Why the circular economy is a golden opportunity

Why the circular economy is a golden opportunity

Scientists estimate that by 2050, we will need the resources of almost three planets to sustain our current lifestyle. It is time to move away from our linear system of taking-using-and discarding resources.

Helen Burdett, head of circular economy at the World Economic Forum, and Connor Bryant, CEO of the Rubbish Project, tell us how a restorative and regenerative circular economy can be a game changer.

The Circular Economy offers us a lot of hope for the future. What are the top three benefits of moving away from the current linear system that was born and shaped following the Industrial Revolution?

Helen: First, the circular economy protects nature through reduced reliance on virgin materials. Second, it strengthens business resiliency and returns. Businesses that incorporate social and environmental aims in addition to their aims of growth in money making are 43% more likely to scale. The circular economy represents a USD 4.5 trillion business opportunity.

Third, it reduces emissions. Nearly half of all emissions can be tackled by how we make, take, and use resources. So those would be my top three - nature, business, and climate.

Are we seeing significant and quick action on the ground to change this culture of take-make-waste?

Connor: Unfortunately, we're still quite a long way from the scale of action and change that is required. However, it is also important to note that the momentum has started to build. Over the last ten years we are starting to see an accelerated transition towards adopting this and taking it seriously as a business model.

So, while we are nowhere near doing enough, we are at least heading in the right direction. But we need exponential change to accelerate this to get us moving faster.

Which sectors and industries have the biggest opportunities and can easily adapt to the circular economy?

Helen: Studies show that circular economy strategies could help reduce emissions from steel, aluminium, concrete, and plastics, so those four material sectors by 50% by 2040.

Those same four materials are often referred to as 'harder to abate' sectors, some more than others, and moving to net zero is less straightforward, perhaps for them.

What are the most common bottlenecks and practical problems in converting from the traditional linear system?

Connor: The top bottleneck or barrier is short-term thinking on both the government and company levels. This has been a major barrier to change for the circular economy, action on climate change, and any other sort of large, existential issue for humanity.

The other one is that there is no lock-in or existing infrastructure investment. If you as a company or government have spent a large amount of money on infrastructure that already exists or infrastructure that is hard to replace, then it can be quite challenging to build the investment to replace it or write-off the loss of the investment that you've already made.

And the other one is the desire to make small iterative changes rather than redesigning your whole approach. And then finally, it is a culture change because we've designed these systems that are inherently wasteful by design.

What role do policymakers and governments need to play in building circular economies?

Helen: The government's role in influencing industries is often broken down into a push and pull. It can push changes through regulation restricting linear practices, such as banning single-use plastics. Or it can pull changes via incentivising circular approaches.

In a conversation with a Minister of Environment at Davos, a third, potentially most crucial role of government came up - i.e., to get out of the way. Innovative companies often bump up against existing regulations that make it difficult to grow their business or enact changes. The classification of waste is an often-cited example of this.

Connor: One of the biggest barriers to using recycled material in products; especially food contact packaging is legislation that restricts the use of recycled materials in those applications. There is a slow pace of change despite significant evidence to show that these bits of legislation are outdated and holding back the recycling industry.

Now, it is more expensive to use recycled material than it is to use virgin material. This is both - a problem of not acknowledging the externalised cost of using virgin material and a problem of the existing infrastructure investments that we've made.

Another key area, I would say that governments have a huge role to play is to start building in the external costs of consumption or resources or business practices through tax. Currently, that cost isn't being borne into the product. You are not being charged based on the cost to the overall planet and therefore the costs that we will all have to pay to fix that mistake. You are only paying for the small cost of producing that product.

What are the main drivers that will push the creation of a more circular economy?

Connor: If we start to bring in the real-world environmental cost into every business decision we make, that will dramatically change the viewpoint and the economics of our products and systems. The other one is mounting public pressure because companies can be very quick to make transitions when they feel that the public, and therefore the market they serve, is turning against their product or packaging. And then there is innovation - from businesses on new and novel ways to solve and tackle these problems.

At Wärtsilä we have been quite active in working with digitalisation and technologies such as 3d-printing, or additive manufacturing and see them as quite transformative in our markets. How important is this type of technology development in driving the change? 

Helen: Technology will be key to scaling these solutions and ensuring that cities, regions, and countries can use the latest tools to find customised and circular solutions that are both sustainable and fair. We are now at a place where we shouldn't be coming up with new and innovative ideas and products that are not circular and do not incorporate the circular lens.

And the final piece is that technology, by definition, is disrupting the kind of linear model of our economy. And in economic disruptions those who are most vulnerable are often at risk. 

As part of these shifts and changes, we should also keep in mind how to make this transition a just and fair transition that it can't only be for the planet but also for the people on it.

This conversation is abridged. To hear the complete conversation please tune into the podcast.

In this episode
Atte Palomäki
Atte Palomäki
Executive Vice President Communications & Branding