluntary arrangements that individual companies agreed to sign up to that further the objectives of the legislation and, in return for doing so, often that company will then be authorised to use a product stewardship logo, which is seen – as many logos and trademarks are – they're seen as being a positive economic benefit to the recipients. And the departments when deciding if someone should get one of these logos looked at the arrangements and really ask yourself three questions. Is this arrangement going to promote a circular economy? Is it going to maximise the continued use of this particular product or material over its lifecycle? And importantly, is it going to reduce harm to the environment and/or to human health? And if they pass those tests, the arrangement can be put in place, and the company gets the benefit of being able to have the products with its stewardship logo.

Slightly different is the co-regulatory approach. This involves having manufacturers, importers, distributors and users of products involved in making the rules and being part of a group that is responsible for then checking in and enforcing those rules as approved by the Minister. So these arrangements again, they must have an outcome that is designed to further the objectives of the act that I talked about before. And a good example of this is the TV and computer industry, where the national television and computer recycling scheme has been set up as a co-regulatory body to manage the use and continued use and reuse of those products.

And the third, and so far, least popular, method is mandatory. As the name suggests, this is where there are rules that require specific persons or industry participants to take specific actions in relation to specific products. And at the moment, the only example of that is the oil industry, which has got a mandatory product stewardship scheme for recycling of used oil.

As we can probably see from that from an industry participants point of view, either a voluntary or co-regulatory approach is likely to be much more attractive, because it offers a degree of control and influence over the requirements that will apply to your industry, and also inputs into the timing and the transition arrangements that will apply as an industry moves into a more circular economy approach.

Mike Duggan

Jodie, one final query, why do we need to shift to a circular economy? I mean, what's the burning platform?

Jodie Bricout

Well, the biggest platform, and I think the biggest challenge facing humanity right now is climate change. We are all in a race to try to get to net zero - Countries, states, cities, companies, we're all trying to get there. But one of the issues is that we can only address 55% of the world's climate emissions through switching to renewable sources of energy. And it's right that that's where most of the focus is. But the problem is the other 45% can only be addressed through shifting how we might transport, use, and dispose of our materials, or ‘stuff’. Wf we don't consider our stuff and materials or shift that we're not going to hit net zero.

You can either be a climate change denier, and, you know, that just means you're not going to be able to access world markets and things like that. Or you do recognise this, and realise that if we don't start hitting that, we're going to hit the point where we will have catastrophic climate change and things are going to change pretty severely. The life we live now is going to be really, really different and uncomfortable in the future.

Wayne Hubbard from ReLondon was fantastic when we were speaking together, and he talks about that. He says, ‘Life is going to change by design or by disaster’. Either we don't hit net zero, it all goes belly up and we are just forced to change. And it was really inspiring, because he says, ‘Well, I pick design every time’. And circular economy is about trying to design our economic system now so that we can avoid this disaster, but also so we can function better. We know we're going to have to adapt to it as well. That's my mantra at the moment: ‘By design rather than disaster’. That's the climate change side of things.

But we also saw, I think COVID was really good for us in understanding better around our supply chains and seeing supply chains be drastically broken from one week to the next. And we're not sure you know, there won't be a linear, nice, neat increase in prices of different materials. But we know that prices are going to go up, they will be available and then not available. How are we going to make sure that we have access to these important materials and products that we need to function as a society? This access to materials issue and even sovereign supply chain is one that I think is really, really significant as well.

That's talking about the ‘sticks’, as Andrew was saying before and burning platforms usually about sticks, right? But there's some important ‘carrots’ as well. Study after study after study shows the economic benefits and jobs benefits that come from circular economy business models and the innovative thinking that goes behind circular economy. And that's really, really exciting for us in Australia, in our capital cities and our regions - tomorrow's employment and job opportunities that we might be seeing through the circular economy lens.

Mike Duggan

Thank you, Jodie, and thank you Andrew, for sharing those insights.

Jodie Bricout

Thanks so much, guys.

Andrew McCormack

Thanks, Mike.

Mike Duggan

It will be interesting to see (now that the legacy plan has been launched and infrastructure planning is further underway) how circular approaches will be embedded in the systems that will support Brisbane 2032 to realise the objective to be the most sustainable games ever delivered, and how the same systems will deliver a lasting legacy for Brisbane, Queensland and Australia for many years to come.

Thank you for listening to Ashurst Business Agenda, and this episode in our 2032 and Beyond mini-series. To listen to previous episodes in this series and to subscribe for future episodes, check out Apple podcasts, Spotify, or wherever you get your podcasts. And while you're there, please feel free to leave us a rating or review. For now. I've been your host, Mike Duggan. Thanks again for listening and goodbye.

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This podcast contains general information and does not constitute legal advice. Ashurst is not a sponsor, licensee or promotional partner of the Brisbane 2032 Olympic and Paralympic Games, the Olympic Movement nor any Olympic body, event, team, or athlete. Nothing in this podcast is intended to suggest any such sponsorship, licence or promotional affiliation.