A Circular Economy Strategy for Scotland – Island Communities Impact Assessment (ICIA)

Island Communities Impact Assessment Report

Introduction

This Island Communities Impact Assessment has been prepared to accompany publication of the Circular Economy Strategy for Scotland (‘the Strategy’) and has been updated following a public consultation and analysis of the consultation responses.

This document was completed in conjunction with the Island Communities Impact Assessment (ICIA) Guidance. This guidance sets out a seven-step process to help policy makers assess and take into account the impact a policy, strategy or service may have in island communities in Scotland.

The development of impact assessments is an iterative process and should be updated and referred to throughout the development of a policy, strategy or service. This document considers steps one to six of the Scottish Government guidance and is published alongside the Strategy. Further information on these and subsequent steps, as well as the importance of Island Communities Impact Assessments can be found in the guidance on the Scottish Government website.^[1]

Islands Communities Impact Assessment Introduction

The Islands (Scotland) Act 2018 places a duty on the Scottish Ministers and other relevant authorities, including a number of public authorities, to have regard to island communities in exercising their functions. For the Scottish Ministers, this includes the development of legislation. This duty is often referred to as ‘island- proofing’.

An Islands Communities Impact Assessment must align with the requirements of the Islands Act, namely to:

(i) describe the likely significantly different effect of the policy, strategy or service (as the case may be) on island communities, and

(ii) assess the extent to which the authority considers that the policy, strategy or service (as the case may be) can be developed or delivered in such a manner as to improve or mitigate, for island communities, the outcomes resulting from it.

Step one – Develop a clear understanding of your objectives

The Scottish Government is committed to transitioning to a circular economy as a means of addressing the climate and nature crises while delivering sustainable economic and social benefits. A circular economy keeps materials and products in use for as long as possible, thereby reducing demand for virgin resources, minimising waste, and maximising the value retained within the economy.

Around four-fifths of Scotland’s carbon footprint comes from the products and services we manufacture,^[2] use and throw away and 90% of global biodiversity loss and water stress is caused by extraction and processing of these products.^[3] The Scottish Government is committed to delivering a different approach to our economy, one where we move from a "take, make and dispose" model to one where we value materials and keep them in use for as long as possible.^[4]

The Scottish Government has set climate change ambitions to become a net zero greenhouse gas emitting nation by 2045.^[5] Sustainable resource use is key to tackling climate change and will be vital for our efforts to reduce Scotland’s global carbon footprint, and for other sectors to deliver their own net zero goals.

The Circular Economy (Scotland) Act 2024 places a statutory duty on Scottish Ministers to publish or revise a Circular Economy Strategy every five years.^[6] The Strategy provides a high-level framework for Scotland’s transition to a circular economy, setting out a broad vision and outcomes as well as priorities across policy mechanisms, priority sectors, and product stewardship. It also sets out plans for monitoring and evaluating the impact of the Strategy via the Circular Economy Monitoring and Impact Framework.

These priorities aim to support the Strategy “Vision” set out below:

“By 2045 Scotland will be a net zero and nature positive nation helped directly by the significant progress in transitioning towards a circular economy with sustainable levels of material use.

Scotland will have a thriving economy that meets societal needs and is based on circular economy principles, and we will have reduced the negative global impact of our production and consumption.

People, businesses and the public sector will have the skills and knowledge to benefit from opportunities arising from a circular economy and these will be fairly distributed across society.”

The Strategy builds on Scotland’s Circular Economy and Waste Route Map to 2030. While the Route Map focuses on sustainable resource use and reducing the carbon impact of our waste, the Strategy sets out the strategic direction for the future and how circularity will be embedded across the economy by looking at sectors, systems and products. Future interventions that relate to the Strategy’s priorities may include policy proposals, potential legislative measures, and supporting activity to drive systemic change across production, consumption and disposal of materials and products in Scotland.

Policy context:

The Strategy aligns, as far as practicable, with key Scottish Government commitments as set out below. The Strategy also reflects international commitments such as the UN Sustainable Development Goals,^[7] the EU Circular Economy Action Plan,^[8] and the Paris Agreement.^[9]

The Scottish Government will also develop proposals for the introduction of circular economy targets following the publication of the Strategy and associated monitoring and indicator framework. This is also a requirement of the Circular Economy (Scotland) Act 2024.

The Strategy is already supported by, and will be connected to, a wide range of existing and planned circular economy policies, interventions and activities. These include investment in reuse and recycling infrastructure resulting from our Recycling Improvement Fund, or product stewardship initiatives such as the packaging Extended Producer Responsibility scheme, the Deposit Return Scheme, or measures on other product types. The Strategy builds on existing and planned activities to set a clear direction for Scotland for the systemic change required to transition to a circular economy.

Interaction with other policies (draft or existing):

The Circular Economy (Scotland) Act 2024^[10]

The Act introduces measures that require primary legislation in Scotland’s transition towards a circular economy. The Act requires Scottish Ministers to publish a Circular Economy Strategy for Scotland every 5 years to make regulations to set circular economy targets.

Climate Change Plan ^[11]

The Scottish Government publishes a statutory strategic delivery plan (the Climate Change Plan) every 5 years. The most recent plan sets out a pathway to reduce Scotland’s emissions over the period to 2040.

Scotland's National Strategy for Economic Transformation (NSET)^[12]

Scotland’s NSET sets out the priorities for Scotland’s economy as well as the actions needed to maximise the opportunities to 2032 to achieve the vision of a wellbeing economy. The NSET contains a vision for a Wellbeing Economy, ‘thriving across economic, social and environmental dimensions’, is supported by three ambitions, including ‘Greener: Demonstrating global leadership in delivering a just transition to a net zero, nature-positive economy, and rebuilding natural capital’. A number of priorities across the Strategy support the NSET.

Just Transition – A Fairer, Greener Scotland: Scottish Government response^[13]

In 2021, the Scottish Government published our response to the findings of the first Just Transition Commission. The response also comprised our National Just Transition Planning Framework, which was designed to ensure an ambitious and consistent to planning for a just transition. The framework continues to underpin the production of Just Transition Plans for different sectors and sites, all of which will support the aims of NSET.

The Good Food Nation Plan^[14]

In December 2025 the Scottish Government published its First National Good Food Nation Plan which states “In our Good Food Nation, the people of Scotland can access and enjoy food that keeps them happy and healthy. Our food industry continues to thrive and grow. The environment is protected, biodiversity loss reversed, and our net zero ambitions achieved. A Good Food Nation enables flourishing rural and coastal communities.”.

Scotland’s Biodiversity Strategy to 2045: tackling the nature emergency^[15]

Scotland’s Biodiversity Strategy and associated delivery plan recognises the need to ensure the range of actions we are undertaking are both complementary and coordinated as part of our overall efforts to tackle the twin crises of climate change and biodiversity loss.

Environment Strategy^[16]

The Environment Strategy creates an overarching framework for Scotland’s strategies and plans for the environment and climate change. Its 2045 vision and supporting outcomes describe our guiding ambitions for restoring Scotland’s natural environment and playing our full role in tackling the global climate and nature crises. In turn, this will help to build a stronger, more resilient economy and improve the health and wellbeing of Scotland’s people. It will help to ensure we live within the planet’s sustainable limits as responsible global citizens.

Green Industrial Strategy^[17]

The Green Industrial Strategy publication identifies areas of strength and opportunity for Scotland to grow globally competitive industries in the transition to net zero. It outlines what government and partners will do to support stakeholders to create an enabling environment for investment and growth. The Green Industrial Strategy’s mission is to ensure that Scotland realises the maximum possible economic benefit from the opportunities created by the global transition to net zero.

Litter and Flytipping Strategy^[18]

The National Litter and Flytipping Strategy sets out our approach to tackling litter and flytipping in order to protect and enhance Scotland’s environment; ensure safer and cleaner communities; and contribute to a thriving circular economy for Scotland. Litter and flytipping are losses of material from the economy, so reducing litter and flytipping will also help accelerate Scotland’s transition from a ‘linear’ economy, which is environmentally unsustainable and energy and resource intensive, to a more resource efficient and sustainable circular economy.

Extended Producer Responsibility (EPR) and ongoing reforms

The Scottish Government has committed to reforming the existing four nation Producer Responsibility schemes:

• Packaging Producer Responsibility Scheme^[19]
• Waste Electrical and Electronics Producer Responsibility Scheme^[20]
• Batteries and Accumulators Producer Responsibility Scheme.^[21]

Reforms to the existing Producer Responsibility schemes will result in changes to how end of life products are managed, how local authorities may be funded to manage that waste and how reuse and repair are championed across the three schemes.

Deposit Return Scheme

The Scottish Government is also committed to introducing a deposit return scheme (DRS) for single-use drinks containers in Scotland to help increase recycling, reduce litter and meet our climate change targets. We are working closely with the UK Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland to ensure the successful delivery of interoperable schemes across Scotland, England, and Northern Ireland in October 2027.

Single-use vape ban

The ban on the sale and supply of single-use vapes came into force on 1st June 2025 using powers under the Environmental Protection Act 1990. This approach has been used in the past to ban other items such as microbeads, cotton buds and single-use plastics. The UK-wide ban has been introduced to prevent the environmental damage disposable vapes cause and also to address health concerns associated with vaping as Scotland moves towards a tobacco-free generation by 2034.

The publication of the Strategy will not directly impact people or communities. At this stage, it is therefore unlikely that there are potentially positive or negative impacts on island communities linked to the publication of the Strategy itself.

The priorities set out in the Strategy are intended to apply across Scotland and do not specifically target particular groups, geographical locations or sections of society. It is, however, important to consider that future interventions related to the Strategy priorities may impact people differently in island communities as they are developed and rolled out.

Due to the high level nature of the Strategy, we have undertaken an initial screening to assess potential impacts on islands communities. It is anticipated that ICIA requirements will be further assessed where required as any policies, strategies or services to deliver the priorities in the Strategy are developed.

Step two - Data and stakeholders

Whilst the nature of the Strategy means that it will not have a direct impact on islands communities, it has been considered important to complete an ICIA nevertheless. This ICIA will not offer full insight into all potential issues that will come from the development of interventions linked to the priorities set out in the Strategy, however we can identify and consider broader issues. Doing so will assist further investigation prior to development and implementation of individual interventions, as required.

An initial assessment of potential impacts on islands communities was undertaken. This analysis was updated to take into account responses to the public consultation on the draft Strategy, which ran from 21^st October 2025 to 13^th January 2026. This involved systematically assessing the Strategy priorities and considering impacts on islands communities based on ICIA guidance notes. This process looked at the theme of the priority and anticipated the nature of activity it may demand.

As a result, many priorities were discounted from this analysis because it was not immediately clear how they might impact island communities. Only those priorities that could be reasonably predicted to link to future impacts on island communities are included.

This ICIA acknowledges and assesses some generic activities that may result from pursuing interventions linked to stated priorities. This will enable an element of impact assessment at this stage and highlight areas for attention for fuller assessment in future. These generic activities are listed alongside other identified impacts below.

Several generalised potential impacts were identified, via desk-based research, consultation responses and internal discussion, that often impact island communities:

A. Cost of living

B. Resource and waste management and access to circular infrastructure

C. Access to (and uptake of) skills, training and jobs

D. Access to transport

E. Access to food and essentials

F. Demographics

G. Other generic activity likely to result from the Strategy:

• Research activity
• Policy development activity
• Communications activity

A. Cost of living

A Scottish Government report from 2021 estimates that the cost of living in rural Scotland, including the islands, is between 15% and 30% higher than urban parts of the UK.^[22] The budgets that households need to achieve a minimum acceptable living standard in ‘remote rural Scotland’ are typically 10% to 40% higher than elsewhere in the UK.

Interventions resulting from the Strategy priority to empower consumers and organisations to adopt circular behaviours may have an indirect effect on product prices. Interventions relating to priorities that support business to increase circularity and uptake of circular business models; and expanding the application of a place-based approach to the circular economy may have the same effect. If these interventions resulted in lower prices it could benefit those living in island communities in future – although this is not certain and the converse may also be true. In addition, these benefits could also be offset or negated by lack of economies of scale or increased transportation costs – and these price effects may also differ in terms of impact product by product. Understanding and setting out the impacts will require assessment of associated interventions once they are in their own planning and development phase.

B. Resource and waste management and access to circular infrastructure

Island communities face unique challenges around waste management due to the increased distances involved. These issues also include accessibility to equipment and/or waste management infrastructure or services; added complexity and cost for collections and/or haulage logistics; and a lack of economies of scale for local solutions.^[23] For example, a lack of food waste infrastructure was specifically cited by consultation respondents.

Consultation responses highlighted the potential for disparities of circular economy service or scheme provisions and/or investment opportunities between mainland and islands populations due to these costs and complexities. Understanding the viability of approaches and finding tailored solutions were seen to be crucial during the development of activities resulting from the Strategy priorities.

The same challenges can also make it more difficult to establish, access and utilise secondary resources and make reuse, repair and refurbishment services or solutions less accessible. These issues were reiterated by multiple consultation respondents and highlighted issues relating to potential food distribution activities and broader market access issues.

As such the priority to improve management of post-consumer textiles may result in a disproportionate impact on islands communities if it requires additional resource management costs, services or infrastructure.

Consultation respondents specifically highlighted a lack of infrastructure to support circular practices - such as reuse networks, repair hubs, or shared logistics. Some respondents called for actions that explicitly support decentralised and locally adapted solutions and/or innovation creating local jobs - in order for circularity to work in island communities.

Accessibility issues also extend to digital connectivity in island communities. All activities resulting from the Strategy priorities that may have an impact on circular economy accessibility in island communities should be accounted for in future impact assessments.

Marine litter and the additional costs of cleansing, transport and disposal of this inherited waste was identified as a further complexity in island communities by consultation respondents.

C. Access to (and uptake of) skills, training and jobs

There is potential that circular skills and job opportunities are increased through the transition to a circular economy. While this will be across all society, it may prove to be more difficult for those living and working in island communities to access them; conversely, island communities may be uniquely placed to adopt new practices and attract inward investment.

Expanding the application of a place-based approach to the circular economy has the potential to improve accessibility to circular economy products/practices and potentially jobs.

Linked to the above, plans to improve job opportunities in island communities need to consider the implications of a predicted shrinking working-age population, which is anticipated to be at a disproportionately higher rate than elsewhere.^[24]

The nature of part-time, seasonal or self-employment should also be considered when positioning any investment in climate-smart skills in the islands.

Availability of affordable housing is also a barrier to young families staying and settling on the islands – more so than in many other areas of Scotland.^[25] This issue also requires further understanding in relation to addressing any skills gaps and taking advantage of any possible circular economy opportunities in terms of skills, training and jobs.

Some consultation responses highlighted a need to recognise and support educational pathways that protect cultural knowledge and enable young people to remain and work within island communities – this is seen as required in order to strengthen island resilience, wellbeing and cultural continuity. Also that, in any future analysis of impacts of activities relating the Strategy priorities, evidence on barriers such as connectivity, workforce retention, skills succession, access to training, and the impact of regulatory and market pressures on key sectors in islands communities is required.

D. Access to transport

People in island communities do not benefit from the same accessibility to public transport. Respondents to the consultation reiterated the issue of infrequent public transport options - which may impact on the ability of islanders to access circular economy options or opportunities.

When developing interventions linked to the priority of improving circularity of passenger and light goods vehicles, consideration should be given to issues this would raise for those in island communities who are more reliant on personal transport.

Transport issues extend to freight capacities in island communities. Limited freight boat capacity, even for existing industries, was raised in consultation responses – as well as the associated resulting supply chain constraints. All activities resulting from the Strategy priorities that may have an impact on transport issues should be accounted for in future impact assessments.

Weather disruption was described as an exacerbating transport challenge to the development of circular opportunities in island communities – this should also be acknowledged and accounted for in future assessments.

E. Access to food and essentials

Empowering consumers and organisations to adopt circular behaviours may be more difficult in island populations for a variety of reasons. The 2021 Poverty in rural Scotland evidence review^[26] suggests that the cost of these items may be higher in some rural and island areas, and that people may experience additional non-financial barriers to food in island communities linked to dispersed populations, limited food retail, irregular or disrupted transport, and weather-related disruption.

Consultation respondents reiterated these issues relating to potential food distribution activities as well as disruptions to supply chains due to adverse weather.

F. Demographics

The average age of populations living on Scottish islands is increasing at a rate that is faster than mainland populations. This makes those communities more vulnerable to climate change as age is a factor which compounds vulnerability to climate change. This is of relevance as a more circular economy can help tackle climate change.

2022 census data^[27] shows that Scotland's average age in every area between now and 2043 is set to increase. The highest reduction in children and working age populations will occur in islands and remote rural areas, - 23% and -15% respectively.^[28] The projected percentage change in population is most extreme in island and remote rural areas, where an approximate drop of 19,000 people represents a 12% change between 2018 and 2043.^[29]

G. Other generic activity likely to result from the strategy

This ICIA acknowledges and assesses some generic activities that may result from pursuing interventions linked to stated priorities. This will enable an element of impact assessment at this stage and highlight areas for attention for fuller assessment in future. These generic activities are:

• Research activity
• Policy development activity
• Communications activity

Future research activity may impact on islands communities at two stages. First, via impact during research due to methodology, and secondly, the potential impact of policy implementation following research.

For the former, it is not possible to assess at this stage where and how this impact may occur. As such, this research activity must encourage inclusivity and diversity to avoid bias and generalisations. It should be accessible and ensure perspectives and experiences represent the breadth of Scottish society - including organisations and individuals that represent islands communities.

It is also not possible to assess where and how this impact may occur for the latter at this stage. As such, future research related to the Strategy priorities should require a methodology that includes perspectives, and experiences of organisations and individuals that represent island communities.

Similarly, future policy development activity may impact on islands communities and so must encourage inclusivity and diversity to avoid bias and generalisations. It should include voices from organisations and individuals that represent islands communities.

Finally, future communications activity may impact on islands communities and must be inclusive, suitable and incorporate information relevant to all – including those in islands communities.

Step 3 – Consultation

An interim Island Community Impact Assessment report was produced to help inform the formal consultation for the Strategy, which ran from 21st October 2025 to 13th January 2026. This has been updated following the analysis of consultation responses.

While we believe the Strategy, in and of itself, will not impact directly on islands communities, we have set out some potential areas of interest in this document. These areas show where future assessment of impact may be required during the development of any interventions resulting from the Strategy priorities.

Various suggested solutions/mitigations to the island specific issues were raised by consultation respondents, including:

• Place-based approaches
• Micro-hub/reuse network models (e.g. shared facilities for economies of scale)
• Targeted grants and tailored infrastructure investment funding
• Community ownership models
• New employment opportunities linked to energy transition
• Ensuring local island voices are accounted for in planning and decisions
• Local management of solutions
• Community asset transfer opportunities.

These solutions and other considerations should be assessed, as appropriate, when activities relating to the Strategy priorities are developed in future.

Step four – Assessment

Conclusions

The publication of the Strategy will not directly impact people or communities. At this stage, it is therefore unlikely that there are potentially positive or negative impacts on island communities linked to the publication of the Strategy itself.

The priorities set out in the Strategy are intended to apply across Scotland and do not specifically target particular groups, geographical locations or sections of society. It is, however, important to consider that future interventions related to the Strategy priorities may impact people differently in island communities as they are developed and rolled out.

Due to the strategic nature of the Strategy, we have undertaken an initial screening to assess potential impacts on islands communities. It is anticipated that ICIA requirements will be further assessed where required as any policies, strategies or services to deliver the priorities in the final Strategy are developed.

Following the publication of the Strategy and its priorities, associated individual interventions may be subject to impact assessment requirements. This may range from screening to full assessments. We will engage with island communities as required - as indicated under ‘section G’ above on other generic activity