Published: Fri, Jul 7, 2017
Author: Peter Bakker
Type: Insight

Population growth, urbanization and increasing affluence are driving natural resource consumption beyond the earth’s ability to replenish.

Over the last 40 years, annual extraction of materials has more than tripled[i]. If we continue along this trajectory, total demand for resources is expected to reach 130 billion tons by 2050, up from 50 billion in 2014. That will mean that by 2050, we’ll be overusing the Earth’s total capacity by more than 400%.

Every year, natural resources will become harder to extract and more vulnerable to extreme price volatility – making it difficult and expensive for businesses to provide the products and services necessary for a well-functioning global economy.

Addressing these issues will be key for G20 leaders as they seek to build healthy societies and strong economies.

Collectively, businesses and policymakers need to step up and make a change, address resource scarcity and get creative with the way we produce and consume goods and services.

Implementing the circular economy provides an elegant path forward, ensuring more sustainable sectors and industries - across the board.

The circular economy moves away from the traditional “take-make-dispose” economic model to one that is regenerative by design. The goal is to retain as much value as possible from resources, products, parts and materials to create a system that allows for long life, optimal reuse, refurbishment, remanufacturing and recycling[ii].

It will enable companies to remove the concept of waste, design products to last, get creative with material inputs and think through product life-cycles from start to finish.

The circular economy is beneficial for society and the environment, and will yield significant economic benefits.

Transitioning to the circular economy represents a $4.5 trillion opportunity, and has the potential to catalyze the biggest social, economic and environmental changes since the First Industrial Revolution.

The pathway for getting started is more clear than ever.

Eight material inputs for products, agriculture and infrastructure (steel, aluminium, plastic, cement, class wood, primary crops and cattle) are responsible for 20% of global GHG emissions, 95% of water use and 88% of land use. Implementing circular economy measures in these areas can help address climate change, water and land use challenges[iii].  

Specific processes for implementing the circular economy around these key areas will yield massive benefits that positively affect business, society and the environment – while helping achieve the SDGs and the Paris Agreement.  

Businesses who understand this are starting to step forward, policymakers must follow suit.

By moving towards the circular economy, countries and companies can capture increased growth; innovation and competitive advantage while enjoying cost savings; reductions in energy use and CO2 emissions, as well as better supply chain and resource security.

Businesses are using renewable energy and recycled inputs, while recovering useful resources out of by-products and waste. They’re designing better products, with longer life-cycles and more opportunities for second and third uses, while exploring sharing platforms to help ensure that more people have access to their products and services.

As more companies implement the circular economy successfully, they serve as proof points for policymakers – illustrating to them that circular economy efforts can benefit society at large.

As such, companies are calling upon G20 leaders to help accelerate progress towards the circular economy by:

  1. Securing access to sustainably sourced raw materials
  2. Implementing measures to increase re-use and recycling at the end of a product’s life
  3. Boosting demand and creating consumer/governmental incentives for circular products and services
  4. Increasing the uptake of high-quality secondary raw materials
  5. Encouraging and supporting research and innovation for smarter uses of resources

This isn’t about doing the right thing. It’s about doing the smart thing. It’s about what’s best for the economy, for society and for local communities. 

By encouraging and implementing new circular business models and technologies, businesses and policymakers have the opportunity to start the engine that drives economic growth while minimizing environmental impacts.

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[i] UNEP International Resource Panel (2016): Global Material Flows and Resource Productivity Assessment Report

[ii] Adapted from: kenniskaarten.hetgroenebrein.nl/en/knowledge-map-circular-economy/definition-circular-economy/

[iii] Research conducted by Ecofys with WBCSD to be released in 2017. Eight materials include steel, aluminium, plastic, cement, glass, wood, primary crops, and bovine cattle.

This piece was originally published on G20 Foundation Magazine.