Circular Economy Organizational Governance

Fix the Economy, Fix the Climate:
A Deeper Dive Into the Win-Win of a Circular Economy

At a recent virtual event, Dame Ellen MacArthur and an esteemed lineup of business and policy leaders discussed how to push siloed circular efforts to scale. And while the unknown and upfront costs are delaying progress, MacArthur asserted: “Everybody loses if we continue with business as usual.”

By Maxine Perella | Published 3 years ago | About a 5 minute read

Image: Frank Cone/Pexels

Climate action pledges are in full swing as COP26 beckons this year, one of the most significant being the joint communique drawn up last week between the G7 nations. But while the focus remains on cutting emissions, those within the circular economy movement believe such an energy transition will only get us so far.

At the Ellen MacArthur Foundation’s Summit 21 last week (watch video of the event here), Christiana Figueres — former executive secretary for the UN Convention on Climate Change and now founding partner at Global Optimism — spoke with Dame Ellen MacArthur about how the climate movement may be blindsiding itself by overlooking the potential of circular thinking.

“We are addressing climate and emissions very much from a linear perspective,” Figueres said. “We are still caught in this linear thinking; and we haven’t closed the loop yet to figure out then, what happens?”

Figueres was instrumental in delivering the historic 2015 Paris Agreement; but like MacArthur, she feels that much of the climate conversation is about switching to renewables — while the issue of designing waste out of industrial systems isn’t really being talked about.

“If we look at where we are progressing on solutions to climate, we are definitely focusing on energy and transport, but 30 percent of our emissions come from land use. We can’t blind ourselves to this,” she said.

She added: “We’re beginning to see much more potential to capture carbon out of the air and sequester it back into the soil. CO~2~ in the air is nothing but a location problem, but CO~2~ in the soil is our friend. We should be thinking about location, location, location. That is the natural cycle of CO~2~.”

In many respects, regenerative agriculture may hold the key when it comes to fixing the land use carbon cycle as it can also offer a number of additional benefits such as improved soil health and biodiversity. The question is, how to scale such farming solutions?

Another summit speaker, reNature founder Felipe Villela, is supporting farmers who are shifting towards more sustainable agri-production models, linking them with multinational food companies who want to create more resilient supply chains.

“We have seen a lot of interest from corporates in looking at these practices. One factor is the willingness to transition, if they are willing to learn about this,” he said.

Better prices for farmers to help them offset some of the risk is paramount. Villela pointed to buying models and contracts that could help accelerate this, such as offtake agreements set at around 20 percent higher than the market value.

Following Villela, Nestlé CEO Mark Schneider said it was important that the company used its commercial leverage to get such initiatives off the ground. He said that addressing supply chain agricultural practices were a “major cornerstone” of Nestlé’s net-zero roadmap and a big part of reducing the company’s overall footprint.

“The transition is not going to be easy,” he added. “Fresh investment is needed, additional training is needed … the farming community for many crops is the weakest link when it comes to the supply chain; financially speaking, they are the most exposed. We have to help those communities to go through that change.”

Meanwhile Hanneke Faber, Unilever’s president of foods & refreshment, said it was important for brands to help build, rather than deplete, biodiversity — and that biodiversity will ultimately be driven by more diverse consumption. “If we as big food suppliers don’t change what people eat, we are not going to create the shift that the planet needs.”

Faber pointed to the 50 foods we need to eat more of, and added that retailers also had a “giant role” to play in influencing what consumers eat. Looking ahead, that likely means going more plant-based — but also cutting down on foods with high sugar and salt content.

Later in the afternoon, MacArthur reflected on the impact of the pandemic while in conversation with Wolfgang Blau, former global COO at Condé Nast. She said while there were “evident ways” the circular economy had been slowed down by the virus — global demand for PPE and single-use plastic being a case in point — there had also something of a mindset shift.

“People have stopped and reflected,” she said. “There has been a real focus on — when we build back after this pandemic, what do we focus on? The circular economy gives that answer in its restorative, value-creating agenda.”

MacArthur acknowledged that with every transitional shift there will be winners and losers, but asserted: “Everybody loses if we continue with business as usual.” Asked by Blau who bears the most financial risk of this transition, she replied: “That’s a good question. It’s a conversation we have been having with companies for the past decade.”

She added: “Without question, there is a cost of transitioning towards a circular economy; but you have to weigh that up with the cost of staying within a linear economy.”

Emphasizing the importance of policy, MacArthur said a level playing field in this regard would make the transition easier for business. It was a view echoed by speaker Mariana Mazzucato, professor in the economics of innovation & public value at University College London, who said responsibility for such shifts should not be isolated to a few governments, or indeed companies.

“It has to go to the centre of how we think about economic and societal change,” she observed. She maintained that governments need to take an outcomes-oriented approach to policy — so, rather than fixing market failures, co-shape them with others to build in resilience from the start.

“If we think of the circular economy as not something that is peripheral to the economy, but central to it, then that’s where we are going to have change,” Mazzucato concluded.