Sustaining and Deepening Innovation in the Circular Economy Portfolio through Local Government Units: ALab PH’s continued efforts to inject innovation through UNDP PH’s Circular Economy projects.

How can ALab PH continue to deliver its value proposition on social innovation to the portfolio in a manner that makes the team financially and operationally sustainable?

The UNDP Philippines’ growing portfolio on Circular Economy (CE) began as a probe into the proliferation of marine plastic pollution. It was a controversy (as the Philippines was tagged among the top contributors of marine plastic litter) which brought to fore the underlying problem of a linear “take-make-waste” economy. Since 2019, the UNDP Accelerator Lab in the Philippines (ALab PH) has been working hand in hand with the country office’s Climate Action Programme team build a portfolio for circular economy (CE) to support the country’s transition towards more sustainable, inclusive and resilient economies at the local government unit (LGU) level. This work began at the national level through support for the Department of the Environment and Natural Resources (DENR) to develop a national action plan on marine litter through a multi-stakeholder approach; and at the local level through a probe on the underlying systems in Pasig City to help it convene its stakeholders to co-design a local CE portfolio.   Since then, the UNDP’s work on local CE portfolios has expanded to five cities under the Japan-funded Accelerating CE in Cities project in 2022-2023 (ACE Project). The portfolio work is slated to further grow massively the EU-funded Green LGUs Project: it has kick-started this year (2024) with an initial ten (10) localities; followed by another ten (10) identified and initiated in 2025; towards covering as much as 40 more by 2028. The Green LGUs Project falls under the EU-funded Green Economy Programme for the Philippines (EU-GEPP), which is implemented by a consortium composed of UNDP, GIZ, Expertise France, and IFC.   As UNDP's CE portfolio has scaled up and scaled wide, ALab PH performed a crucial role in bridging knowledge and practices between the recently-closed ACE Project and the newly-initiated Green LGUs Project. As the latter’s project management unit was being organized, ALab PH augmented its capacity by supporting the inception activities in the first 10 LGUs, preparation of city-level portfolios, and identification of opportunities for innovation. While it is clear that ALab PH is uniquely positioned to provide social innovation services to the project, the challenge it currently faces is how to translate this positioning into a compelling value proposition which contributes to the lab’s sustainability (considering the end of funding from the global Accelerator Lab project by 2025).

ALab PH has established itself within the UNDP country office for its value proposition of driving social innovation and out-of-the-box thinking into development. What has not yet been proven is if CO programmes and projects are willing to pay for these services enough to sustain the ALab PH team and enable it to perform its research and development (R&D) mandate independent of project funding. This is especially true for the  CE portfolio. As noted under the previous Action Learning Plan (https://learningplans.sdg-innovation-commons.org/en/edit/pad?id=2138&source=2074&display=adjacent-source), ALab has faced the challenge of monetizing its work of supporting the portfolio beyond the recovery of part of the costs (such as salaries of social innovation analysts). A recent breakthrough was realized by ALab PH with the new project management unit (PMU) of the Green LGUs Project. So far this year, the team supported the project’s inception through the design and co-facilitation of all local inception workshops, albeit on an informal and even ad-hoc basis. The PMU and ALab PH are now discussing an agreement where the latter will implement innovation aspects of the project, while the former compensates such work through a formal mechanism (consistent with the Delivery Enabling Services policy of UNDP). As the proposed arrangement is being reviewed by UNDP and the donor, the team is currently planning for and starting to implement work to be done during the project period: a) application and “layminzing” of systemic design to facilitate portfolio development at city level; b) data innovations and systems mainly through the Pintig Data lab (ALab PH’s sister lab that it had incubated); c) design and implementation of innovation challenges and community grants; d) behavioral insights and change campaigns; e) value chain development in specific areas of CE such as waste reduction, tourism, and food.

Innovation is at the heart of CE. As @UNDPph expands its local #circulareconomy work from one city to as many as 60 localities through the EU-backed Green LGUs Project, @acceleratorlabs PH continues to inject social innovation by helping local govs frame their CE challenges and co-create solutions with their communities.  

How can ALab PH translate its value proposition to the Green LGUs Project as a formal insourcing arrangement that is novel, yet aligned with internal policies and procedures of UNDP, and acceptable to both programme and donor (EU)? To pursue this, ALab PH, through its mother unit the Impact Advisory Team (IAT) which also houses the Pintig data lab and the SDG Finance and Partnerships unit, is currently designing a new instrument for the delivery of bespoke services to projects. The Impact Advisory Services instrument is essentially an agreement between IAT and the client-project which spells out the scope of the engagement; the innovation, digitalization, and partnerships services to be delivered by IAT to support specific project results; the resources and arrangements that the project commits to provide to deliver those services; and the cost recovery mechanism for staff and non-staff expenses. Developing and implementing such agreements—foremost of which with the Green LGUs Project—is itself a prototyping and testing exercise. The Impact Advisory Services model is guided by the policy on Delivery Enabling Services (DES). However, the policy as currently understood and implemented has various technical limitations. To what extent can these limits be stretched or hacked to optimize the value of the Impact Advisory Services model to the client project (e.g., as opposed to the default delivery mode of hiring an external entity or consultant) and its contribution to IAT’s sustainability without being in violation of the policy?

The core method being used by ALab PH in the CE portfolio is Systemic Design: a combination of systems thinking and human-centered design to discover and prototype solutions that are responsive to a holistic understanding of complex problem spaces. Systemic Design can be considered an umbrella approach that provides coherence to other methods offered by the lab (e.g., ethnography, solutions mapping, co-creation). This specific learning question entails prototyping the Impact Advisory Services model. This is composed of (i) an internal policy note that operationalizes the DES policy for such insourcing approach; (ii) a model Impact Advisory Services agreement with the Green LGUs project; and (iii) a cost-recovery mechanism aligned with the DES policy. Although the prototyping exercise could benefit from a regulatory sandbox, such is not available at present especially with the highly risk-averse environment of UNDP at present.  

This effort mainly entails prototyping to design and test a new instrument to enable the insourcing of innovation services by ALab to CO projects. In designing such, it entails a thorough review of relevant sections of the UNDP Programme and Operations Policies and Procedures (POPP) particularly on DES (formerly Direct Project Cost or DPC). Apart from reviewing written policies, it entails understanding how these are currently practiced through consultations with the Operations Team as well as with programme and operations experts within the global Accelerator Lab team. In finalizing and eventually implementing the agreement with the Green LGUs project, ALab PH intends to continuously seek the PMU’s feedback and advice.

How can the portfolio approach to CE be best understood and embraced by the cities covered by the Green LGUs project? The ALab is supporting the startup phase of the Green LGUs project by co-designing and co-facilitating inception workshops in the 20 localities for deep action (10 localities covered in Q2-Q3 2024; while the next 10 will be covered in 2025). The output of these workshops is a CE portfolio for each city, which identifies: (i) the challenges that the city faces; (ii) the city’s vision for transitioning to a CE; (iii) the portfolio of potential solutions (from which the Green LGUs project can pick up); and (iv) the stakeholders contributing to the portfolio. In supporting this sprint of local workshops, ALab PH had to learn from past experiences where stakeholders found many new concepts to be alien: on top of which are the very concepts of circular economy and the portfolio approach. ALab PH had to design the workshops in such a way that lay stakeholders understood the concept of circularity foremost, while being discreet about the “portfolio approach” itself (to, among others, avoid introducing too much jargon). Though the workshops are designed to be patterned after the systemic design approach, the team—particularly the Social Innovation Analysts who were deployed to support these local workshops—had to be agile in adjusting the discussion agenda and mechanics to respond to the situation on the ground.

The “portfolio approach” being used is essentially Systemic Design: a combination of systems thinking and human-centered design to discover and prototype solutions that are responsive to a holistic understanding of complex problem spaces. Within Systemic Design, ALab PH uses rapid ethnography (to surface the lived experience of system actors), sensemaking (to document and understand the ongoing CE efforts of the LGU and stakeholders in the locality), co-creation (to enable stakeholders to build a portfolio of options), and prototyping (to put flesh and bone to ideas for solutions).

The local inception workshops are aimed to bring together a diverse set of stakeholders of the locality: including the various offices of the LGU (not just their environment offices, but also their investment promotion and economic planning units), private businesses and their associations, academic and nongovernment organizations, among others. The workshops aim to (i) surface and map the CE-related issues as well as ongoing efforts in the locality; (ii) establish common ground around a vision and set of goals or principles for the city’s transition to CE; and (iii) identify and prioritize possible solutions that, under the Green LGUs Project, may be further developed and then supported. While the workshops are city-specific—and as such, unique issues, contexts, and solutions have been identified—ALab PH and the Green LGUs Project intend to synthesize common themes of issues and interventions, emerging to be as: (i) waste-to-resource in urban settings; (ii) circularity in food systems; and (iii) sustainable tourism. The documented discussions are currently being consolidated into a compendium of portfolios that serve not only as a guide document for the city’s CE initiatives but also as an advocacy and learning tool to, among others, enable the cities to learn from each other.

As previously mentioned, the Circular Economy portfolio is in its grow phase, where ALab PH is working closely with the Climate Action Programme Team (CAPT) in defining the place of innovation in the CE portfolio and the role of ALab PH moving forward. Apart from the Green LGUs Project, ALab PH is also supporting CAPT in designing and implementing the local implementation of a regional project sponsored by The Coca Cola Foundation for plastic waste recovery and reduction; and it is also implementing the third phase of its experiment for remote sensing of marine litter under the Japan SDGs Innovation Challenge. ALab PH is also considering its deepening engagement in the CE portfolio as an opportunity to also pursue its other innovation areas, particularly (i) future-ready local governance and public sector innovation and (ii) inclusive value chains for local economic development. Whether these remain as stand-alone frontier challenges or are fully integrated into the CE portfolio remains will need to be decided on by the team as the year closes.