In a world of close to 9 billion expected by 2030 – including 3 billion new middle-class consumers – the challenges of expanding supply to meet future demand are unprecedented. Our current ‘take-make-dispose’ approach results in massive waste, and in the fast-moving consumer goods sector about 80% of the US$ 3.2 trillion value is lost irrecoverably each year. Change is vital, and is needed now.
Relying on efficiency gains alone will not be enough to meet global demand: the context calls for systemic changes, and in that respect the switch from a linear to a regenerative circular economy provides credible and quantified perspectives. Within this economic model, designing durable goods to be restorative will keep components and products in use for longer, whilst ensuring that biological materials can re-enter the biosphere at the end of their life will contribute to safeguarding soil productivity. Ultimately the circular economy could decouple economic growth from resource consumption – truly a step-change.
The potential for innovation, job creation and economic development is huge: estimates indicate a trillion dollar opportunity, and numerous global trends suggest the time is ripe for this sea change (see box).
Global trends driving transition to the circular economy:
During 2013, the World Economic Forum in partnership with the Ellen MacArthur Foundation – with the support of McKinsey & Company – engaged in conversations with key business leaders and experts to identify the relevant trigger points for scaling up this new model. ‘Towards the Circular Economy: Accelerating the scale-up across global supply chains,’ launched in the Forum’s 2014 Annual Meeting in Davos, describes the results of this research and lays out a plan of action.
The report highlights the need for more circular flows of major global raw materials, such as polymers, steel and glass. This would be a decisive step in itself, allowing re-used and virgin materials to become interchangeable. This opens up the economic potential of the circular model – in some cases leading to 40-50% savings - and moves away from today’s “recycling” which generally downgrades materials, leading to eventual waste and continuing high demand for virgin materials. It would also be the basis for wider adoption of the circular model, enabling products and supply chains to be designed optimally around materials which are consistently re-used – in turn unlocking greater value in refurbishment, remanufacturing and the shift from product to service provision.
Project MainStream is an initiative that was jointly launched by the World Economic Forum and the Ellen MacArthur Foundation, with support from McKinsey & Company.
Project MainStream aims to leverage a pre-competitive, cross-sector collaborative effort that addresses the enablers of the circular economy, ranging from pure material flows to policy enablement and technology. The project will develop business cases and deliver proof-of-concept for such flows, and be the cornerstone to influence the rest of the business community.
The project will develop programmes that address questions such as how to enable the circular flow of materials like polymers or paper, and how to improve the economics of remanufacturing.
After two years, the project team expects to have proof-of-concept based on the results of pilot projects. It believes that the success of these programmes will prompt other industry players to go circular as well.
The expected benefit of Project MainStream is huge, with the potential to deliver at least US$ 500 million in materials cost savings and 100,000 new jobs (e.g. reverse logistics and materials recycling), as well as to avoid 100,000 tons of materials waste within five years globally.