Circular Economy

If Circularity Is Now a Megatrend, Why Does Material Extraction Continue to Rise?

Deloitte and Circle Economy Foundation identify ongoing gaps in circular policies and approaches and outlines a roadmap to unlock capital, implement policy, and unlock skills and human capital needed for a robust circular economy capable of meeting the material challenges of the Anthropocene.

By Christian Yonkers | Published 9 months ago | About a 5 minute read

Image: Pixabay

A circular economy — a concept on the fringes of the zeitgeist a decade ago — is now part of sustainability discussions throughout the business world. According to a recent report by Deloitte and Circle Economy Foundation (CEF), circularity has reached megatrend status — with the volume of discussions, reports and articles on the concept nearly tripling since 2018.

Unfortunately, little conceptual development has occurred in circularity since the early 1990s amidst a backdrop of ballooning global consumerism and stagnated recycling policies and infrastructure. Deloitte and CEF’s annual Circularity Gap Report, first published in 2018, introduced the “global circularity metric.” That year, only 9.1 percent of the world economy was circular. In this year’s report, that number is 7.2 percent.

As Matthew Fraser — Head of Research and Development at CEF — explained, multiple factors can explain the marked decrease in global circularity:

Greater global consumption over the past five years
A greater share of materials are durable goods lasting years and even decades in the global economy, indicating a decline in economic outputs relative to inputs
Global recycling rates remain stagnant.

Since 2018, the Human Development Index has risen across high, middle and low-income nations — leading to corresponding material consumption and material footprint per capita. Since 2018, the report found that humans have consumed over 500 gigatonnes of material, a whopping 28 percent share of total material consumption since 1900. The report outlines a roadmap to unlock capital, implement policy, and unlock skills and human capital needed for a robust circular economy capable of meeting the material challenges of the Anthropocene.

“As [Human Development Index] rises, so does material consumption — and consequently, pressure on the environment,” the report reads. “We need a new economic model for the 21st century: one that maximizes benefits for people and minimizes the pressure on the planet’s life support systems. This is a circular economy.”

Characteristics of a circular economy

The 2018 report outlined seven principles of a circular economy:

Prioritize regenerative resources.
Preserve and extend what’s already been made.
Use waste as a resource.
Rethink business models.
Design for the future.
Incorporate digital technology to track and optimize resource use.
Collaborate through the supply chain to increase transparency and create shared value.

The 2023 report outlined 16 solutions that could realign humanity with planetary boundaries, reverse planetary overshoot, and reduce the need for virgin material extraction. Each solution directly addresses seven societal needs — nutrition, housing, mobility, healthcare, communication, consumables and education. The 2023 report found that, assuming business-as-usual continues, the world will consume 170-184 gigatonnes of material annually — but implementing economy-wide circular solutions could reduce material consumption by one-third.

The latest report builds upon these findings — shifting from theory to action. It identifies the most impactful circular solutions for industries across three country profiles and shows how legal, regulatory and financial incentives can be shifted to unlock durable structural change.

“Today’s world is characterized by a ‘polycrisis’ of overlapping and interlinked economic, environmental, social and political crises and challenges,” Dieuwertje Ewalts from Deloitte Consulting Netherlands told Sustainable Brands® (SB) via email. “We need systemic transformation to create lasting change — not just treat the symptoms. A systems-thinking approach to ecological breakdown can help tackle complexity, deal with uncertainty, balance trade-offs, limit rebound effects, and prevent embedding biases that can cause future issues.”

Most notably, the report finds that a circular economy must prioritize human and ecological wellbeing over profits — whereas traditionally, discussions about a circular economy focused on environmental and economic considerations.

“This report acknowledges the crucial role of people — particularly, key workers and communities — in driving the transition to a circular economy,” Ewalts added. “By placing people at the center of the narrative, the report recognizes that the success of the circular economy transition relies on the engagement, empowerment and participation of individuals across varying industries and backgrounds.”

The report’s solutions focus on three key systems — food, the built environment, and manufactured goods — as well as three country profiles: Build (lower-income), Grow (middle-income), and Shift (higher-income).

“In our report, we selected to look at the manufacturing system for Grow and Shift countries … due to the fact that consumption of common goods — from clothing to furniture to cars to electronics — represents one of the fastest-growing and evolving industries globally,” Fraser told SB. “It is therefore crucial to consider circularity across the sector — such as industrial symbiosis on the production side, as well as circular business models and extended producer responsibility schemes, on the consumption side.”

“Public officials, financial institutions and multilateral organizations must reform international financing and trade architectures to ensure all countries can invest in sustainable development,” Ewalts continued. “For example, they can increase access to affordable technological innovations and roll out measures for debt cancellation and relief.”

Global economic incentives including redesigned tax frameworks, disincentivizing consumption and market interventions that reinforce better pricing must also be realigned to sustain a circular economy.

“Public officials, multilateral organizations, labor agencies and unions, business leaders and educational institutions must engage in global collaboration,” Ewalts said, to ensure a circular transition “is people-centric — building support and leadership among governments, harnessing policymakers’ creativity, and ensuring education addresses the shift in jobs and skills.”

While an internationally binding plastics treaty continues to be debated at the UN, the private sector is proving the efficacy and importance of circular social enterprises — proving that a holistic, inclusive approach to building a circular economy is non-negotiable.

“A systems-thinking approach to ecological breakdown can help tackle complexity, deal with uncertainty, balance trade-offs, limit rebound effects and prevent embedding biases that can cause future issues,” Ewalts wrote.

A systemic approach, she continued, uncovers the root causes of ecological breakdown as well as identifying leverage points where a small shift can result in transformational, equitable systems change.

Christian Yonkers

Christian is a writer, photographer, filmmaker, and outdoor junkie obsessed with the intersectionality between people and planet. He partners with brands and organizations with social and environmental impact at their core, assisting them in telling stories that change the world.

Tags:

Deloitte