Insurance Industry’s Contribution to Empowering ASEAN for Circular Economy
The ASEAN conducted a virtual multi-stakeholder policy dialogue on Empowering ASEAN for Circular Economy, together with the heads and/or their representatives of Relevant Regional Organizations, on 17 June 2022. The purpose of this dialogue is to introduce ASEAN’s Work Programme to support the implementation of the Framework for Circular Economy for the ASEAN Economic Community (AEC). The Framework was adopted during the 20th AEC Council Meeting on 18 October 2022, with the aim “to guide ASEAN in achieving its long-term goals of a resilient economy, resource efficiency, and sustainable and inclusive growth.” (ASEAN, 21 October 2021)
ASEAN is guided by the following Five Strategic Priorities (SP) in its transition toward a circular economy:
- Standard harmonization and mutual recognition of circular products and services
- Ensure trade openness and trade facilitation in circular goods and services
- Enhanced role of innovation, digitalization, and emerging/green technologies
- Sustainable finance and innovative investments
- Efficient use of energy and other resources
During the Dialogue, the Strategic Priority 4 (SP4) was discussed by Dr. Cholifihani of Bappenas. He presented insurance, as one of the innovations in funding, to achieve the short-term goals for the year 2025. He proposed for the involvement of the insurance companies that will support and speed up the implementation of Circular Economy in Agriculture, Energy, and Transportation sectors.
AIC Agricultural Insurance Working Group (AIC AIWG) under the ASEAN Natural Disaster Research and Works Sharing (ANDREWS) has compiled a report on Agricultural Insurance in ASEAN (unpublished). Thailand’s Rice Insurance Top Up Scheme from the year 2011 to 2021 has served as a model for other ASEAN member states. The article, “What can ASEAN learn from Thailand’s Agriculture Insurance?” may be accessed at: https://aseaninsurancecouncil.org/magazine-insight/
In relation to the Energy Sector, the AIC’s ASEAN Reinsurance Working Group (ARWG) is undertaking an ASEAN Green Energy Facility/Pool Initiative, spearheaded by Malaysian Re. This is a way by which reinsurers and insurers may invest in renewable resources, and show their support to ASEAN Plan of Action for Energy Cooperation (APAEC), which aims to increase the component of renewable energy to 23% by 2025.
What is Circular Economy?
In 2015, the European Parliament defines Circular Economy as “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.” (News European Parliament, 2 December 2015)
On the ASEAN Center for Energy website, it is defined as “the restructuring of the conventional linear and extractive economy into a closed-loop recycling process that regenerates natural systems and designs out waste and its harmful by-products. This concept aims to balance the complex interrelationship between the three pillars of sustainability, namely economic growth, environmental sustainability and social welfare.”
ASEAN, 21 October 2021, ASEAN adopts framework for Circular Economy, accessed at: https://asean.org/asean-adopts-framework-for-circular-economy/ on 17 June 2022.
ASEAN Center for Energy, 10 November 2021, Finding the Right Path for ASEAN Toward Circular Economy, By Veren Yoshevania Sattvadharma, Syahira Narizta Syahputri and Dynta Trishana Munardy, accessed at: https://aseanenergy.org/finding-the-right-path-for-asean-toward-circular-economy/ accessed on 20 June 2022.
News European Parliament, 02 December 2015, Circular economy: definition, importance and benefits, accessed at: https://www.europarl.europa.eu/news/en/headlines/economy/20151201STO05603/circular-economy-definition-importance-and-benefits, accessed on 21 June 2022.