1.1. Our current mode of operandi: The “Take-Make-Waste” Economy
We are still living in a linear “take-make-waste” economy – meaning most of the stuff which we are buying – from clothing, cellphones, laptops to packaging-materials – are made from finite resources which are traveling upstream through complex value chains around the globe. Downstream – when the product transfers to the consumers, companies often “lose control”: At the end of their life cycle, products are most often thrown away and are not returning to the retailers and producers. Meaning those things are losing their value and waste is affecting the environment and biodiversity in a dramatic way.
Waste is a lost economic opportunity. For example, look at the electronic industry: According to the World Economy Forum, around 53,6 million metric tons of e-waste are produced every year worldwide – it is the fastest growing waste stream at 3 to 5 percent annual growth. The WEF estimates that 83% of e-waste is not being collected, meaning dramatic effects on the environment and people. And a huge, missed opportunity for the circular economy.
1.2. A Solution: The Circular Economy closes the loop & unlocks new revenue streams
The Circular Economy is about systemic change and new revenue streams: De-coupling economic growth from the consumption of finite resources – keeping them inside cycles at their highest value as long as possible. This saves energy, water, raw-materials and therefore costs in a significant way. Product design is crucial: According to the Ellen MacArthur Foundation, 80% of the environmental impact of a product is defined during the design phase. Therefore, a Circular Economy requires circular design principles, take-back systems, and “As a Service” business models – e.g. renting or leasing a car, cellphone, washing machine and even clothing instead of owning them.
A key principle is to regenerate nature – e.g. through stopping resource-depletion and biodegradable packaging and garments. A positive side-effect for the economy: Acting circular significantly reduces dependencies on scarce and expensive raw materials, supply chain disruptions, international logistics and emissions – the production becomes more local.
McKinsey estimates in a study that the Circular Economy could unlock a revenue opportunity of more than $1 trillion in Europe alone by 2025 – helping organizations to gain a competitive edge. Another McKinsey analysis estimates that consumer goods companies in Europe could access a value pool worth up to €500 billion by 2030 by shifting to circular business models. They claim that companies who commit themselves to environmental, social and governmental (ESG) metrics will become the leaders of the future. ESG metrics are essential facets of the Circular Economy: For instance, adhering to Human Rights and considering social matters such as fair payment, safety, proper healthcare and good work conditions inside global supply chains.
