The Desperate Need for a New Economic Model
As the world attempts to move toward a cleaner more efficient future, it is important to highlight and celebrate those individuals and organizations working to make the circular economy a reality. The circular economy proposes that instead of obtaining, using, and disposing of materials that we find a way to design and build products so that most if not all of the original materials can be recovered for future use. Given our inclination for tossing a veritable supercomputer in the trash about every two years, the circular economy can look like a fool’s errand.
And yet the signs of this crucial transformation are happening in some of the world’s largest economies. The European Commission recently adopted a €24 billion Circular Economy Package to help facilitate the change within the European Union. According to international law firm Lantham & Watkins LLP, the objectives of the package include:
- Actions to reduce food waste, including a common measurement methodology, improved date marking and tools to meet the global Sustainable Development Goal (SDG) to halve food waste by 2030.
- The development of quality standards for secondary raw materials to increase the confidence of operators.
- Measures in the Ecodesign working plan for 2015-2017 to promote reparability, durability and recyclability of products, in addition to energy efficiency.
- Revised regulation on fertilizers to facilitate the recognition of organic and waste-based fertilizers and support the role of bio-nutrients.
- A strategy on plastics that addresses recyclability, biodegradability, hazardous substances and the SDG target for significantly reducing marine litter.
- Actions on water re-use, including a legislative proposal on minimum requirements for the re-use of wastewater.
In addition, the circular economy package also establishes specific proposals for waste management including:
- A common EU target for recycling 65 percent of municipal waste and 75 percent of packaging waste by 2030.
- A binding landfill target to reduce landfill to a maximum of 10 percent of all waste by 2030 and a ban on landfilling separately collected waste.
- The promotion of economic instruments to discourage landfilling.
- Simplified definitions and harmonized calculation methods for recycling rates.
- Measures to promote re-use and stimulate industrial symbiosis by turning one industry’s by-product into another industry’s raw material.
- Economic incentives for producers to put greener products on the market and support recovery and recycling schemes.
So is it really economically responsible to commit such a significant amount of financial assets for whole countries to “go green”? The answer is a resounding yes. The Ellen MacArthur Foundation estimates that a circular economy could be worth $340B - $630B annually in the EU just in materials cost savings. A similar report from consulting powerhouse McKinsey reveals that by 2025, the circular economy could be worth $1 trillion a year and that “under the right conditions, a circular economy could become a tangible driver of global industrial innovation, job creation, and growth for the 21st century.”
Aside from the potential economic windfall, the circular economy can offer national governments an opportunity to push national security concerns toward stability. Much of the global economy is dependent on the ability of countries to procure raw materials from a variety of sources consistently and without promoting slave and/or child labor. Look no further than the concern over conflict minerals from the Democratic Republic of the Congo to see the difficulty in acquiring these raw materials responsibly. If countries were able to recover and reuse many of these materials, a more financially stable source of materials would help to reduce economic support for these violent regimes.
The economic, environmental, and societal benefits of shifting to a circular economy are undeniably important in today’s world. While corporations are crucial for success, this change cannot succeed in a vacuum. A fundamental rethinking of infrastructure in the areas of waste, water, and recycling among others needs to be undertaken. The shift will be rough and undoubtedly difficult, but the European Union is making great strides in pushing the circular economy toward a prosperous reality. Will others follow suit?
Practitioner & Promoter of the Shewhart/Deming Management Method (SPC/14 Points) and the System of Profound Knowledge
9 年I think Brendan made a statement that needs to pondered, " I feel it's unreasonable in a capital market to 'expect people to aim to make less profit' because it's 'good'. Certainly good business does not need to be less profitable." I on the other hand think the focus of the economy needs to be on people, and not on profit. People first, and profit second, perhaps not in the amount that could be made. Ayn Rand's theoretical "benevolent industrialist" puts the individual's profit ahead of all other individuals, and that somehow dependent on goodwill of the industrialist, prosperity will trickle down to the masses. Rational seflishism she called this. The great conflict between state and the individual continues. We are betwixt the two. On one hand we empower the state which can be a cruel tyrant, or we empower the industrialist which can be a cruel tyrant. The state can watch industrialism destroy people and the environment, it can support initiatives that are doomed for failure, or it can regulate until it is almost impossible to conduct business. PS. Is the EU ultraistic in its motivation or self-serving? PSS. I strongly recommend for those who are not faint of heart, to read Upton Sinclair's turn of the century book, "The Jungle" to have a basic understanding of the essence of mass production and government collusion.
Empowering people, developing business, inking the right deals.
9 年Excellent paper. There is already an important shift to a circular economy, at least on a local / vertical scale. One of the main shifts in the past few years, is with the motivation - moving from "green" to "business worthy" - that could be the main game changer as we look ahead, and lawmakers can influence the pace.
Agricultural journalist specialising in farm machinery
9 年I'd agree with Matt Prescott, It's a sign of the times that we need to dress the same concern for the environment up in sexy new clothes at ever more frequent intervals. Another year and somebody else will have thought of a new guise for the green philosophy, I guess the cycle has to match that of the life of the average smart phone to be cool.
Director of Research, Lantern Insights. Sustainability thought leadership and research services. Nature, Climate, Carbon, Technology, Finance, Strategy, Policy, Data Insights.
9 年The Circular Economy strikes me as a rebranding of the older reduce, re-use and recycle mantra.