The impact of mega events in Brazil

If you’re curious about the evolution of reactions within Brazil to the World Cup, this one’s for you.

My friend Nayana Fernandez who is a journalist at the Latin American Bureau and has written extensively on Brazil, has compiled a list of provocative articles covering the impact of the World Cup on Brazilian society and politics.

Latin American Bureau - indie media reporting on reporting from the viewpoint of the region’s poor and marginalised communities

Latin American Bureau – indie media reporting from the viewpoint of the region’s poor and marginalised communities

Naya’s reading list

Rio on Watch
Yellow Card campaign
Amnesty International
Survival International
Copa Pública (in Portuguese)

Videos:

The Dark Side of Rio’s World Cup by Catalytic Communities and partners
Public Domain by Paêbiru Produções
Aldeia Maracanã by Nayana Fernandez
No I’m not going to the World Cup by Carla Daudén

Articles:

Aldeia Maracanã marks 513 years of Indigenous Evictions in Brazil” by Nayana Fernandez (Mar 19, 2013)

Brazil: Indigenous Community Evicted as 2014’s World Cup Approaches” by Nayana Fernandez (April 2, 2013)

FIFA Beware! Journalist Teams Up with Brazil’s World Cup Victims” by Andrea Dip (May 31, 2013)

Uprising in Brazil: An Extraordinary Moment for Change” by Nayana Fernandez (June 25, 2013)

Why people are protesting against the World Cup” by Marina Amaral (June 26, 2013)

Brazilian football: Rich fans only, please” By Ciro Barros and Giulia Afiune (Aug 27, 2013)

The Never-Ending Eviction: Demolition, protest and police violence in a Rio favela” by Felicity Clarke (Jan 13, 2014)

Brazil: World Cup security locks in repression” by Raul Zibechi (April 8, 2014)

Força Nacional: Brazil’s New Praetorian Guard?” by Ciro Barros (May 2, 2014)

Brazil: Favela pacification at the heart of new violence” by Jordana Timerman (May 6, 2014)

Brazil: Why Is Blackwater helping to train the World Cup security squads?” by Dave Zirin and Jules Boykoff (May 9, 2104)

A Brazilian Street Artist Has Created the World Cup’s First Viral Image by Jeremy Stahl (May 20, 2014)

World Cup 2014: 22 Staggering Images Of Brazil’s Indigenous Tribes Taking On The Riot Police With Bows And Arrows” by Jessica Elgot (May 28, 2014)

Drought fuels World Cup blackouts fear” by Kieran Cooke (May29, 2014)

Beautiful Game – Deep in the Brazilian Jungle, Villages Host Their Own World Cup” by John Lyons (May 30, 2014)

Brazil’s poor stage an alternative World Cup” by Elisabeth Gorman (June 3, 2014)

Check out in London (UK):

Manifest-Action Brazil‘ a photography exhibition about the violations of human rights in Brazil, at the Amnesty International UK in London from 9 June – 14 July 2014 – Launch event June 16 with films screening and round table discussion.

Is the “World Cup of all World Cups” a social powder keg for Brazil?

Image blog“What could’ve been robbed has already been stolen”.

So goes a recent and famous repost by Joana Havelange, an Executive of the Local Organising Committee, about the World Cup and corruption. This more or less sets the tone of the current national mood concerning the World Cup, and Brazilian newspapers are guessing that this neat sound bite might turn into a slogan for the entire event.

As Brazil edges closer to what will be one of the biggest events the country has seen in years, there’s a bubbling sensation akin to a match-box that’s waiting to strike up into one big ball of fire – suddenly and fiercely. #NãoVaiTerCopa, “No World Cup”, has engraved itself into social media sites and can be seen as graffiti on the walls of host cities across Brazil. Instead of eliciting joy and excitement, the World Cup has put Brazil on tenterhooks.

I tend to take taxis when I travel for work around Brazil, and these short trips in the car provide great moments for a relaxed chat with a local. So far, in the six host cities I’ve recently visited, all but one taxi driver out of 20 or so expressed a sense of excitement. Most responses are angry, referring to the event as horrible, corrupt, unnecessary and not a priority.

Stadiums are ivory towers with little connection to their local environment

Across host cities, World Cup stadiums pierce the cityscape like shiny ivory towers, oddly unfitting to the surrounding environment. Whilst in Fortaleza, a taxi took me from the airport into town and we drove straight past the stadium. It was impressive, and so was one of the main avenues that had been completely demolished, now just a river of mud and dirt, months behind schedule. The airport terminal promised for the World Cup was also a mere pile of bricks with some lead sticking out of foundation pillars. “So is that piece of junk going to be delivered as promised after the World Cup?” the taxi driver said as he jerked his thumb at the sort-of-started-but-not-really new airport terminal, “it probably won’t, as the rest of the stuff they promised”.

Some of the most expensive shiny new stadiums have been built in host cities that don’t even have a decent football team like Brasília, Manaus and Cuiabá. Locals wonder who will foot the bill for maintenance costs and if they will ever fill the stadiums again after the event. Built to world-class, expensive FIFA standards, the legacy of the World Cup stadiums remains unclear, given many will be handed over to the private sector, therefore losing the opportunity for public-centred activities within the stadiums. As urbanist and academic Christopher Gaffney points out on his blog:

“of the nine stadiums fully constructed with public money, seven have been handed over to Public Private Partnerships and Manaus and Cuiabá are desperately trying to find elephant trainers. Why doesn’t the government demand that these stadiums have public schools or emergency care centers inside them? Why can´t we make them multi-functional, integrated elements of the social and urban fabrics?”.

protestos-copa

During the opening match of the World Cup, Dilma and Blatter from FIFA were welcomed by voracious booing that filled the stadium. Yet Fans showed with equal vigour their love and support for their national team. That the stadium played host to both booing and support demonstrates Brazilians’ love-hate relationship with the World Cup. The national and international protest against FIFA has reached such as extent that the organisation felt obliged to publish an FAQ that aims to clarify accusations directed at FIFA, which fails to mention important drivers such as the FIFA standards for stadiums, which cater to luxury and result in expensive stadiums.

Brazilians are pissed off and are slowly but surely gaining courage to show it – including on President Dilma’s Twitter page (a great 101 lesson into Brazilian insults and offensive humour, btw). In this new republic that’s still acclimatising to democracy, Brazilians are reclaiming spaces and growing their collective voice, despite facing police brutality.

Forever the “country of the future”?

And the Brazilian people have legitimate reasons too – with São Paulo’s population facing a severe water shortage crisis, 7 million people lacking basic sanitation, less than 20% of all committed infrastructure projects complete, and a government and police force that is getting ready to treat protestors as terrorists, it’s unlikely we’re going to be samba-ing our way to the stadiums. In the face of such issues, a World Cup hardly seems a priority, yet the government continues to invest more in stadiums than public health or education.

The World Cup was an opportunity for the “country of the future” to finally break through the developing ranks, emerge and shine amongst the new world. Brazilians were excited with the long list of promises attached to the World Cup. So whilst this event could have spurred growth, completed much-needed infrastructure projects and provided basic services to a growing middle class, Brazilians feel that they have been let down once again. As a taxi driver in São Paulo told me: “It’s as if we have forever been rowing against the tide, and I’m unsure how long I can go on.”

It’s no longer about the football

With a history of corruption, Brazilians sense they have been robbed yet again. Undelivered commitments and empty promises fuelled the social unrest we saw last year in June. With an upcoming national election in October after 12 years of PT rule (Worker’s Party), this World Cup isn’t about football; it’s more than a sporting event. This World Cup is a politically defining moment for Brazilian power structures and society, and is the Brazilian people’s opportunity to taken on more political driving force.

 

 

 

 

Uma economia cíclica no Brasil?

A economia cíclica apresenta oportunidades de realizar reduções importantes na produção de resíduos sólidos no país. Ao longo do ano passado, eu realizei uma série de pesquisas sobre as oportunidades para a implantação de uma economia cíclica no Brasil. A pesquisa englobou análises das oportunidades criadas e dos enquadramentos legais, econômicas e sociais existentes no Brasil.

Os resultados apresentam quatro oportunidades para uma economia cíclica: a Política Nacional de Resíduos Sólidos, incentivos financeiras, concentração de indústria e logística na região Sudeste do Brasil, e empreendedorismo.

A economia cíclica apresenta soluções estratégicas para umas das questões mais complexas enfrentando o mundo hoje em dia: esgotamento de recursos, produção de lixo na cadeia de valor, aumentos nos preços de recursos e degradação de biodiversidade e ecossistemas. Ou seja: as forças destrutivas do sistema econômica do XXI século.

A visibilidade do conceito da economia cíclica esta aumentando: em 2008, legislação chinesa adotou conceitos da economia cíclica como parte da estratégia de desenvolvimento econômico nacional. Em total, 30 parques eco-industriais foram aprovados para construção, facilitando o intercambio de resíduos sólidos entre fabricas, com aproveitamento de resíduos para matéria prima e extração de energia. De modo similar, a União Europeia anunciou em 2012 um compromisso de se tornar a uma economia cíclica, no programa «Uma Europa eficiente em recursos».

Aumentos nos preços de energia e recursos (veja gráfico abaixo), demonstram claramente a necessidade urgente de mudar para uma economia não-destrutiva, alternativa para o modelo atual, que consome recursos finitos de maneira infinita.

 Screen shot 2012-07-21 at 20.44.54

Baseado no conceito de ecologia industrial, a economia cíclica pretende analisar a indústria de forma integrada, tendo em conta as interaçãos e relações entre a indústria e ecossistemas. A economia cíclica considera tanto a produção como o consumo sustentável no âmbito empresarial e da sociedade. Assim, ela promove desenvolvimento sustentável na medida em que procura reduzir a utilização de materiais primas e energia no ciclo de vida de produtos.

A economia cíclica é uma oportunidade para crescimento econômico, possibilitando o desenvolvimento de uma economia restaurativa que protege o meio ambiente e recursos naturais. Isto pode ser conseguido por meio de uma ampla gama de estratégias, incluindo os fluxos de circuito fechado de materiais, fabricando produtos em ramo de Design para Refabricação e Design para Desmontagem, aplicando a certificação Cradle to Cradle, e montando logística reversa para evitar que os resíduos sejam depositados em aterros e, como alternativa, utilizando os resíduos sólidos como matéria prima em novas cadeias de produção.

Imaginando a economia cíclica no Brasil: 4 possibilidades

1. Politica Nacional de Resíduos Sólidos

Depois de 20 anos, o governo brasileiro introduziu Política Nacional de Resíduos Sólidos (PNRS). A política tem foco em seis tipos de resíduos perigosos, tendo como objetivo a redução de produção de resíduos e a melhoria de sustentabilidade na gestão de resíduos sólidos urbanos.
As características fundamentais da política a torna uma plataforma viável para a construção de uma economia circular:

– introdução da hierarquia dos resíduos, que determina as prioridades de pós-consumo, gestão de resíduos, salientando a necessidade de prevenção e redução, o que tem implicações sobre design de produto

– assegurando o princípio do poluidor-pagador, os produtores são obrigados a pagar para a gestão de resíduos sólidos

– dando prioridade ao desenvolvimento da logística reversa e cadeias de abastecimento, a fim de desviar os resíduos dos aterros sanitários e lixões e retornar em fim de vida de produtos para o produtor

Com respeito a esta última questão, a logística reversa facilita sobre tudo o desenvolvimento de sistemas de produção industriais em ciclos fechados. A PNRS exige que os produtores em um determinado sector trabalhem em parceria para construir a logística reversa. Isso promove uma maior colaboração, o compartilhamento de informação e comunicação entre os jogadores-chave. Portanto, existem grandes barreiras institucionais, físicas e econômicos envolvidos no desenvolvimento de logística reversa. Por exemplo, enquanto o Brasil tem a quarta maior rede de estradas em todo o mundo, apenas 13% do que é pavimentada, que define os desafios para o desenvolvimento de rodoviário de cargas para a logística reversa (CIA World Factbook).

No entanto, no desenvolvimento da logística reversa, as indústrias brasileiras poderiam preparar se para estratégias cíclicas de design, fabricação e reuso de resíduos sólidos como matéria prima.

2. Fundos económicos

Várias fontes de financiamento existem para incentivar a produção sustentável​​:

– Fundo Nacional para Mudanças Climáticas – apoie projetos que desenvolvam a logística reversa
– FINEP Brasil Sustentável investe em projetos que promovem a produção sustentável e inovação em tecnologia
– BNDES Funtec investe em inovação sustentável em tecnologia

Os três fundos citados fazem parte de programas nacionais que fornecem investimento para dar apoio a negócios sustentáveis, tecnologia e serviços em superar as barreiras de mercado. Brasil Sustentável, por exemplo, tem acesso a US$987 milhões em financiamento, que se destina ao desenvolvimento de produtos sustentáveis​​, tecnologias e inovação. 75% sera destinado a projetos que incentivam inovação nas empresas e 25% para subsídios no desenvolvimento de novas tecnologias em áreas prioritárias que têm relevância para a economia circular.

Além disso, o governo brasileiro lançou recentemente o Plano de Ação para Produção e Consumo Sustentáveis. O Plano define objectivos e metas de sustentabilidade para seis setores chaves que visam à transição para uma sociedade brasileira mais sustentável. Este plano constitui o quadro regulamentar necessário para crescimento no mercado de bens e serviços sustentáveis.

Uma das maiores barreiras é à demanda do mercado por produtos sustentáveis​​: atualmente apenas 5% dos consumidores brasileiros se consideram “consumidores conscientes” (Instituto Akatu). Isso impede a inovação e os esforços de sustentabilidade, como o retorno do investimento para os produtos sustentáveis ​​continua sendo baixa. Outros desafios incluem o “Custo Brasil”, e processos burocráticos que agem como barreiras à entrada no mercado.

3. Região Sudeste

A região Sudeste oferece fatores favoráveis ​​para uma economia cíclica, sendo que:
– a maioria da atividade industrial no Brasil está concentrada nas regiões da cidade de São Paulo e Rio de Janeiro, que entre eles contribuem em média 25% do PIB do Brasil anualmente

– a maioria dos resíduos são produzidos no Sudeste, impulsionada pelas cidades de São Paulo e Rio de Janeiro

– parques eco-industriais estão florescendo no estado do Rio de Janeiro, originalmente criado por uma iniciativa do governo e agora liderado pelo sector privado

– a melhor infra-estrutura rodoviária encontra-se no Sudeste, facilitando o desenvolvimento da logística reversa a um custo mas favorável
– a maior parte do financiamento do BNDES mencionado no ponto 2 acima foi para empresas sediadas na região Sudeste do Brasil

4. Empreendedorismo

Finalmente, empreendedores têm uma oportunidade de fazer crescer nichos de mercado na concepção e produção de produtos sustentáveis​​, dada a sua capacidade de inovar em produtos, exemplificado pelas empresas TerraCycle, NovoCiclo e EPEA Brasil. Esses atores tiram benefícios do fato de não estarem “trancados” em processos de fabricação de alto produção de carbono. A Lei Nacional de Resíduos Sólidos oferece a oportunidade de gerar novas oportunidades no mercado, com apoio de financiamento oferecido pela FINEP e BNDES para empresários e a PME, o que reduz as barreiras à entrada.

O governo brasileiro não tem desenvolvido o melhor ambiente operacional para start-ups e empresários, mas a boa notícia é que a mudança é iminente: no mês passado, o governo anunciou que investimento de R $ 200.000 para cada um dos 100 start-ups selecionados por demonstrarem o maior potencial de crescimento e oportunidades para expansão.

Tomados em conjunto, os quatros pontos citados representam uma rede de oportunidades para um novo sistema econômico, modelos de negócios e de consumo que ajudará o Brasil a se desenvolver em uma sociedade sustentável e resiliente.

Fontes complementares

Fundo Nacional sobre Mudança do Clima

FINEP Brasil Sustentavel

BNDES Fundo Tecnológico (BNDES Funtec)

Plano de Ação para Produção e Consumo Sustentáveis (PPCS)

Competitiveness and growth in Brazilian cities: local policies and actions for innovation

bRIC with a small b Part II: 4 opportunities for a circular economy in Brazil

In this blog post I argue that there are key intervention points within the Brazilian economic, social and legal structures that open up opportunities for a circular economy. It is intended as a follow-up from my last blog post, which discussed key trends that point to the need for Brazil to embrace a more sustainable economic model.

Why the circular economy: an opportunity for restoration

I am currently reading Paul Hawken’s The Ecology of Commerce, which outlines the destructive effects of our global linear economy. A fact I read this morning during my commute put our urgent situation into perspective:

Our human economy utilizes, consumes, converts, […] and burns annually more than 40% of the total net primary production* of the planet. […] Our species, out of 5-30 million species, is directly and indirectly claiming 40% of the earth’s production for itself. If, as predicted, population grows to 9 billion, we will usurp 60% of the primary production of the planet. […] We will quadruple our impact, a physical impossibility.

(*Net primary primary production of the planet = defined as the sum of all photosynthetic production minus the energy required to maintain and support those plants.)

The economic activity described above is currently being driven largely by Western consumption and demand for goods. As Brazil, and other emerging and developing countries, move towards high levels of income and consumption, this will compound the destructive effect illustrated by Paul Hawken.

With the EU and China taking positive steps towards such a transition, the circular economy has been gaining attention from business, government and society.

The circular economy is an opportunity for growth, enabling the development of a restorative economy that protects the environment and natural resources. This can be achieved through a broad range of strategies, including closed-loop material flows, replacing end-of-life waste disposal with repair, design theories such as Design for Remanufacture and Design for Disassembly, and Cradle-to-Cradle production and Industrial Ecology (see image below).

Kretslopp eng 09 2009 300ppi

How industrial ecology works: a schematic diagram

These strategies lie in stark opposition to those practiced by our ‘take-make-waste’ economic and industrial systems. This structure depends on linear modes of production, namely: extracting resources, manufacturing goods, transportation, sale, use, disposal. Whilst we have enjoyed a boom in trade, economic prosperity (not for all) and mass production since the Industrial Revolution, this has been at the expense of ecosystems, cheap labour, abundant resources and energy. As the price for energy and resources rise (see graph below), there is an urgent need for a non-destructive, restorative economic as an alternative to our ‘take-make-waste’ model, and current trends in Brazil give rise to the opportunity for a more circular economy.

Screen shot 2012-07-21 at 20.44.54

A warning sign? Price hikes for key commodities in the past 12 years have offset a cumulative decline in resource prices over 100 years.

Key intervention points Brazil can leverage in order to restructure for a more circular economy 

1. National Policy on Solid Waste 

After much dithering (approximately 20 years) the Brazilian government introduced the country’s first national law on solid waste, the Política Nacional de Resíduos Sólidos. The policy focuses on six hazardous waste types, including e-waste and aims to decrease the production of waste and improve the sustainability of municipal solid waste management. 

Key features of the policy render it a viable platform from which to build a circular economy:

  • the policy introduces the waste hierarchy that determines priorities for post-consumer waste management, stressing the need for prevention and reduction, which has implications on product design
  • polluter pays principle is upheld, as producers are obliged to pay for waste management
  • reverse logistics and supply chains are to be developed, in order to divert waste from landfill and dumps and return end-of-life products to the producer

It is this last point concerning reverse logistics, in particular, that is of importance. Reverse logistics help transition an economy from a ‘take-make-waste’ model to one which operates based on closed-loop models of production, where waste is reused as an input. This Brazilian law requires producers within a given industry to work together to build reverse supply chains, which fosters greater collaboration, information sharing and communication between key players. Of course, there are large institutional, physical and economic barriers involved in developing reverse logistics. For example, whilst Brazil has the fourth largest road network in the world, only 13% of it is paved, which sets challenges for the development of road cargo for reverse logistics (CIA World Factbook).

Nevertheless, in developing reverse supply chains, Brazilian industries could be setting themselves up for circular modes of design, production and reuse.

2. Policies and financial mechanisms

Several funding sources and policies exist that incentivise the production of sustainable goods:

  • National Fund for Climate Change – Climate Fund Fundo Nacional sobre Mudança Climatica – Fundo Clima will soon support projects that develop reverse logistics
  • FINEP’s (Projects Financing Institution) Brasil Sustentável invests in projects that promote sustainable production and innovation in technology
  • BNDES (Brazilian National Bank for Sustainable Development) Funtec invests in sustainable innovation in technology
  • National Action Plan for Sustainable Production and Consumption Plano de Ação para Produção e Consumo Sustentáveis

The three funds above are national programmes that provide investment to help sustainable business, technology and services overcome market barriers. Brasil Sustentável, for example, has access to US$ 987 million in funding that is intended for the development of sustainable products, technologies and innovation. 75% will go towards projects that enhance company innovation and the remaining 25% will subsidise the development of new technologies in priority areas that hold relevance to the Circular Economy.

Furthermore, the Brazilian government recently launched the National Action Plan for Sustainable Production and Consumption, which I have written about here. In brief, the Plan sets out sustainability  objectives and targets for six key sectors (see table below) that are aimed at transitioning Brazil towards a more sustainable society. This Plan provides a necessary regulatory framework from which to grow the market for sustainable goods and services.

Screen shot 2013-03-23 at 04.55.45

Priority sustainable development areas for the Brazilian National Action Plan for Sustainable Production and Consumption

One of the biggest barriers concerns the market demand for sustainable goods: currently only 5% of Brazilian consumers consider themselves as ‘conscious consumers’ (Instituto Akatu). This stifles innovation and sustainability efforts, as the return of investment for sustainable products remains very low. Other challenges include high running costs in Brazil, known as custo Brazil, and bureaucratic processes that act as barriers to market entry.

3. São Paulo & Rio de Janeiro: a South East city-region opportunity 

Brazil is typically divided into five regions, which group together several states. The South Eastern region is made up of four states, including some of Brazil’s most competitive and tech-savvy cities: São Paulo, Rio de Janeiro, and Curitiba (The World Bank, 2010).

The South Eastern and Southern regions of Brazil provide the biggest enabling factors for a circular economy, given:

  • Most of Brazil’s industrial activity is concentrated in the city regions of São Paulo and Rio de Janeiro, which between them contribute on average 25% to Brazil’s GDP annually
  • The largest amount of waste is produced in the South East, most driven by São Paulo and Rio de Janeiro cities
  • Eco-Industrial Parks are flourishing in the state of Rio de Janeiro, originally set up by a government initiative and now private sector led
  • The best road infrastructure lies within the South East, facilitating the development of reverse logistics at lower cost
  • The majority of the BNDES funding mentioned in point 2 above went to companies based in this South Eastern region of Brazil

4. Entrepreneurs & SMEs in the driving seat

Finally, entrepreneurs and SMEs have a real opportunity to grow niche markets and lead the way in the design and production of sustainable goods, given their ability to innovate around products, as exemplified by TerraCycle, NovoCiclo and EPEA Brasil. These actors benefit from not being locked-in into resource and energy intensive production and processes. The National Law on Solid Waste offers the opportunity to generate new market opportunities, supported by sustainable finance offered by FINEP and BNDES that support entrepreneurs and SMEs, which lowers the barriers to entry.

Admittedly, the Brazilian government hasn’t developed the best operating environment for start-ups and entrepreneurs, but the good news is that change is imminent: last month the government announced it would invest R$200,000 for each of 100 selected start-ups that demonstrate the most potential for growth and opportunities for scaling up.

The verdict

There are certainly opportunities that can be leveraged to transition Brazil to a circular economy. The above four points lower the ‘barriers to entry’ for such a transition to occur. I have also attempted to (very) briefly outlined some of the key challenges involved in this process, one of which remains political will. With a track record of influential government leadership and the use legislative solutions, political will and backing is required for any economic transition to take place in Brazil (without it many initiatives fail to be successful). The above points remain context specific in isolation, however, when taken in aggregate, they represent a network of opportunities for a new economic system, business and consumption models that will help Brazil develop into a sustainable, resilient society.

Resources

National Fund for Climate ChangeFundo Nacional sobre Mudanca Climatica

FINEP’s Brasil Sustentável (Projects Financing Institution)

BNDES Funtec (Brazilian National Bank for Sustainable Development)

National Action Plan for Sustainable Production and Consumption Plano de Ação para Produção e Consumo Sustentáveis

Competitiveness and growth in Brazilian cities: local policies and action for innovation

bRIC With a Small ‘b’: Rethinking Business Models for the Emerging Middle Class

Screen shot 2013-01-01 at 08.03.36

Go home Michael, the party’s been cancelled.

Whilst Brazil’s economy boomed up to 2010, it has dramatically slowed. There’s a need for a new economic growth model.

In 2012 Brazil overtook the UK as the world’s 6th largest economy, moving closer to meeting the expectations set by the novelist Stefan Zweig in 1942, when he said that “Brazil is the country of the future”.

Unfortunately it seems that Brazil has slipped back a few paces, as the UK economy resumes its place in world rankings ahead of the South American nation, much to the dismay of a proud, nationalist country that likes to celebrate occasions: “We have to go back to being the ‘country of the future’ “, says Marcos Troyjo, director of the BRICLab at Columbia University in his guest blog for the FT.

A model driven by consumption

The love for celebration is strongly expressed in a very consumerist society. Brazil’s GDP grew by 8% in 2010, its fastest growth rate in over 25 years (Euromonitor International, 2012), reducing unemployment and boosting household disposable income (Accenture, 2011). Yet GDP growth has been volatile, dropping to 2% in 2012 , and is expected to remain under 2% until 2013.

Economists attribute the past growth in the Brazilian economy mainly to:

i) policies and a culture that favours consumption,

ii) easy access to personal credit,

iii) income distribution methods.

The combination of the above has resulted in a consumption boom. According to the marketing research agency Euromonitor, Brazilian consumers rank top four in almost all product categories. They are also marked by vanity, as an Accenture study revealed that

“72% of 8000 consumers [interviewed] that the electronics brand they own is important to be perceived as most innovative.”

Rising domestic consumption has been the main driver in lifting Brazil into the ranks of a middle class economy, which now makes up 60% of the population.

This shift was spurred on by social and economic policies targeting social inequality from Lula’s government that helped 30 million people move up from the lowest socio-economic bands between 2003 and 2010.

The Family Grant (Bolsa Família) and growth in the minimum wage are key policies that have increased Brazilian consumer spending power. In addition, increase in credit access and rising incomes boosted domestic consumption, increasing consumer confidence and spending.

But is this growth model also limited by consumption? 

But now, in 2013, it seems that the boom as been cancelled – at least until 2015 (the World Cup and Olympics are sure to give a helping hand, however temporary and despite Michael Palin’s visit).

As an emerging economy struggling to develop a stable, strong economy, it seems that the

“the old consumption-led model of development is now less likely to deliver impressive rates of growth that it has done in the past.”

Neil Shearing, Capital Economics

The rise in consumption has not been paralleled by a rise in productivity. During the same period, productivity increased 4% in China, whilst it grew by a mere 0.2% in Brazil.

And what’s more, the socio-economic benefits from the emerging middle class are questionable. Yes, 30 million people have been lifted out of poverty, but they are now heavily in debt, and inequality hasn’t decreased. Easy access to credit and a culture that encourages consumption has led to a ‘consumerisation’ of Brazilians. Debt has surged to represent 43% of a family’s income, limiting the economic sovereignty of Brazilians, and has developed a culture of material ownership that mirrors the USA.

I have had conversations with many Brazilians who would prefer to be stuck in a traffic jam for 2 hours than take the public transport, as they value the status gained from driving and owning a car. Almost all big-ticket items are paid for in 12, 24 and even 36 instalments over several years, often pulling families deeper into debt. The need to own is strong.

How fair is to to bring people into the middle class status when this burdens them with debt and is dependent on their consumption, therefore fuelling more debt? Additionally, lack of investment in public education has resulted in an elitist education system, benefiting those who can pay and locking those into poverty who can’t.

An ill-fitting business model

Screen shot 2012-12-31 at 22.00.26It would seem then that a consumer-dependent model was ill-fitting for this huge emerging middle class. A conversation I had with Alexandre Fernandes, Founder of EPEA Brasil, challenged conventional consumer business models: what if one could meet the needs of the emerging middle class by supplying products through a different ownership model?

He mentioned that Brazilians, once they can afford it, opt to buy a washing machine or dish washer, as this “frees up manual labour and time for leisure”. Yet there are long-term consequences when 30 million people buy and own a new washing machine. In a consumer society based on ownership, questions regarding the end-of-life are left unanswered, especially in a country like Brazil where over 80% of collected rubbish goes to landfill and less than 1% of all electronic waste is recycled (roughly 10,000 tonnes a year is collected for recycling).

As a result, electronic waste is landfilled and increases the risk of pollution, people are held ransom to consumption, resources are used inefficiently and, ultimately, middle class prosperity is falsely upheld.

We already know that UK and US lifestyles require the equivalent of three planets to support their needs, and that the planet’s resources are currently being overused by  25% (most management consultancies would cringe at this level of inefficiency in a business) and a consumption economy will further exacerbate these stresses. Is this really the dream, the lifestyle we want to ‘export’ to emerging economies?

Rethinking ownership: performance, quality and equality

So, let’s take a look at different model, one based on performance rather than ownership. Instead of 30 million people buying a washing machine, they buy into a service contract with a company, who owns the washing machine and retains customer loyalty through enhanced customer service and replacement. Competition is therefore not only led by cost, but also by customer service, performance and quality.

Companies retain ownership over resources, bringing down the need to exploit virgin resources, decreasing the rise in resources cost and limiting environmental damage by minimising waste. This type of business model requires reverse supply chains and generates new jobs in logistics, remanufacture, repair and distribution. Concerning job potential for reverse supply chains,

“Microsoft found that computer reuse creates 296 jobs for every 10,000 tons of material disposed of each year”

– United Nations Industrial Development Organisation, 2009

In comparison, incineration creates merely 20-40 jobs for 10,000 tonnes of material, whilst landfill a meagre total of 10 jobs (Huisman, Magalini et al. 2007).

The ownership model is steadily establishing itself, with classic and quality examples including Interface, Desso, Caterpillar, Spotify and Ricoh.

Consumption of electronics has risen rapidly in Brazil and is highest in the world as as a proportion of GDP. Globally, Brazil is the world’s fifth largest producer of computers (Oliveira et al., 2012) and the Brazilian industry electronics association ABINEE has estimated that in 10 years Brazil will be second globally in terms of purchase figures. There is a real opportunity to provide these goods in a way that lessens the burden on resources, waste and energy and that promotes economic activity.

As it happens, Brazil isn’t very good at promoting innovation. It tends to focus on innovating new processes within existing businesses, rather than innovating new goods. In fact, the most common form of innovation is copying ideas from the West, but adding a Brazilian flavour to it. What’s more, it is notoriously difficult and costly to set up a business, which doesn’t attract entrepreneurs and locks existing businesses into heavily bureaucratic structures.

Going forwards: the $200 billion opportunity

Screen shot 2013-01-01 at 08.36.55Brazil has the opportunity to tackle its economic slump and structural problems, known as Custo Brasil, by implementing policies that encourage business models based on performance, and improving environmental and social standards.

The opportunity within Brazil is huge, as the Carbon Trust recently issued a report that the Brazilian low carbon economy is worth $200 billion.

The question is whether Brazil can restructure its economy, and what key intervention points it can leverage to do so, which I’ll be taking a look at in my next blog post.

Beyond responsibility 2.0 – insights from Brazil

I recently saw Tom Burke speak at an alumni event at Imperial College London. He focussed on the politics of climate change and how we need to move discussions beyond responsibility to get the positive collaboration we so need. A recent report has highlighted how the global economy is most likely going to miss the 2ºC target in global warming; instead at the current economic trajectory we’re likely to see global warming increase by 6ºC. Tom’s call to action thus comes at a crucial moment.

Yet sustainability and environmental issues are notoriously complex, involve lots of different actors and statements like “the system’s at fault!”, “consumers need to change their behaviour!” and “large corporations are w**kers they should be paying for all this!” are not so uncommon when it comes to discussing solutions.

Regarding e-waste generation, the biggest conundrum remains: “whose responsibility is it anyway?!” The issue of waste disposal is a complex one that poses challenges to policy makers. Let’s take a closer look.

There are two key steps between when an electronic good fails and when it enters end-of-life processing. End-of-life processes are those that treat e-waste appropriately, so dismantling it, separating different components, reusing and recycling it accordingly.

These two steps are

  1. storage
  2. disposal

Storage

Storage influences the amount of electronic products entering the waste stream before they can be appropriately treated. Nokia published survey results on on the end-of-life of mobile phones, which revealed the difficulty in collecting phones as nearly 50% were kept in home drawers, and merely 5% were collected for recycling. This delay caused by storage makes collection for recycling difficult, and minimises opportunities to substitute virgin materials through recycling.

Disposal

Once an item is thrown away, it should hopefully enter the recycling system. The recycling system is made up the following processes and the effectiveness of recycling is determined the weakest link. Often, the weakest link is the disposal of e-goods, which is closely tied to our behaviour.  

For your visual aid, I’ve helpfully circled the weakest link.

However, not all electronics end up being disposed this way. Recycling electronics is a  costly activity in developed countries, and drives the illegal exportation of e-waste to countries like India, Pakistan and China, as this is the cheaper option. In fact, over 80% of the world’s e-waste is either dumped, landfilled or illegally shipped to developing countries where it is dismantled.

Therefore, correct disposal is one of the most important factors that determines high recycling rates. 

Where illegal e-waste ends up – remember e-waste is mostly produced by rich countries!

Considering responsibility

So why are appropriate disposal rates not higher? If disposal is down to the consumer, should consumers be fully responsible? Is it fair to make them pay? What about the role of manufacturers and retailers?

I argue that consumers are not entirely at fault. The lack of strong incentives, an easy disposal system and low awareness are the main drivers for low collection. Our behaviour is shaped and limited by the systems that surround us, which determine whether safe and appropriate disposal of mobile phones is easy or not.

Beyond responsibility 2.0 – insights from Brazil

So how to tackle this phenomenon? Ideally, we want a solution that makes returning defunct and undesired electronics easy and cheap.

The EU Waste Electrical and Electronic Equipment Directive (WEEE) is a flagship policy that holds producers responsible for the collection e-waste. The systems put in place for this to happen can take many shapes and form, from collection points to buy-back schemes, the opportunities for returning e-waste are improving. What’s more, the need to divert e-waste from landfill is giving rise to business opportunities as companies like Mazuma and Envirofone deliver services to individual consumers and entire organisations. 

But ultimately consumers will also need to raise the bar and play the role of active environmentally-responsible citizens. We bear a social responsibility, we also need to bear an environmental responsibility.

Innovatively, Brazil has made all stakeholders along the lifecycle of electronic goods responsible for ensuring that they are appropriately returned to the manufacturer. From the consumer, to the retailer, the distributor and manufacturer, by law all of these stakeholders are required to ensure that e-waste enters the recycling system and is diverted from landfill. The National Solid Waste Law is the first to hold all actors accountable, and is a huge step towards environmental citizenship and solving sustainability through holistic means.

Furthermore, Brazil has also introduced a national programme to driver greater environmental citizenship. The Plano Nacional para Produção e Consumo Sustentável brings together the public, private and civil society sectors in a national effort to increase environmental awareness and responsibility. The effects of these policies remain to be seen, but one thing is clear: Brazil has moved towards a more holistic definition of responsibility and is making efforts to mobilise all affected parties in an effort to advance to more sustainable behaviour and technologies. 

In this Digital Era, we’re all affected by e-waste and need to pull our weight (or more, like this ant with a microchip!).