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IF ESG POLICIES ONLY RELY ON THE INVISIBLE HAND OF THE MARKET, WE WILL NOT GET FAR AHEAD

15 November 2022


Prof. D. Sc. Dimitar Kanev, VFU "Chernorizets Hrabar", in "Tech 21: Circular Economy", 14.11.2022, Bloomberg TV

We know what the environmental problems are, we have the solutions, but these solutions must become more systemic, more comprehensive and we must oblige businesses, households and society as a whole to adhere to these policies - it should even become a value, not a product on a cost-benefit basis. Prof. D. Sc. Dimitar Kanev, VFU "Chernorizets Hrabar”, commented on this issue within the framework of the "Tech 21: Circular Economy" forum.

When asked why the transition to a circular economy is needed, the guest said that there is no problem with the functioning of the economy as a system. "Our resources have always been limited; waste has always been an economic evil. Now this is intensifying and the natural reaction is that the prices of resources increase and any sensible business will move to use less limited resources, more renewable resources, will take care for the recycling of waste, and this is the essence of the circular economy, and we are forced by the invisible hand of the market to go towards it ".

"If we only rely on the invisible hand of the market, we will not get very far, because we have at least three problems. The first is the fact that many of the resources are undervalued or even free and that is from the limited resources. Here we have a solution - subsidies, taxes, standards and prohibitions".
The second is that if we want to have a result, we should not only look at individual action, but we should insist on collective action, stressed the professor. "If others pollute and I don't do it, nature won't be cleaned up. That won't solve the problem. If others don't pollute and I do, it won't create a problem. That's why a standard is needed and government intervention is needed. We are already moving in this direction".

"We need to change consumer behavior. The problem is that people are irrational. But we can take advantage of this irrationality. That means we can manage it. For example, if only there are colorful containers for separate collection of waste, it increases collection by 34%. We don't pay attention to what we don't see."
We know the environmental problems, we have the solutions, but these solutions must become more systemic, more comprehensive and we must oblige businesses, households and society as a whole to adhere to this policy, even make it a value, not a product of "cost-benefit" account, Kanev explained. "It's a long-term process, but steps need to be taken today, in a smart way."

"It's not smart to pay for full landfills, but for empty ones. It's not smart to pay for full hospitals, but for empty ones. It's not smart to give money for education through institutions, but it's good for students if businesses give money for education. It's not smart to make electric cars and still produce electricity using coal. In effect, that means cars run on coal. It's not smart to leave the government unattended, and I'm not even talking about corruption here. When you let someone spend other people's money, you don't spend them in the most reasonable way, and for that you need public control".

In recent times, businesses have complained that staff are pouring into the labor market from the education system not sufficiently prepared, and young people have complained that they are not being given enough opportunities. This is a problem of the Bulgarian education system, but "for a private university like ours, this cannot be a serious problem, since we have been on the Bulgarian education market for 31 years and have always put our students first", commented the guest. "They are our consumers, not the government. They fund our activity and we are forced to do what these students need, and for that we have to train them in the professions of the future, for what the business wants. For that reason, business is involved in our curriculum councils, it says what our curricula should be, it is involved in our educational process. Business is in our state examination boards."

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