Kirsten Belk: The Circular Economy (Scotland) Bill – impact on Scottish real estate

The Circular Economy (Scotland) Bill was passed by the Scottish Parliament on 26 June. Sustainable production and consumption are essential for net zero and the bill aims to support an economy which minimises waste and emissions through supporting re-use, refurbishment, maintenance and recycling. According to Zero Waste Scotland (a non-profit funded by the Scottish Government), a circular economy will benefit the environment, reduce costs and provide opportunities for businesses, communities and skilled workers by:

• reducing demand for raw materials;
• supporting the expansion of businesses with the provision of maintenance services alongside sale of products;
• improving supply chain resilience; and
• supporting greener industries with skilled jobs.

The idea of the circular economy did not start with the Scottish Government. It has been around for many years and is now gaining traction globally as a means of contributing to the achievement of net zero. Extracting raw materials from the environment can be minimised by an economy which keeps resources in use and saves them from landfill.

With approximately 40 per cent of UK carbon emissions linked to the built environment, circular economy principles have made their way into the Better Buildings Partnership’s Green Lease Toolkit. Their drafting draws on the Chancery Lane Project’s “Sustainable and Circular Economy Principles in Leasing Arrangements for Repairs and Alterations”. By applying circular economy principles to the conduct of landlord or tenant works, waste and emissions can be minimised. Obligations on parties may include:

• re-use of materials and components where possible, whether from the same property or from another site;
• use of materials and components of minimal embodied carbon and which are recyclable or re-usable; and
• use of materials or products produced by recycling or reprocessing.

While occupiers may be directly impacted by the powers introduced within the bill (for instance, to restrict disposal of unsold consumer goods or compel a charge for supply of single use items such as disposable cups), all businesses must take account of the direction of travel. A circular economy strategy will be adopted by the Scottish ministers under the legislation and they may impose targets aimed at developing a sustainable economy. Such targets may include an imposed reduction in consumption of materials and an increase in re-use and recycling.

The potential for engaging these principles within real estate is broad and the provisions within the Green Lease Toolkit (now available in a Scots law version) are a good place to start.

Kirsten Belk is a practice development lawyer at Dentons