How to make economies create more value and less waste
By Antonia Gawel and Mathy Stanislaus
About three quarters of everything consumed in western economies – from packaging to clothing – becomes waste within just one year. A recent study in the journal Science Advances found that 6.3bn tonnes of plastic had entered the global waste stream since large scale production began in the early 1950s. Some 79% of this waste is scattered across the world’s oceans and landscapes or lying in landfills. The rest is incinerated or recycled, but even two thirds of recycled plastics end up in the environment after just one use.
The stress on the environment is being felt at both ends of this cycle. We are extracting an unprecedented amount of natural resources to produce all this stuff, and we are toxifying and damaging the environment by discarding it. As the global population grows and becomes wealthier, these impacts will only intensify. Estimates suggest that resource demand will triple by 2050 if these trends continue.
This is simply not sustainable. The dramatic increase in the use of materials is intensifying climate change, increasing air pollution, reducing biodiversity and leading to the depletion of natural resources. The extraction, production, transportation, use and disposal of natural resources in the world’s economies is estimated to be responsible for about 50% of greenhouse gas emissions.
While the picture is bleak, there is a growing movement of innovators in the private and public sectors who recognise that there is a better way to provide the things we want. New technologies, new business models and smarter approaches to what we produce and how, and the way we consume are emerging. The combination of these can lead us towards a circular economy where we create much more value and much less waste from the resources we use.
A few global market leaders are driving the charge and starting to create demand signals. Philips, for example, offers “lighting as a service”, which enables it to provide a product that customers want, while retaining ownership of its materials so as to be able to eventually reintegrate them into its supply chain. Nike has committed to closing their product loops. Lego has committed to moving away from oil based products by 2030. Renault Nissan Alliance has run an automotive remanufacturing plant since 1949. And Arup is leading thinking on how to transform the built environment: they have achieved reductions of 75% in weight and 40% in materials, compared with traditional construction methods, through using 3D-printed steel components.
This transformation also represents a movement from the ground up, with many technology pioneers emerging worldwide across all sectors to disrupt traditional approaches to production and consumption. Miniwiz in Taiwan is developing building and other materials from waste through “urban mining”. Gastromotiva in Latin America is making new products out of food waste, such as salsa from overripe tomatoes that would otherwise be thrown out. Mobike in China has become the largest global smart GPS-enabled bike sharing scheme. Blue Oak, an e-waste recycling company in the US, sources metals from end-of-life electronics. And Fairphone in the Netherlands has developed a smartphone that is easy to disassemble, repair and upgrade.
Individual governments and multilateral government organisations have also identified the need to remove barriers and establish enabling conditions for private sector innovation. The G7 Alliance for Resources Efficiency and the Organization for Economic Cooperation and Development, for example, have identified the need for governments to collaborate with the private sector in advancing policies on materials recovery, design and procurement so as to create market incentives for business models that decouple resource use from growth.
The problem is that these solutions and policies remain nascent and small-scale, and their broader uptake is frustratingly slow. As the statement of principles (pdf) issued after the October 2016 dialogue on the global commons, convened by the Global Environment Facility and the International Union for the Conservation of Nature, puts it: “Humans are pushing the global commons to the limits of their coping capacity . . . Only with disruptive, systems level change can we hope to get on the right path . . . Our focus should be a complete overhaul of key economic systems and development pathways.” We are still far from achieving that goal.
We need fundamentally, not incrementally, to change the way society produces and consumes. A circular mindset fundamentally shifts from the current linear economic systems of using and disposing of natural resources as waste towards a system that continuously captures and retains their value within economies.
A circular economy approach would recover the value of wasted materials that are currently thrown away; it would replace the wasted resources of “once used” non-renewable materials with regenerative renewable and bio-based materials; it would maximise the wasted capacity of underutilised products and assets by using sharing platforms; and it would extend the use of products through remanufacturing.
Accenture Strategy estimates that the value of capturing this waste could be $4.5tn (£3.4tn) by 2030. Such an approach can also act as a key lever to achieving the targets of the United Nations Framework Convention on Climate Change – through the Paris agreement – by potentially delivering over half of the current gap left by present commitments to reduce greenhouse gas emissions.
Collaboration along global value chains – and with the public sector and consumers – is essential to overcome fundamental economic, policy and infrastructural challenges that stand in the way of achieving scale. The Global Environmental Facility, Philips, and UN Environment, in partnership with the World Economic Forum, Accenture Strategy, and the Ellen MacArthur Foundation have come together to establish the Platform For Accelerating Circular Economy to respond to this challenge. The project aims to convene leaders from companies, international organisations, financial institutions, governments and civil society to bring this emerging, yet critical circular economy transformation to scale.
Transforming entire sectors and value chains cannot rely on the few who stand out front. What is needed is a true system transformation that creates the right framework for all actors to engage in it.
Antonia Gawel is head of the circular economy initiative at the World Economic Forum
Mathy Stanislaus is policy advisor to the World Economic Forum platform for accelerating the circular econom