By Professor Dato Dr Ahmad Ibrahim
We’ve been treating the planet like a shopping mall instead of a home. We walk in, grab what we need off the shelves—materials, water, energy—and toss the packaging in a trash can that we’ve politely labeled “Away.” For the past decade, the corporate world has tried to absolve its sins with a magic wand called ESG. Companies publish glossy reports, plant a few trees, and congratulate themselves for reducing their carbon intensity while still producing the same disposable crap. But here is the hard truth: ESG without the circular economy is just sophisticated greenwashing.
If we are serious about the next decade, we need to stop talking about “sustainability” as a compliance box and start talking about loop as a business model. Here are the three major fractures in the current system—and how we might actually weld them shut.
Right now, most ESG strategies rely on a fairy tale. A product labeled “recyclable” is treated as a virtue. But in reality, downcycling is not a loop; it’s a death spiral. A plastic bottle becomes a park bench. A park bench becomes a speed bump. A speed bump becomes landfill. Eventually, entropy wins.
The major challenge is economic disincentive. Virgin plastic is cheaper than recycled plastic. Virgin steel is subsidized. The infrastructure for “waste” is a relic of the 1950s—designed to hide garbage, not to mine it. Until the price of raw materials reflects their true ecological cost, companies will keep using ESG scores as a shield while their logistics teams buy the cheapest virgin feedstock available.
We overcome this with a brutal economic lever: Extended Producer Responsibility (EPR) with teeth. Stop asking consumers to wash their yogurt cups. Force the brands that made the mess to pay for the clean-up—and the design change. If a car company has to pay the cost of dismantling its battery at the end of its life, it will suddenly become a genius at modular design. If a fast-fashion retailer has to finance textile-to-textile recycling, they will stop sewing zippers onto polyester blends. The loop doesn’t close with guilt; it closes with liability.
We have become obsessed with Scope 1, 2, and 3 emissions to the exclusion of materials. The current ESG paradigm is carbon-centric. A lithium mine in the DRC is fine for your ESG rating as long as you buy offsets. A shipping container of non-recyclable e-waste is ignored because the carbon accounting looks clean.
We cannot manage what we cannot measure. The EU is leading here, but the rest of the world needs to catch up. Every screw, every solvent, every rare earth magnet needs a digital passport that records its composition and repairability. When an investor looks at an ESG rating, they shouldn’t just see carbon per dollar. They should see virgin material intensity and recovery rate. We need to shift the metric from “net zero” to “gross utility.” A product is not an asset; it is a temporary loan from the planet. Pay back the principal, not just the interest.
The business community loves growth, and the circular economy—repair, reuse, remanufacturing—historically looks like slowing down. The psychological challenge is the business model mismatch. Most public companies are optimized for volume, not durability. ESG reporting currently rewards incremental efficiency (5% less plastic) but rarely rewards structural transformation (selling a service instead of a product).
The only way is to make the manufacturer own the product forever. Shift from “buyer owns” to “maker leases.” Philips sells “light as a service” to airports—they keep the bulbs, so they make them last. Michelin sells tires by the kilometer. When the producer retains the asset, waste becomes a line-item loss. We need regulation that favors product-as-a-service in government procurement. If the government only buys “repairable and upgradable” electronics, the market will follow.
The circular economy is not a niche environmental trend. It is the only logistics system compatible with a finite planet. And ESG—if it is to have any credibility—must become a stress test of material intelligence. The major challenge isn’t technology. The chemical recyclers exist. The modular phone exists. The repair-shop network exists. The challenge is courage. We have built a global economy on the assumption that next year’s growth requires last year’s landfill. It does not.
We can overcome this by doing three things by 2030. First, ban the export of waste. Every country handles its own mess. Next, tax virgin materials with a rising floor price. Stop asking, “Is this recyclable?” Start asking, “Is this necessary?” The earth doesn’t care about your ESG rating. It only cares about the loop. Close it.
The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya.
About The Author
