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The Next Economy
Why a Circular Economy Is Key to Sustainable Development (and Why Business Must Lead the Way)

This post is part of a series produced by The Huffington Post, "What's Working: Sustainable Development Goals," in conjunction with the United Nations' Sustainable Development Goals (SDGs). The proposed set of goals will be the subject of discussion at the UN General Assembly meeting on Sept. 25-27, 2015 in New York; they cover 17 key areas of development — including poverty, hunger, health, education, and gender equality, among many others.

This post is part of a series produced by The Huffington Post, "What's Working: Sustainable Development Goals," in conjunction with the United Nations' Sustainable Development Goals (SDGs). The proposed set of goals will be the subject of discussion at the UN General Assembly meeting on Sept. 25-27, 2015 in New York; they cover 17 key areas of development — including poverty, hunger, health, education, and gender equality, among many others. This post, which addresses Goal 12, first appeared on The Huffington Post on September 17, 2015.

The United Nations’ 2030 agenda for sustainable development includes 17 lofty-as-ever goals for tackling our most pressing social and environmental challenges – not the least of which is Goal 12: Ensure sustainable consumption and production patterns.

Achieving, or even striving for, Goal 12 will require nothing less than a complete overhaul of our linear, take-make-waste patterns of production and consumption in favor of a circular system - a restorative or regenerative system in which all products are designed and marketed with reuse and recycling in mind - informed by a radical shift in business models and policies around the world.

The proliferation of the concept of a circular economy – framed and popularized in recent years by the Cradle to Cradle movement, and Dame Ellen MacArthur and her namesake Foundation – is a direct response to growing concerns about resource scarcity and awareness that business as usual is literally unsustainable; we simply cannot continue to extract resources and toss them somewhere with little regard for the cumulative effects indefinitely.

Aside from the environmental benefits of circular models – such as a significant drop in use of virgin materials, reductions in materials waste as products are designed to last, and utilization of manufacturing by-products and excess materials previously considered waste streams - more and more studies point to the undeniable business case for redesigning our entire economy: In 2014, the Ellen MacArthur Foundation and the World Economic Forum released a report contending that over US$1 trillion a year could be generated for the global economy by 2025 and 100,000 new jobs created within the next five years if companies focused on building circular supply chains to increase the rate of recycling, reuse and remanufacture. And the Foundation’s recent research for the European Commission, released in June, projected that Europe could create a net benefit of €1.8 trillion by 2030, or €0.9 trillion more than in the current linear development path (along with substantial societal benefits), by adopting circular economic principles.

While some countries and municipalities are proactively heading in this direction, governments typically aren’t the most nimble or adventurous of entities and can drag their feet in the “radical shifts” department. So, it’s up to business to drive the necessary shift to sustainable production and consumption.

Luckily, it’s already happening. Through Sustainable Brands’ global events and collaboration platform, we’ve seen more and more companies innovating and collaborating on new ways to close materials loops, and seeing the benefits:

  • In 2014, Dell became the first electronics manufacturer to use UL Environment-certified, closed-loop recycled plastics in its computers. By reusing plastics already in circulation, Dell is cutting down on e-waste, saving resources, reducing carbon emissions by 11 percent compared with virgin plastics, and saving money.
  • Later that year, Walmart – along with founding members Coca-Cola, Colgate-Palmolive, Johnson & Johnson, Keurig Green Mountain, PepsiCo, Procter & Gamble, Unilever and Goldman Sachs - launched the Closed Loop Fund, a $100 million, five-year investment in the development of recycling infrastructure in cities across the U.S. The companies expect the ROI to be multi-dimensional, including a more consistent pipeline of recycled content to turn back into packaging, maximizing efficiencies and reducing their own environmental footprint along with their customers’.
  • In April, textile upcycler Worn Again announced it had partnered with fashion giants H&M and Kering to test the viability of a textile-to-textile chemical recycling technology that can separate and extract polyester and cotton from end-of-use textiles. Once separated, the ‘recaptured’ polyester and cellulose from cotton can be spun into new fabric, creating a circular resource model for textiles.
  • Ford and aluminum giant Novelis announced in May they had built an infrastructure ensuring a truly closed loop for the automotive aluminum for Ford’s new aluminum F-150 truck. Among the benefits: Recycled aluminum requires 95 percent less energy to produce and generates 95 percent fewer greenhouse gas emissions; it provides Novelis with more supply chain security through a regular inbound supply of scrap for recycling back into the marketplace; and the aluminum F-150 is 700 pounds lighter than its predecessor, resulting in best-in-class fuel economy.
  • In June, adidas unveiled the first fruit of its collaboration with ocean conservation group Parley for the Oceans: a running shoe made from upcycled ocean plastic waste. adidas has also partnered with singer Pharrell Williams’ company, Bionic Yarn, for a line of shoes and apparel made from marine plastic. Similarly, ECONYL® — a nylon yarn created from reclaimed fishing nets – has been turned into everything from socks to wetsuits, and carpets from Interface and Desso, to men’s apparel from Kelly Slater’s Outerknown label.
  • In July, the Corporate Eco Forum, the US Business Council for Sustainable Development and the World Business Council for Sustainable Development launched the National Materials Marketplace, an online database through which the over 20 participating companies – including 3M, Eastman Chemical, General Motors, Nike, Dow Chemical and Tetra Pak - can identify ways to reuse or exchange undervalued materials and establish circular supply chains.

Another trend is a shift from sales- to service-based models, with companies changing consumers to users by offering maintenance, repair and replacement of products as part of their value proposition:

  • In 2013, Philips became a strategic partner of the Ellen MacArthur Foundation and launched a two-year circular economy project plan to embed the concept into its operations, building on the Philips Healthcare refurbishment business and the recycling activities from its Lighting and Consumer Lifestyle businesses. Philips says embedding a circular economy concept promises additional economic value creation potential across its value chains.
  • Not only are Desso’s flooring solutions Cradle to Cradle®-certified - meeting stringent criteria on material health and reutilization, among others - Desso takes back any company’s carpet tiles (provided the backing doesn’t contain PVC, which doesn’t meet the C2C material health standard) and upcycles them into new tiles. In 2013, the company also established the first leasing program for carpet tiles. Desso said in 2014 that it credits its circular economic business model for its rise in profitability from 3 percent to 10 percent EBITDA, and the doubling of its market share in the UK, in the last four years.
  • More companies are designing products to last (and ensuring that they do) while encouraging consumers to take better care of them: Swedish brand Nudie Jeans will repair worn-and-torn jeans for free; Holland’s Mud Jeans leases, rather than sells, theirs – and recycles all garments into new ones at their end of life; and not only do San Francisco-based Timbuk2’s bags have a lifetime warranty, the company’s Life Cycle program enables customers to reduce, reuse, repair, and recycle or even reimagine their bags at the end of their useful life.

While examples such as these continue to emerge, it will take more than siloed efforts to bring about the radical systemic shift that’s needed to achieve the UN’s goals, and many challenges must be overcome for widespread adoption. But as solutions continue to emerge and circular economic business models become more prevalent, I see it influencing consumers to be more conscious about their consumption, which in turn will drive more companies to adopt the principles … enabling the complete systemic shift needed to achieve sustainable development.