From linear to circular, the future of business and the economy

Switching to the circular economy from the take-make-consume-dispose model — also known as the linear model — helps reduce waste, improve efficiency, reduce costs, and enhance long-term value creation. The World Economic Forum projects that, by 2025, recycling, reuse, and remanufacturing could help the economy unlock USD 1 trillion per year of untapped resource savings¹.

In the final instance, the circular economy is a powerful tool to tackle climate change. Circular economy strategies can reduce global greenhouse gas emissions by an estimated 39% since about 80% of a product’s environmental impact is determined during the design phase². 

The circular economy is a model of consumption and production that disconnects economic growth from resource use by extending products' overall life cycle through sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products over a long period of time³.

The adoption of circular economy models can help drive green growth, providing a dual dividend that benefits the environment and the job market⁵. According to the World Bank, the circular economy can help create between six and twenty million jobs worldwide.

In March 2020, the European Commission launched the “Circular Economy Action Plan”, which is one of the main building blocks of the European Green Deal, Europe’s agenda for sustainable growth⁷. 

On a global scale, regulation is expected to increase over the coming years. Specific global actions that promote the circular economy include the Global Alliance on Circular Economy and Resource Efficiency, which was initiated by the European Commission and the United Nations Environmental Program (UNEP), in coordination with the United Nations Industrial Development Organization (UNIDO)⁸. 

The transition towards a circular economy could generate USD 4.5 trillion of additional economic output by 2030 and USD 25 trillion by 2050¹⁰.

The circular economy represents a great opportunity for businesses, investors, and governments to tackle the environmental crisis and generate economic growth. The switch from the linear model, based on the take-make-consume-dispose model, to the circular economy, where products are kept in the economy for as long as possible, helps reduce waste, improve efficiency, reduce costs, and enhance long-term value creation.

The regulatory drive should benefit companies that position themselves as practitioners of the circular economy in their business models. Well-positioned companies that are able to tap the circular economy opportunity should reap the benefits of this very necessary transition. 

1. Towards the Circular Economy: Accelerating the scale-up across global supply chains. World Economic Forum.
2. The Circularity Gap Reporting Initiative. https://www.circularity-gap.world/ 
3. The circular economy in detail. Ellen MacArthur Foundation. https://ellenmacarthurfoundation.org/the-circular-economy-in-detail-deep-dive 
4. Circular economy: definition, importance and benefits. European Parliament. https://www.europarl.europa.eu/news/en/headlines/economy/20151201STO05603/circular-economy-definition-importance-and-benefits#:~:text=The%20circular%20economy%20is%20a,reducing%20waste%20to%20a%20minimum 
5. Putting young people at the center of the circular economy. World Bank. https://blogs.worldbank.org/jobs/putting-young-people-center-circular-economy 
6. Closing the loop: Responsible investment and the circular economy. PRI. https://www.unpri.org/sustainability-issues/environmental-social-and-governance-issues/environmental-issues/circular-economy 
7. Circular economy action plan. https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en 
8. Circular economy. https://environment.ec.europa.eu/international-cooperation/circular-economy_en 
9. Circular Economy and Innovation. EIT Raw Materials. https://eitrawmaterials.eu/circular-economy-and-innovation/ 
10. The Circular Economy Could Unlock $4.5 trillion of Economic Growth. Accenture. 2015. https://newsroom.accenture.com/news/2015/the-circular-economy-could-unlock-4-5-trillion-of-economic-growth-finds-new-book-by-accenture 

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