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More and more evidence continues to emerge that points to the literal wealth of untapped potential of shifting to a circular economy. Today, the Ellen MacArthur Foundation, the McKinsey Center for Business and Environment, and SUN (Stiftungsfonds für Umweltökonomie und Nachhaltigkeit) present the results of a major new study at the European Commission’s stakeholder conference on the circular economy in Brussels.
More and more evidence continues to emerge that points to the literal wealth of untapped potential of shifting to a circular economy. Today, the Ellen MacArthur Foundation, the McKinsey Center for Business and Environment, and SUN (Stiftungsfonds für Umweltökonomie und Nachhaltigkeit) present the results of a major new study at the European Commission’s stakeholder conference on the circular economy in Brussels. Growth Within: A circular economy vision for a competitive Europe reveals that by adopting circular economy principles, Europe can take advantage of the impending technology revolution to create a net benefit of €1.8 trillion by 2030, or €0.9 trillion more than in the current linear development path. This would be accompanied by better societal outcomes including an increase of €3,000 in household incomes, a reduction in the cost of time lost to congestion by 16 percent, and a halving of carbon dioxide emissions compared with current levels.
“The economy is undergoing profound transformation as the technology revolution reaches scale,”says Dame Ellen MacArthur. “This report has shown that by applying circular economy principles we can catalyse this change, achieve a real system shift, and open a new era of growth and development, decoupled from resource constraints.”
Europe’s current linear growth model is highly dependent on finite resources, exposing it to resource volatility, limited gains in productivity, and huge loss of value through waste. Research to date by the Ellen MacArthur Foundation has quantified clear economic benefits of a transition to the circular economy which aims to keep products, components, and materials at their highest value at all times. This latest research presents, for the first time, a vision of how the circular economy could look for three of Europe’s most resource-intensive basic needs: food, mobility and the built environment, which together account for 60 percent of household costs.
“The findings are the result of a nine-month study, drawing on the expertise of academia, government, and industry,” says Dr. Martin R. Stuchtey, McKinsey Center for Business and Environment. “The insights of the report have been derived through extensive desk research, over 150 interviews, a new approach to modelling the economic impact of the circular economy, the largest comparative study on employment effects, and three in-depth sector analyses. The results show that, given the massive change in technology, consumer behaviour and business models, the circular economy is both viable and attractive. We found that businesses that work on the basis of circular principles are amongst the fastest growing in the economy.”
The report acknowledges that on the current linear path, technological disruption will bring benefits, but finds that the potential gains for growth, household incomes and the environment are much greater with a circular model. Key findings for Europe include:
The report’s findings are timely: As the European Commission considers its circular economy strategy and consults with stakeholders in order to develop a circular economy package by the end of the year, Growth Within provides a fact-base to inform the choices that need to be made.
For policy-makers inspired by the vision presented in this report, the Ellen MacArthur Foundation’s new and complementary report, Delivering the circular economy: A toolkit for policy-makers, offers an actionable, step-by-step methodology to help transition towards a circular economy.
The Ellen MacArthur Foundation's findings were echoed by independent research released this week from Imperial College London, commissioned by leading environmental solutions provider Veolia, which found a combination of closing resource loops and moving to a service- rather than product-based economy has the potential to add 0.18 percent — equivalent to £2.9 billion (~US$4.5 billion) — to the UK's Gross Domestic Product (GDP) per year, roughly £29 billion by 2025 by:
The report, entitled The circular revolution, also estimates that 175,000 jobs will be created by the circular economy, amounting to almost 10 percent of UK unemployment (echoing a similar projection earlier this year from WRAP and Green Alliance) with particular opportunities for growth from plastics recycling. It also reveals that while the size of the waste-management sector has fallen in tonnes, it has risen in value, pointing to the importance of the increasing value of resources.
Estelle Brachlianoff, Senior Executive Vice-President UK & Ireland, said: “The world is facing an enormous challenge. Expanding populations and a rise in living standards means demand for raw materials is growing at the same time resources are rapidly depleting. Businesses need to wake up to the unsustainable nature of our throw-away economy and put more value on resources.
“The findings of the report have exceeded our expectations — even if we only achieved a 50 percent shift this would add £15bn to the country’s economic output.”
The report’s leading author, Dr. Nick Voulvoulis from the Centre for Environmental Policy at Imperial College London, said: “The report refers to the UK’s economy ability to become circular and to grow while resource use is declining. It goes beyond resource and energy efficiency; it also includes closing the loop between resource extraction, production and disposal, moving towards the provisions of services, where materials are valued differently; creating a more robust economy in the process.”
Meanwhile, paper-based packaging giant Smurfit Kappa has reiterated its commitment to delivering business value through sustainability across all areas of its operations in its 8th annual Sustainable Development Report, Sustainability in Every Fibre. The report highlights the company’s focus on designing and enabling truly circular systems and commitment to use only 100 percent sustainably sourced fibers in its products and processes.
“The circular economy provides Smurfit Kappa with new business opportunities and innovative solutions to reduce material costs, ensuring our business is resilient in the face of growing resource constraints,” the report reads. “In our view, increasing resource productivity through a more circular model of production and consumption can be an important contributor to job growth and economic competitiveness.
“Re-engineering our business in this way requires a holistic approach, working at system level, which promotes innovation and connections across sectors and value chains. While a number of our operations are already advanced in their application of this systemic approach, others are on a journey to doing so.”
In addition to expanding sustainable sourcing and responsible forestry and reducing its water use, waste to landfill and carbon emissions, Smurfit Kappa says it is closing loops in its energy production through fully utilizing, where possible, any by-products that have a high energy value. In addition to traditional bioenergy usage at pulp and paper mills — burning black liquor at integrated pulp and paper mills and utilizing biogas produced during anaerobic water treatment at its recycled paper mills as fuel — the company is exploring further options for creating energy and heat from its side streams that have no other value.
Making sure that paper is recycled to its limit and then utilizing that pulp in innovative ways is another way Smurfit Kappa has set itself apart; as the report claims: “Being a sustainability leader within our industry creates business value.”
Published Jun 24, 2015 7pm EDT / 4pm PDT / 12am BST / 1am CEST