Why the environment needs an insurance policy

We insure everything, from material goods to the middle finger on the left hand of Keith Richards or David Beckham. These particular individuals know what it is that they need to survive from a career perspective, so why not take a step back and insure the one thing we all need for our survival: the environment.

The World’s population is over 7.3 billion and will reach over 11 billion by 2100. So where will the population get the natural resources that we, in 2016, take for granted?

To bridge this gap and turn the scarcity of resources on its head, we need a new way of thinking.

Consumers are happy to buy and use products but what we pay at the till is not the whole cost of the product. It covers everything to get the product to the shelf but ignores what happens after that, when the used shell ends up in landfills and the oceans. By that point it’s ‘out of sight, out of mind’ – the manufacturer doesn’t care because the sale is done and the consumer doesn’t care because it’s served its purpose.

But consumers are paying a price. Essentially, we are subsidising manufacturers who are not forced to develop better processes to manage their products’ end-of-life and to reduce emissions and reliance on raw materials. In addition, we pay the price indirectly through air pollution, environmental degradation, landfills filling up and serious health impacts.

What we need is an insurance policy for the environment, one which means that those who create the end waste problem, pay for fixing it by factoring the cost into their cost of manufacturing. The benefit of this is that manufacturers are incentivised to make more environmentally-friendly, longer lasting products, built with zero waste in mind and with recyclable packaging. The lower the environmental impact of a product, the less environmental ‘insurance’ the manufacturer will need to pay in the long term.

South Africa is the only country in the world doing this in the tyre industry, with 100% of the industry participating. Since 2013, the environment has been ‘insured’ against the negative impact of waste tyres. At the moment, tyre manufacturers pay a waste management fee, worked out per kilogram of rubber. This fee is spent on cleaning the environment of tyre waste, funding the development of recycling industries, through which small businesses are developed across the supply chain, and carrying out research and development to help tyre manufacturers and importers better design processes. In the long run, we will reach a zero waste target in this industry.

For the first time an entire industry is being held accountable and is taking responsibility for the full environmental impact of its products and, moreover, has a means to mitigate and ultimately eliminate that impact.

Imagine the opportunities if this could happen across all industries. Incentive schemes for manufacturers would encourage design and packing changes that result in no waste. Landfills could be rehabilitated and dangerous plastic particles would not end up in the ocean.