Circular economy

The world economy has been built on the ‘take, make and dispose’ linear economy, which is now under threat because of the limited availability of natural resources to meet growing demand, the problem of climate change, the over reliance on fossil fuel energy or nuclear power (one causes oil price hikes, the other may be unsafe) and toxicity in materials.

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The rising economies in Asia, Latin America, Africa and the Middle East are expected to lift three billion people out of poverty in the next few decades, which is likely to create ever increasing demand for consumer goods from the new middle classes.

However, the planet will not be able to sustain this surge in economic activity and use of resources this will generate unless a new more environmentally positive business model is created in which materials are managed more responsibly.

The circular economy offers a way to promote economic growth while helping to deal with environmental crises. 

We all face a potentially game-changing moment, when we move from the old "take, make and waste" model to the circular economy, which is designed to be much less draining in terms of materials and energy. The stark reality is that we cannot sustain economic growth in the decades to come unless we make this switch and learn to design goods for disassembly and safe recycling. There are four global crises the circular economy will help us to tackle: 

1. The climate crisis

Not only is the ultimate goal of the circular economy to move to renewable energy - leading to lower carbon emissions - but the recycling and reuse of materials will make industry much less energy intensive than the current linear system.

2. The toxicity crisis

We inhale chemicals from manufactured goods all the time. We may not think about it but - given that we spend 90% of our time indoors - this is a major problem if not properly addressed. Plastics, paints, textiles and so on give off gases that contain toxins and dust particles, causing asthma as well as other diseases. As the world become more urban, we need to ensure that the materials that go inside buildings are made with human health and the environment in mind. The  "cradle to cradle" approach identified by William McDonough and Michael Braungart and adopted by my company, Desso, offers a framework for making sure all products are safe and designed to be recycled and reused.

3. Raw material scarcity crisis

We simply don't have an endless supply of raw materials in the earth - copper, phosphates, zinc, oil and the like - with which to continue the economic growth rates of the past century. At present, about 80% of waste from consumer goods, whether packaging, clothes or shoes, ends up in incinerators, landfill and wastewater. Yet, there is commercial value to be gained from finding recycle-and-reuse business models, which could amount to US$ 700 billion in consumer goods material savings every year, according to a report from the Ellen MacArthur Foundation.

4. Energy crisis

Our reliance on fossil fuels is not only unsustainable in the long term, but also makes us vulnerable to economic shocks now. As the American economist Jeremy Rifkin put it, "When fuel costs rise, all the other prices across the supply chain go through the roof, because everything's made out of fossil fuels: fertilizers, pesticides, pharmaceuticals, construction materials, synthetic fibres, power, transport, heat and light." Rifkin calls for a more stable energy system based on a new, technologically enabled power grid supplying renewable energy to homes, offices and plants. The circular economy, with its long-term focus on the use of renewable energy sources and its less energy intensive model provides a potential structure for this.


Desso, with its circular economic model shaped around Cradle to Cradle® design is well placed to take advantage of this new industrial innovation.

A recent report, 'Towards the Circular Economy: Economic and business rationale for an accelerated transition' (Volume 1) from the Ellen MacArthur Foundation and McKinsey & Co., launched in January 2012 by Dame Ellen MacArthur, the founder of the Ellen MacArthur Foundation states that the circular economy, "replaces the 'end-of-life' concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and within this, business models."

This report calculated that businesses in the EU could reap annual savings of $630 billion/ €464 billion (almost 4% of annual EU GDP) by moving to the circular economy.

A second report,
 'Towards the Circular Economy' (Volume 2) by the same authors in 2013 found that there was a global economic opportunity worth USD 700/€516 billion in the fast moving consumer goods sector alone.

Most recently, 'Towards the circular economy: Accelerating the scale-up across global supply chains' (Volume 3) was launched at the World Economic Forum's annual Summit in Davos.The report  finds that the circular economy can generate over US$1 trillion annually by 2025 for the global economy. It  forms part of Project MainStream,a new World Economic Forum initiative in partnership with the Ellen MacArthur Foundation and McKinsey & Co, which aims to work with companies to help realise the potential of the circular economy around specific areas such as materials management, information technologies and business model innovation. The organisers estimate that the potential benefits of Project MainStream will be to generate US$500 million in material cost savings, 100,000 new jobs and prevent 100 million tonnes of waste.

Desso is one of first organization to become a member of the learning network, the Circular Economy 100, organized the Ellen MacArthur Foundation and remains one of the pioneers of the circular economy, providing case material for the Ellen MacArthur Foundation and others.

“In a world of finite resources, we need to find a new, more restorative economic model for the world economy and one in which we develop supply chains that deliver healthy materials in our products when in use and when they are recycled. We spend 90% of our time indoors and it is imperative that all the materials that make up the built environment support health and wellbeing. That is why we are delighted to be supporting this new report and Project MainStream with our experience of going circular along with other businesses.”

Alexander Collot d'Escury, CEO Desso Group

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