Global Trend

Circular Solutions

Building the infrastructure of the future

From food and fashion to electronics and the built environment, circular thinking — keeping resources in use for as long as possible to extract the maximum value — will continue to gain momentum in 2020, driving innovation and disrupting linear business models.

Driven by societal and regulatory pressures including the European Commission’s Circular Economy Action Plan, consumer goods companies are increasingly piloting and adopting circular strategies. These include the redesign of products to require less material and energy; shifting to product-as-a-service models; setting up product take-back schemes; recovering and repurposing waste; and substituting finite materials for renewable ones. Despite a growing momentum, the world is currently only 8.6% circular and nowhere near limiting global warming to 1.5°C. There is an urgent need to scale these activities and understand the interconnected nature of circular and low-carbon agendas, recognizing the largely underutilized potential of the circular economy as a pathway to a low-carbon future.

2020 Forecast

In addition to presenting a multi-trillion dollar economic opportunity, a circular economy plays a significant role in addressing other challenges of our time, notably climate change, biodiversity loss, resource scarcity, waste and pollution. The interlinkages and overlaps between climate resilience and a circular economy are becoming clearer, with a fundamental shift needed in the way the economy functions and creates value. In 2020 and beyond we expect more companies to innovate, collaborate and demonstrate the opportunities of a net-zero emissions circular economy.

Signals to Watch

  • Our material resource use breached the 100 billion tons mark for the first time in history. It is forecasted to rise to between 170 and 184 billion tons by 2050.

  • E-commerce and easy customer returns through companies such as Amazon are driving increased waste, with millions of kilograms of products (many free from defects) ending up in a landfill each year due to the time and costs associated with repacking and assessing items for damage and resale.

  • A WRI report has warned that many of today’s business models will be put at risk by an increasingly resource-constrained world.

  • Companies like Apple and Starbucks are stepping up to the challenge. Starbucks recently announced a multi-decade aspiration to become a resource-positive company — storing more carbon than it emits, eliminating waste and providing more clean, freshwater than it uses.

  • When implemented in sectors such as the built environment, mobility, food, electronics and textiles across Europe, India and China, a circular economy could reduce GHG emissions by 22–44% by 2050 compared to the current development path.

  • Increasing the reuse of products, scaling product as-a-service models and capturing the value of e-waste in China could make goods and services more affordable for citizens, make cities more liveable, reduce emissions of fine particulate matter by 50%, emissions of greenhouse gases by 23% and cut traffic congestion by 47% — all by 2040.

  • Research shows that a transition to a circular economy could generate $4.5 trillion in additional economic output by 2030.

  • E-waste is worth at least $62.5 billion annually, which is more than the gross domestic product (GDP) of most countries. Yet, society only deals with 20% of global e-waste.

“Many of us just keep buying more stuff, responding to the pervasive belief that acquisition brings happiness and to an economic system that requires ever-increasing sales to function. A commitment to keeping products and materials in use will require us to change our thinking about acquisition.”
Kathleen Sellers, Technical Director, ERM

Source: Global CO2 emissions from four key materials production, Ellen MacArthur Foundation

Advice for Business

  • Prioritize dematerialization and closed-loop systems. Collaborate within, and outside, the value chain to increase product takeback and keep materials in use.

  • Consider how the circular economy can help your business meet its climate targets.

  • Is your company considering strategies to reduce consumption? Consider what alternative models exist that can deliver value to the customer and the business.

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