Towards the circular economy

Posted by on feb 7, 2014 in Sustainability Mission | 0 comments

Towards the circular economy

In this report, the World Economic Forum and the Ellen MacArthur Foundation, with analytics provided by McKinsey & Company, acting as project adviser, joined forces to reconcile the concept of scaling a circular economy within the reality of a global economy and complex multi-tier supply chains. The key objective is to propose a very specific joint plan of action for industry leaders.

Foreword – Ellen MacArthur Foundation

Today’s ‘take-make-dispose’ economy has long relied on inputs of cheap and available resources to create conditions for growth and stability. Within the past decade, however, businesses have been hit by an increase in commodity prices that has effectively erased the (average) decline of the entire preceding century. Coupled with this, we expect three billion more middle-class consumers by 2030. This unprecedented rise in demand for a finite supply of resources calls into question our current predominantly linear economic system.

The concept of the circular economy is rapidly capturing attention as a way of decoupling growth from resource constraints. It opens up ways to reconcile the outlook for growth and economic participation with that of environmental prudence and equity. It is inspiring CEOs, politicians, engineers, designers and the next generation of leaders.

Our research highlights immediate and relatively easy-to-implement opportunities, analysing a number of specific examples. It uses current technologies and trends to estimate the materials cost savings of adopting a more restorative approach at over US$ 1 trillion p.a. by 2025, net of materials costs incurred during reverse-cycle activities.

We are now observing the evolution of circular business models as leading companies drive innovation across product design, development of product-to-service approaches and new materials recovery methods. These are demonstrating potential to disrupt the linear economy. A deeper and broader understanding of how to capture commercial value across supply chains from a very practical perspective is needed to accelerate and scale this trend.

The World Economic Forum’s report Accelerating the scale-up across global supply chains report plays a crucial role in this market evolution by exploring how businesses can use the circular economy to drive arbitrage opportunities across complex, global supply chains. While examples of circular business models are emerging, significant materials leakages still persist. This report provides practical guidance on how businesses can address these leakage points to capture the value of the circular economy together with their partners—whether suppliers or wholesales/retailers—and consumers. The initiative outlined in this report, aims to make practical steps towards capturing this opportunity through the facilitation of pure materials flows, an important first move in the shift to a new economic model.

The circular economy provides a framework to both challenge and guide us as we rethink and redesign our future. I would like to express my thanks to the thought leaders and business pioneers who have informed this thinking and helped make this work possible. These include our collaborator, the World Economic Forum, McKinsey & Company, which acted as project adviser and provided the analytics for this report, as well as representatives from leading businesses and experts who have contributed their extensive know-how.

I believe this to be one of the greatest opportunities of our time, and urge you to play your part in making it a reality.

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