Product, Service & Design Innovation
Ellen MacArthur on Leading a Complex System of Global Change

Since Ellen MacArthur made the transition in 2009 from world-record-breaking sailor to champion of the circular economy, the Ellen MacArthur Foundation has become a driving force behind shifting our approach to business away from that of take-make-waste to one centered on resilience, reuse and optimality.

For many, the circular economy is still an abstract idea, or one that arouses skepticism. During an onstage conversation with Jack Ehnes after her opening keynote at last week’s Ceres Conference in San Francisco, when an audience member used Interface’s foray into carpet tile rentals as an example of a model that failed, MacArthur reiterated the importance of a holistic approach:

“You can’t become circular through siloed activity, it’s not possible," she said. "It’s about changing everything from design to manufacturing to how you sell the product to how you recover the product, incentives for your salespeople ... is it to sell a kit, to provide performance, to provide a service to remanufacture? There are big shifts that happen — within the finance department, the marketing department, everything — the entire company shifts. I can tell all the companies we’re working with are beginning to move towards that systemic change.”

I spoke with MacArthur afterwards, about the Foundation’s most recent efforts and what she thinks is needed for a complete systemic shift in the way we do and make things — not just within companies but throughout entire industries, sectors, governments and economies.

You’re partnering and working with over 100 global organizations that are making varying degrees of progress on circularity — and recent initiatives have emerged in the areas of electronics, textiles, aluminum and flooring — but for the most part, these efforts are still siloed. What do you think is needed to make …?

EM: What’s the breakthrough? I think one of the biggest levers for breakthrough is the economic rationale for doing this. You know you when we see some of the best case studies, it’s working — it’s delivering more economic benefit. And as we have more middle-class consumers entering the global marketplace there’s only going to be a greater need for circular economics, so they can have better products with less money, they can have access to those products for less money.

Systemic change that involves a non-siloed approach, it involves businesses working together, and it involves leadership and middle management and right through the business. It really is a complex system of change, but actually the goal is quite clear. We’re seeing shifts towards those models, we’re learning about more and more examples of circular economy that perhaps weren’t called ‘circular economy’ before — you know, Renault remanufacturing [parts] was never called circular economy but actually it sits beautifully within that circle, and that helps Renault to understand what accelerating the circular economy looks like for them. So identifying what’s out there already is as much a part as recalibrating the whole system. In many cases there’s a lot to build on in businesses already.

There are some real challenges with businesses doing this on their own — if one company changed everything tomorrow, that wouldn’t solve the problem. So if we can get everyone around the table to say, this is where we’re trying to go, then collaborations can be made. We see this with the Circular Economy 100 — we’ve put together businesses from all over the world.

And now with the IT that we have — Cisco is one of our partners; we’re working on asset tracking with them, looking at how you track products, how you track materials — how do you know when a certain part in a washing machine or an iPhone needs changing out. The ability to track things with these billions of new IP addresses that we now have — that’s a massive asset for the circular economy. And I think the Internet of Things, the Internet of Everything, really is an enabler of that.

What are your primary areas of focus at the moment?

EM: We’re a charity so what we do is open source. We’ve been working internally for several years with the CE100 — there are collaborations between businesses that stay inside that program [but] then will get grandfathered out. So many conversations going on internally with CE100 and with our global partners — our goal is to get as much of that public as soon as we can for those projects that are taking off. So there are many dialogues going on — through the World Economic Forum (WEF), new ones on asset tracking that lead into and are part of [the joint WEF initiative] Project Mainstream. It’s a pretty diverse range of organizations. We have dialogue here in the U.S. with companies; we’re doing work in Brazil; we’re doing work in Europe, looking at the circular economy package review — it’s pretty complex.

Speaking of the CE100, it started as a three-year initiative in 2013 — was the goal to amass a library of resources for companies interested in learning more, as you have, or will there be a new phase in 2016?

EM: A lot will become open source, as I said — things get grandfathered out and go public when particular extremes have been worked on. Will it end in three years? No — we wanted companies to stay three years because if you come in for one year and then leave, nothing’s going to happen. But we hope that many will stay after that — maybe some will leave if they’re not doing enough circular activity and others will become flagships; maybe some will become global partners.

How much of your work involves engaging with organizations who ‘get it’ and are interested vs. organizations that don’t see the rationale — how often are you having to make the case for the circular economy?

EM: It’s a mixture of businesses — some come into the Circular Economy 100 with no circular economic activity whatsoever but want to understand it more, some are already incredibly circular in their thinking and actions, and others are kind of middle ground, so there’s a real mix.

Just because a company doesn’t have any circular activity, is it right that that company should not join the CE100? We believe if there’s an openness to learn about this and the opportunity for that company to become more circular, then they should absolutely be in there. They can’t do nothing forever, but to get them in and get them to understand it is a really important part of this.

We don’t have a great number of conversations where people go, ‘no, this is just not for me’ — I’ve never had a conversation with anyone who’s said that.

A recent white paper by an organization called Go Circular argues that we need a standardized definition of the circular economy, because 49 percent of business professionals surveyed said it was confusing or they couldn’t figure out how to engage with it. If you could distill the fundamentals, what would your definition be?

EM: A circular economy is an economy whereby you keep products’ components and the materials within them at their highest value and utility at all times. And you can carry on, saying through designing out waste, through building more renewables into the mix of energy, there are many other add-ons — eliminating toxicity … It’s a complex, systemic change — it’s the entire economy. But keeping products’ components and the materials within them at their highest value and utility at all times, that’s the top line, which is everything from remanufacturing an engine to being able to resell an iPhone, valorizing a building to its highest extent. Or food waste — that’s also a material — how would you keep that at its highest value at all times?

What do you have coming up that you’re really excited about or that you think is going to be especially challenging?

EM: We have three pieces of work we’re working on at the moment: We have a piece of what we’re doing on Europe towards 2050, looking at the circular economy in much more depth in three areas; automotive, built environment and food — that’s just being finalized right now and that’s much more in depth. It’s looking at much more of the utility elements of the automotive and built environment and the figures there are fascinating — that’s a piece of what we’ve been doing with McKinsey. Another piece we’ve been working on is looking at which policy levers will help to accelerate a circular economy more quickly. So it’s like a toolkit we’ve done that in conjunction with McKinsey, Nera, The Danish Business Authority — we have real data from Denmark, and that’s been a deep dive into policy. That’s not out yet, but will be out we’re going to the [European] Commission next month with that.

Then the Mainstream piece of work on the future plastics economy is hugely exciting. That’s so big, so broad, it’s amazing — the opportunity through WEF to link these companies together, the chief execs on the future plastics economy — that really has transformational potential. It will take time, but we’re building a greater and greater number of people around the table to really make that happen.