Why should we integrate the circular economy into enterprises?
The circular economy is a necessary transition to cope with the risks of a linear economy that depletes natural resources, generates waste, pollutes ecosystems and endangers the Planet. But it is also essential to promote sustainable economic growth.
1. Consumption of natural resources exceeds terrestrial capacity
In recent decades we have witnessed a disproportionate growth in the demand for raw materials, due to the need for resources of developed countries and the rapid industrialization of emerging economies. According to a report of the Organization for Cooperation and Development (OECD), it is estimated that:
The amount of materials extracted, harvested and consumed globally has increased by 60% since 1980.
About one-fifth of the raw materials extracted worldwide end up as waste.
The use of material resources will double globally until 2060, generating a serious environmental impact.
In addition, according to the latest United Nations World Environment Outlook report (March 2019), the global population will reach almost 10 billion people by 2050. If this figure is true, we would need almost 3 Earth planets to provide the necessary natural resources and maintain current lifestyles (see: EOD).
In order not to put an end to the Earth’s limited resources, we have to move from a linear economic system, in which materials are produced, consumed and discarded, to a circular system, in which materials are reused.
“The amount of materials extracted, harvested and consumed globally has increased by 60% since 1980.”
2. The circular economy, an opportunity
We are facing an unprecedented global challenge in which companies play an essential role in the transition to a circular economy, a new paradigm that will allow a change in the system of production and consumption, benefiting the health of the Planet, which also presents an enormous potential for global economic growth. According to several studies published in recent years, the total value of the circular economy opportunity can be quantified as follows:
If all current regulations on waste were applied, more than 400,000 jobs would be created in the European Union, of which 52,000 would be located in Spain (source: Situation and evolution of the circular economy in Spain by Cotec, 2017).
The circular economy could represent a global opportunity of 4.5 trillion dollars in the global economy in 2030: Scaling the circular built environment (2018) by WBCSD).
By adopting the principles of the circular economy, Europe can take advantage of the imminent technological revolution to generate a net profit of 1.8 trillion euros by 2030 (Source: Towards a circular economy, Ellen McArthur Foundation, 2015).
“If all existing waste legislation were applied, more than 400,000 jobs would be created in the EU, of which 52,000 would be located in Spain”.
3. Companies that invest in sustainability are more profitable
The competitiveness of organizations is increasingly linked to their ability to minimize the environmental impact of their operations, manage the supply chain responsibly and defend social causes: business models that are able to reconcile economic profitability with sustainability principles have a competitive advantage over those that perform non-circular business practices.
Aware of this reality, governments have begun a process of reviewing their regulatory frameworks to adapt to the challenges of sustainability and offer greater transparency in environmental, social and corporate governance (ESG) aspects. Companies have also begun to invest in green technologies that, according to studies such as Green information technologies practices and financial performance, improve their results and stock market value in the long term.
Video Ellen McArthur Foundation.
Cover image: Paolo Nicolello