Vigilance in Circular Economy Systems: Policy Reflections from the KOKO Network Case

CBEN members participating in the Monthly Call

During CBEN’s monthly call, members engaged in a reflection led by the Board Chairperson, Mr. Samuel Thou, on the growing need for vigilance as circular economy and climate-linked model’s scale. As initiatives transition from pilot phases to infrastructure-intensive systems, financial discipline, regulatory alignment, and transparent reporting become critical to organizational resilience and public trust. The discussion underscored that these risks are systemic and relevant to all CBEN members, rather than isolated to any single organization.

The challenges faced by KOKO Networks were referenced as a cautionary case for the sector. Public reporting suggests its collapse was driven by a convergence of high upfront infrastructure costs, dependence on future carbon revenues to sustain operations, and increasing regulatory and investor scrutiny.

“When the anticipated climate finance flows failed to align with capital expenditure needs and operational timelines, the resulting mismatch intensified financial pressure. This exposed a structural vulnerability common across many climate-focused business models—especially those where infrastructure development, carbon markets, and consumer-facing services are closely linked without adequate financial buffers.”- Sam Thuo.

A central question raised during the discussion concerned the appropriate role of carbon subsidies. Carbon finance is primarily intended to incentivize emissions reductions and de-risk climate-positive activities, rather than to serve as the main source of infrastructure capital. Using carbon subsidies to fund long-term capital expenditure exposes organizations to carbon price volatility, verification delays, and policy shifts. From a policy perspective, clearer separation between climate incentives and infrastructure financing is essential to ensure sector stability and credibility.

Members also considered alternative financing mechanisms. Climate and green bonds were discussed as more suitable instruments for funding infrastructure with long asset lifespans and predictable revenue streams. Strategic partnerships with larger, well-capitalized firms were also highlighted as a way to scale infrastructure while sharing financial risk and strengthening balance sheets. These approaches may moderate the pace of expansion but improve long-term resilience, a trade-off increasingly supported by policymakers.

The discussion further underscored the importance of strong governance and reporting systems as organizations mature. Transparent accounting, conservative assumptions around carbon revenues, and proactive engagement with government policy frameworks are critical. Weaknesses in these areas can quickly escalate into regulatory and public concerns, affecting not only individual organizations but confidence in the wider circular economy sector.

As captured in the saying, “When you see your companion being shaved, wet your own head,” the experience of KOKO serves as an early warning. For CBEN members, embedding vigilance, appropriate financing choices, and policy alignment from the outset is essential to building resilient and credible circular systems.

CBEN further deliberated on the proposed registration model aimed at safeguarding member organizations as they collaboratively develop strong policies and prepare for potential challenges similar to those previously faced by KOKO Networks .

Outlined below is the proposed registration framework, including the benefits and entitlements associated with each membership category:

Are you engaged in the circularity and bioeconomy space and interested in joining this network? Write to us through circularbe.network@gmail.com for further inquiries and membership details.

By Erick Opiyo Abala

Head Of Communications- CBEN