Circular Economy

The next decade is critical for the climate. Here’s how the circular economy can help

One week's worth of plastic waste, used and collected by one Japanese family trying to reduce the plastic waste it generates and its carbon footprint.

One week's worth of plastic waste, used and collected by one Japanese family trying to reduce the plastic waste it generates and its carbon footprint. Image: REUTERS/Kim Kyung-Hoon

Naoko Ishii
Director, Center for Global Commons, University of Tokyo
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SDG 12: Responsible Consumption and Production

  • Net zero cannot be achieved by decarbonizing the energy sector alone.
  • Circularity is needed to tackle climate goals within the next decade.

Many of our environmental calamities - climate change, extreme weather, loss of biodiversity, extracted ocean and eroded soil - stem from the collision of two systems: Earth’s natural system and humankind’s economic system. Such a clash has led geologists to inform us that we have left the Holocene - which supported our civilization - and entered the Anthropocene, the era of humans dominating the earth.

As a result, we are at a critical juncture of humanity. Many scientists have alerted us that our current economic model has been pushing the carrying capacity of Earth’s systems to their limits, and that unless we change course, we will be thrown into unprecedented uncertainty. Tackling the climate requires total systems transformation, from the energy sector to food, cities and production, and consumption. We must act now: experts warn that we have only ten years left to change course.


What is the World Economic Forum doing about the circular economy?

Achieving net zero

In the midst of the fight against COVID-19, humankind has begun to pay closer attention to the Earth and its systems. As a result, the tide has changed, at least on surface. Japan has committed to go net zero by mid-century, together with China and South Korea. The US has made this commitment as well. These moves could have a dramatic impact on the climate: more than 60% of GHG emissions are covered by those countries who joined the net zero club, according to climate site Carbon Brief.

Despite these commitments, there are, as yet, few concrete pathways to get to net zero. Many leaders and experts realize it is not practical to achieve net zero only by decarbonizing the energy sector. Total transformation of key economic systems is needed, and the pursuit of circularity across the economic system provides a significant lever to achieve net zero. It is estimated that 45% of GHGs needed for net zero can be reduced through pursuit of circularity according to the Ellen MacArthur Foundation, a non-profit focused on the circular economy.

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Collaboration’s role

Various types of coalitions – both vertical, horizontal and networking platforms, among leaders in business and government, and consumers and investors – can address typical systems stalemates and speed our efforts towards circularity.

Reshaping consumption. First, empowering the demand side of the value chain to push circularity is helpful in changing long-held ideas and practices. Traditionally the “circular economy” has been equated with the 3Rs “reduce, reuse, recycle” in Japan. The good news is that, of late, people in Japan have become more interested in the broader aspects of circularity, as seen in frequent coverage by newspaper and TV programs on cutting food loss and increasing circularity in the fashion.

When consumers are more educated on the full environmental footprint of their food or clothing choices (often thanks to better traceability and data standardization) they may change what they eat or wear, triggering changes across the complex value chain of those sectors.

Informed consumers can also be leaders in promoting circularity by creating a movement to appreciate goods and services that have a smaller environmental footprint and fewer GHG emissions (even when the final product is more expensive). In Japan, the general public, and particularly the youth, have become more conscious of the need to choose healthy food and ‘cool’ fashion that comes with a smaller environmental footprint.

Redesigning products. Secondly, multi-stakeholder coalitions demonstrate their value in bringing competitors together to redesign products making recycling easier. For instance, two large consumer goods companies, Kao and Lion, are now collaborating on recycling plastic containers. Containers for detergent in Japan have mostly shifted from new plastic bottles to refills provided in plastic film packages. While this has greatly reduced the amount of plastic, the film is made of composite plastic which is not easy to recycle, requiring new solutions.

This initiative is an unusual instance of two competing companies coming together to design package better for recycling. Private collaborations also require the involvement of local authorities as well as consumer education so that they can create an effective collection system.

Transforming heavy industry. Thirdly, multi-stakeholder coalitions are needed to pursue circularity among heavy industry. Almost 20% of global GHG emissions are linked to hard-to-abate sectors such as iron and cement. However, 40% of GHG emissions from steel, aluminum, cement and plastics can be reduced through circular measures. That reduction is only possible through a coalition among industries along the value chain, or along the sector, as well as the support of government leaders in terms of policy, regulation support and R&D. It is critical that circular efforts cascade to transform the way materials are used. Only the total transformation of industry can help us achieve a more sustainable society by 2050.

Ellen MacArthur Foundation
Image: Ellen MacArthur Foundation

Looking ahead

Of course, these changes won’t happen overnight. Governments need to develop credible long-term pathway scenarios and provide policy frameworks to reach these goals. Once business, consumers and investors commit to those goals, behaviors can align, risks can be taken, and coalitions can be formed.

COVID-19 has provided an unexpected push for circularity as people realize it is possible to embrace a lifestyle for which they have never dreamed possible, one that includes remote work, more decentralized living options and appreciation for a shortened value chain. Changes brought by the pandemic helped spark a genuine interest in pursuing more localized production and consumption systems.

At this crossroad of human history, I firmly believe pursuit of circularly provides powerful solution to the challenge at hand. Transformation of entire systems will be required, involving every quarter of the world, from industry leaders, policy makers, consumers and investors. If we join hands, we can make this journey together.

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