The Economy of the Future: Government, Business, and Civil Society Unite to Fast Track Circularity

Until the Industrial Revolution, most human refuse was organic, leaving no harmful long-term footprint. Much of the waste produced in our current take-make-waste linear economic model, however, is made of non-biodegradable materials like plastic that do not decompose or dissolve naturally. They will remain on earth for hundreds of years, creating one of the greatest challenges for generations to come. Not only is this kind of waste piling up in landfills, but over time it releases highly toxic pollutants that leach into water supplies, pollute the land, and poison the food chain.

Linearity in our global economy has led to significant societal challenges including climate change, pollution, health hazards, and the depletion of resources. The business practices of the take-make-waste mentality falsely assume an endless supply of resources, threatening long-term economic growth and environmental well-being.

Treating waste as a resource

Waste is any substance that is discarded after primary use, or is worthless, defective, or useless. The problem today is that most of what is considered “waste” is neither worthless nor defective after primary use and could be kept in a cycle of reuse until it reaches its natural end of life. This is the concept at the core of a circular economy, where products are continually reused and recycled to achieve the goal of zero waste. The Body Shop, for example, has implemented a refill scheme so customers can keep refilling empty tubes and pots until they wear out, and when they do, the company recycles them into raw material for new packaging.

According to the book Waste to Wealth, the circular economy could unlock US$4.5 trillion of economic growth over the next decade, exceeding the estimated benefits from business as usual within the current linear economy. Peter Lacy, co-author of the book and chief responsibility officer and global sustainability services lead at Accenture, writes that linear business models have now begun to choke economic growth through unpredictable raw material prices and the increased cost of depending on unstable supplies of constrained resources.

Yet, despite the obvious problems of the linear model, the move to a circular economy has yet to fully take off. The good news, however, is that circularity experts agree that people are no longer asking what the circular economy is, but how to achieve the seemingly herculean transition from the linear economy. They also agree it’s not a mission impossible. It’s possible to change from a linear to a circular economy by implementing action plans in the five key areas that cause the greatest waste and pollution: food, textiles, electronics, plastics, and capital equipment (production equipment used in industry).

To help speed up the pace of change, the Platform for Accelerating the Circular Economy (PACE) launched the Circular Economy Action Agenda to help business leaders and government agencies think of waste as a valuable resource, find different business models to reduce dependence on scarce resources, and generate innovative services that grow revenues.

Cans ready to be recycled

Planning with passion

One reason for sluggishness around the implementation of circular models is the fear of job loss. In a circular world that relies less heavily on virgin material extraction, for example, fewer mining jobs will exist. It is estimated that by 2030 the industries that extract and refine petroleum will lose one million jobs. That’s a big, scary number that doesn’t go over well with workers or politicians.

There’s no time to waste as the world goes circular

In the same timeframe, however, according to a report by the International Labour Organization (ILO), 18 million new green jobs will be created. That’s a much bigger, highly encouraging number. The report states that taking action in the energy sector to limit global warming to 2 degrees Celsius by the end of the century can create around 24 million jobs, largely offsetting job losses in other sectors.

Frans van Houten, CEO of Philips, believes circularity can have a massive impact in three areas: jobs, innovation, and climate. But success will depend on collaboration between sectors and a clear understanding of the win-win opportunity. Circularity is not in opposition to business for profit; rather, it fosters economic growth in a sustainable manner. It’s an issue of the heart and the head.

Philips is a prime example of investing in circular business processes. Currently, 15% of the company’s products and services are fully circular; the goal is to reach 25% by 2025. Other challenging targets the company has set itself include sending zero waste to landfills, embedding circular practices at all sites, and, as an exemplar in health technology, responsibly repurposing all professional medical equipment.

Factory located the coast of an ocean

A call to action

The Circular Economy Action Agenda is designed as a rallying call for business, government, and civil society to collaborate on a collective agenda. The organization has compiled a report for each of the five key areas: electronics, plastics, textiles, food, and capital equipment. Each key area consists of four chapters: Objectives, stating what a circular economy could look like for food, for example; Impact, an assessment of the potential impact on people and the planet if the objectives are achieved; Barriers that are impeding the implementation of circularity in the food system; and a set of 10 Calls-to-Action.

Implementing the Action Agenda would result in a global economic system that enables human and environmental well-being. Business, government, and civil society all have key roles to play.
Philips, for example, has just announced the expansion of the Capital Equipment Coalition (CEC) to the North American market together with the U.S. Chamber Foundation. This step corresponds to Call to Action #6 in the Action Agenda for Capital Equipment, which is to collaborate across value chain and sectors to strategically plan reuse operations.

Driving circularity in capital equipment can have wide-reaching effects. Spanning a wide range of sectors and products, capital equipment contributes 6.5% of total global greenhouse gas emissions and uses a significant amount of global metals and minerals, including more than half of the world’s ore production. Adoption of circular practices in the sector could produce long-lasting environmental benefits and offer important lessons to other industries.

Member companies of the CEC, including companies such as SAP, Dell, Cisco, Microsoft, and Philips, identify common challenges and opportunities, share best practices, and set industry-leading commitments to advance circularity in the capital equipment they manufacture or manage.

Two coworkers looking at tablet

Making it happen

For circularity experts and drivers behind circularity, there is hope in sight. The Netherlands has pledged to become a completely circular society by 2050, independent of political influences. The former Prime Minister of Finland is now helping balance global division of labor and trade to enable circularity and drive social justice in the public sector. Canada is investing in a CAD$15.2 billion pandemic recovery plan to build back better that addresses the 21st century needs of the nation in a circular manner.

While government support is important, the role of business is crucial.

SAP and Accenture join forces to help enterprises become more sustainable

Apple, one of the most valuable publicly traded companies in the world, is actively pursuing circularity in its business. The company plans to become carbon neutral across its entire business, manufacturing supply chain, and product lifecycle by 2030. Already carbon neutral in its global corporate operations, this new commitment means that by 2030, every Apple device sold will have net-zero climate impact.

For Ellen MacArthur, whose foundation aims to accelerate the transition to a circular economy, this is the decisive decade for creating a better world. Thanks in part to the efforts of the foundation and its network of partners, in just one decade circularity has morphed into a bigger idea than just sustainability or going green; it is now the guiding narrative enabling better growth.

With governments, businesses, and NGOs all working together there is no question that a circular economy can contribute to tackling the climate crisis while promoting economic well-being, protecting human health and biodiversity, and creating new opportunities for work.