4 key steps towards a circular economy

Moving towards a more circular economy is a logical proposition. Use less natural resources, reduce pollution, tackle climate change, enhance consumer satisfaction, while also improving the bottom line.

The rational path, however, is not always the path of least resistance. As we now operate in an economy where disposability and linear throughput reigns, shifting the system will take leadership, collaboration, innovation and commitment to break the status quo.

This was the focus of the circular economy discussion during the 2019 Annual Meeting in Davos, with four key priorities emerging for the year ahead.

1) Leadership is critical

For the fifth year running, the Circulars awards celebrated leadership and champions of the circular economy – from large businesses, to governments, investors and innovators. The European Commission unsurprisingly took the prize for public sector leadership given their efforts to push the Circular Economy package across Europe. Triciclos, which operates the largest network of recycling stations in South America won the people’s choice awards; while Winnow, which develops technology to help chefs achieve greater visibility in their kitchens, and make better decisions that lead to dramatically reduced food waste and costs, took the award for tech disruptor.

These leaders and entrepreneurs have tapped into the slack and inefficiencies in the current economic systems to derive positive benefits all round. This has however required energy and courage to challenge the status quo, which is why celebrating their leadership is so critical.

The Platform for Accelerating the Circular Economy, which now convenes over 50 CEOs, Ministers and experts, will continue to do just this, while also challenging the leaders to bring more of their peers onboard to shape practical actions, commitments and collaborations. 2019 is kicking off well, with Ikea last week announcing a move towards a furniture leasing-based business model.

2) Leverage the potential of the Fourth Industrial Revolution

With the Davos Annual meeting focused on “Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution”, one theme in focus was how the Fourth Industrial Revolution can enable positive transformations towards the circular economy.

A white paper released in Davos focused on the potential of technology and value chain innovations in electronics and plastics – from shaping provenance tools, to product passports and an internet of materials. These possibilities have yet to be fully leveraged. At the same time, with the right channelling of effort and innovation, they can take hold quickly.

Google and SAP also launched the Circular Economy 2030 contest over the next five months to engage innovators in designing circular solutions, and the World Economic Forum and its partners are shaping a programme – Scale 360 – to collaborate with countries to support entrepreneurs to scale their circular solutions.

While the potential remains largely untapped, the speed with which such technologies have taken hold in other domains provides hope.

3) Circular material value chains

From plastics, to electronics, to food and fashion, efforts continue to drive more circularity into material value chains, but must move from incremental steps to net positive progress.

2019 must be the year where we translate the positive momentum and commitments to shape a circular plastic economy into tangible investment and actions globally. In Davos, public and private leaders debated how to make this happen, and the Global Plastic Action Partnership is now poised to move into action in collaboration with Indonesia, Vietnam and other partners as 2019 kicks off.

This year also drew attention to the positive value that can be generated from the electronics sector by shifting towards a circular model. A report launched in Davos – A New Circular Vision for Electronics, Time for a Global Reboot – in collaboration with the UN E-Waste Coalition noted the annual value of electronic waste at $62 billion, three times the worth of all the silver produced in a single year.

As a positive step in this direction, Davos saw the announcement of a collaboration between the Nigerian government, Global Environment Facility (GEF), UN Environment, Dell, HP, Microsoft and Philips, to launch a $15 million investment to create a formal e-waste recycling industry in Nigeria. The ambition is to roll out this collaborative effort to other global markets, while also working with business to rethink business models and product design to fully benefit from the untapped circular opportunities.

Food system transformation is another area that has seen positive acceleration – the launch of the EAT Lancet report in December put a spotlight on the incredible benefits of a plant and people healthy food system, while the Ellen MacArthur Foundation launched a report at Davos focused on the potential of a circular economy for food, which could generate $2.7 trillion in benefits annually for society and the environment, while averting an estimated 5 million deaths every year by 2050.

Fashion is also increasingly in focus. The Fashion for Good initiative, EMF’s circular textiles initiatives, are shaping more circular and sustainable solutions, but only recently have governments started to take a bolder stance in tackling what has become an incredibly wasteful and polluting sector.

France, for example, passed a law to forbid the practice of burning unsold clothes. 2019 could see the stepping-up of actions across governments to continue to scale leadership in this space, in particular with France’s G7 presidency.

4) Collaboration is key

While the momentum and positive progress is clear, we still have a long way to go. The Circular Gap Report reminds us that still only 9% of the resources put into the economy get reused. This remains unchanged from the previous year.

With PACE scaling up its efforts in 2019 in collaboration with the World Resources Institute and other partners, scaling leadership, tapping into innovation potential and starting to shift global material streams away from linear models, we will hopefully see the trend improve when we revisit progress in 2020.

This will, however, require more than tinkering around the edges of our current system. We will need to think about how we can take efforts like the Loop Alliance or Ikea’s leasing-based furniture pilot from the fringes and onto the main stage.