Davos Makes Economic Case for Action on the Circular Economy

Davos-Klosters, Switzerland, 23 January 2015 – Project MainStream, part of the World Economic Forum’s Circular Economy initiative, has released a new project outline containing three programmes to accelerate the transition to a circular economy. The circular economy is a model that focuses on careful management of material flows through product design, reverse logistics, business model innovation and cross-sector collaboration. These three new programmes usher in the first stage of Project Mainstream’s implementation, which involves over 30 global companies working together to help redesign material flows across the economy.

Project MainStream is a World Economic Forum initiative in collaboration with the Ellen MacArthur Foundation, with McKinsey & Company as the knowledge partner. The three new programmes focus on plastic packaging, paper and paperboard, and asset tracking. The programmes will advance collaboration across these major supply chains during 2015 to address current bottlenecks and leakages that result in loss of material value.

“The need for more circular models of manufacturing and design is undeniable – currently, 80% of the $3.2 trillion value of the consumer goods sector is lost to product waste each year,” said Dominic Waughray, Head of Public-Private Partnership and Member of the Management Committee at the World Economic Forum. “Project MainStream’s three new programmes align to sectors and value chains in the global economy that are ripe for practical action, offering a strong starting portfolio as we move from analysis to implementation.”

The three new programmes of Project MainStream are:

• Plastic packaging: This programme aims to close the gap between the design of packaging and the design of municipal waste management systems. Today’s systems, designed in isolation, result in almost all packaging being made from virgin materials, and it is used just once. This will be resolved by working with leading companies and cities to create an authoritative global plastic packaging roadmap, which aims to enable a 20-year transition to effective packaging solutions based predominantly on reuse and recycling of plastic.

For example, annual material demand for PET and polyester, which is used in plastic bottles and the textile industry, totals about 54 million tonnes, of which roughly 86% leaks out of the system. If Project MainStream can optimize these flows of plastics, it is estimated that nearly $4 billion in value could be created from the better use of PET alone.

• Paper and paperboard: Paper already has a relatively high global recycling rate of about 65%. However, the challenge preventing fully circular flows lies in the many additives used in the product and packaging design process. The programme aims to define a set of simple design rules, with a specific focus on chemical additives and inks, which could become a benchmark for policy-makers around the world.

Total annual production of paper and paperboard will amount to about 480 million tonnes in 2020. Some 130 million tonnes of that leaks out of the system and can be addressed by this Project MainStream programme; the economic value of this leakage is worth an estimated $10 billion.

• Asset tracking: The industrial internet and the internet of things have to date barely been deployed to extend the length and value of a product’s life, missing out on an opportunity to address the information gaps that prevent better decision-making on what to do with a product when a (first) user is finished with it. This asset tracking programme seeks to develop proof points and guidance in the form of a design and implementation toolkit that covers technological choice, consumer incentives and data architecture. The initial focus will be on consumer electronics and medical equipment.

Each year around $390 billion worth of consumer electronics and household appliances reach end of life. Asset tracking could help unlock a potential annual value of around $52 billion in these sectors through more reuse, remanufacturing and recycling.

“There has been significant progress in the transition to a circular economy, and Project MainStream aims to act as a catalyst by tackling the challenges and stalemates that organizations cannot individually resolve. This collaboration across global supply chains marks an important next phase for the circular economy, with a clear move towards systems-level change,” says Ellen MacArthur, Founder of the Ellen MacArthur Foundation.

Project MainStream brings together over 30 leading companies. It aims to find ways of scaling the circular economy through materials management, information technology and business model innovation, among others. The project is driven by a steering board comprising the chief executive officers of Brambles, Brightstar, BT, Desso, Royal DSM, Ecolab, Indorama Ventures, Kingfisher, Royal Philips, Suez Environnement and Veolia.

The Co-Chairs of the Annual Meeting 2015 are: Hari S. Bhartia, Co-Chairman and Founder, Jubilant Bhartia Group, India; Winnie Byanyima, Executive Director, Oxfam International, United Kingdom; Katherine Garrett-Cox, Chief Executive Officer and Chief Investment Officer, Alliance Trust, United Kingdom; Young Global Leader Alumnus; Jim Yong Kim, President, The World Bank, Washington DC; Eric Schmidt, Executive Chairman, Google, USA; and Roberto Egydio Setubal, Chief Executive Officer and Vice-Chairman of the Board of Directors, Itaú Unibanco, Brazil.