A new 18-minute documentary film, Circularity: Preparing for the New Economy, calls for a radical overhaul of current economic systems. Featuring commentary from a number of business analysts, the film provides an overview of what the “circular economy” is and the opportunities for growth that it presents.
The experts assert that to realize financial, social and environmental prosperity, the entire system must be ‘reoriented’ to encourage businesses to change their current models, go beyond incremental improvements, and collaborate.
“The circular economy is a concept that is pro-business and pro-growth but it's about driving a different kind of growth – a growth that innovates for customers, and eliminates wasted and harmful materials. It's based on the idea of using assets more effectively, closing loops, extending product lifecycles, while not cannibalising business,” Peter Lacy, the Managing Director of Accenture Strategy, says in the film.
He suggests that no matter which environmental metrics you consider, whether ocean health or biodiversity or carbon, “globally, we’re heading south,” which merits the need for systemic change. “It’s not to say that there [aren’t] benefits from making incremental progress – small shifts in energy efficiency, corporate responsibility policies on the edge of business – it’s not to say that there’s anything wrong with that in and of itself, but it’s not the ‘True North’ we’re talking about,” Lacy explains in the film.
“‘True North’ is about actually reorienting the entire system so that it rewards and incentivizes business that – at the core of their strategies, at the core of their business models, their global supply chains – that they’re embedding the principles of fairer growth, of more sustainable growth, of responsible growth, and doing well and doing good.”
Research from Accenture Strategy suggests that the circular economy can unlock $4.5 trillion in value by 2030. Further insight on the potential financial benefits for “organizations that get it right” amidst this transition is provided by Werner Furhmann, an Executive Board Member at Akzo Nobel N.V and Leonie Shreve, the Global Head of Sustainable Lending at ING Bank.
In the film, Schreve notes, “Companies that are pro-actively approaching sustainability and resource scarcity we already see in research that the financial performance of these companies is better. It can range from 30 to 40 percent better.”
In addition to financial benefits, experts highlight how remanufacturing can drastically improve the environmental performance of products, how circular models can improve the longevity of products, how design is shifting to be more systems-oriented, and challenges such as material complexity and markets for post-consumer materials.
At the same time, they acknowledge that the transition will likely be slow. As Sophie Thomas, Founder of The Great Recovery Programme, puts it, “This is a whole new economic model. It's not going to happen overnight. It's going to be painful.”
Professor Julia Stegemann of University College London (UCL) adds, “Change is always an opportunity. This is a change that is happening, it's going to happen, it's inevitable. Companies do need to prepare themselves and the opportunity is to be on the leading edge.”