1xFor many people in mature economies, as we sort our domestic recycling from general trash, re-use our shopping bags, and opt for ‘greener’ consumer choices in the supermarket, it is easy to convince ourselves that, as a society, we are making a significant difference in our planet’s journey towards a sustainable future.
But truth has an unerring ability to quickly shatter such illusions. It turns out that even now – with public awareness of global warming at a high and with ‘reduce, reuse, recycle’ being the buzzwords on so many lips – we collectively manage to throw away some 80% of the material content of all our fast-moving consumer goods.[1] That translates to literal mountains of valuable resources recklessly squandered: Incinerated into the atmosphere; left to fester in rancid mounds, or buried as a poisoned inheritance for future generations.
It’s not that the material in question has no value. Conservatively, some US$ 2.6 trillion of goods are thrown away, and never recovered, every year. Even for those who don’t support the green agenda, that’s 2.6 trillion financial reasons to amend our wasteful behavior.
There is, of course, a far more sustainable way of managing our economy. This is the principle known as ‘circularity’ – a concept of manufacture and consumption involving sharing, repairing, refurbishing and recycling materials and upcycling products as long as practically possible to ensure maximum environmental value for every item produced.
What do we waste – and how much?
In the circular economy, products are not simply used and then immediately considered obsolete. Instead, they are either used again (and again and again…) or turned into something else equally valuable to society. The product’s material, in other words, has its lifespan extended as long as is technically feasible.
Not only does this strategy help reduce the kinds of soil, air and water pollution considered inseparable from mass consumerism – it also reduces demand on the Earth’s systems for more fresh resources to replace those prematurely jettisoned.
The quantities involved are truly disquieting. E-waste (electronics such as TVs, laptops, smartphones and white goods) is the world’s fastest growing category of waste. E-waste amounted to 62 billion kilograms in 2022, enough to fill some 1.55 million refuse trucks. With demand for consumer electronics only growing year by year, e-waste is anticipated to hit 82 billion kilograms annually by 2030.[2] E-waste is also especially toxic, containing heavy metals and compounds including arsenic, lead, cadmium, vinyl chloride and flame retardants – all known to negatively affect human respiratory, reproductive and immune systems.
Our problems don’t end with e-waste. We must also count the toll of industrial chemical waste. As a society we produce around 400 million tons of hazardous chemical waste each year – think fuels, traditional batteries, medical waste, solvents, paints, cleaning products, inks and pesticides.[3] In the space of just one human generation, the amount of chemicals we create has increased by 40,000%. The average person now has more than 700 manmade chemicals within their body – with many of their physiological impacts unknown.
Poisonous and expensive to process, chemical waste is often exported to developing countries with fewer environmental safeguards for disposal, where it can often enter the water table or pollute valuable agricultural land.
The construction industry is another dispiritingly waste-heavy enterprise. The billions of tons of waste we generate annually from building, renovating or demolishing infrastructure amounts to around 40% of all landfill.[4] Instead of reclaiming this waste to expand our built environment, we choose to extract some 100 billion tons of fresh raw materials from the Earth’s surface each year – a clearly unsustainable approach. [5]
Joining the stockpile of shame is the avalanche of commercial waste emanating from our homes, offices, shops and factories. Surplus packaging, food, cardboard, paper and textiles translates into more than 2 billion tons of commercial waste annually.[6] We might also wince to consider the fate of ships, some 70% of which are simply run ashore for demolition at the end of their useful lives. Abandoned ships often leak damaging elements such as zinc and mercury from their rusting hulks. Some Bangladeshi beaches are now ship graveyards, home to an estimated 79,000 tons of asbestos, 240,000 tons of PCBs (hazardous organic chemicals known as polychlorinated biphenyls) and 210,000 tons of other ozone-depleting substances – with little hope of a permanent solution.
Worse, due to rising industrialization and accelerating consumption, the planet’s waste production is expected to soar a further 70% by mid-century, suggesting no respite on the horizon.[7]
So, how might we set about mitigating this colossal challenge?
Circular logic: Financial and environmental imperatives
There is one glimmer of hope for our increasingly trash-strewn world: The lure of a financial incentive. Commercial prudence may turn out to be the engine of the coming circular economy.
Of the US$ 2.6 trillion worth of waste we discard each year, the materials therein retain around 80% of their original value.[8] What if this ‘waste’ was reimagined not as end-of-life, but merely as in transition.
Already, as of 2022, the global circular economy was worth approximately US$ 339 billion per year,[9] more than doubling from around US$ 150 billion as recently as 2020.[10] With interest in the segment growing, it is expected to double in value again by 2026.[11] Looking further ahead, the circular economy could deliver an extra US$ 4.5 trillion of global economic activity by the end of the decade, with US$ 25 trillion not an unrealistic milestone by 2050.
According to experts at McKinsey, in Europe alone, consumer goods companies reorienting their portfolios around circular economy principles could unlock a value chain of US$ 500+ billion by 2030, and an overall revenue opportunity of US$ 1 trillion by mid-century.[12]
What is driving these extraordinary predictions? It must be more than the simple cash value of materials recovered from existing products. In fact, businesses embracing a circular mindset save money by lowering their energy consumption; by gaining a competitive edge over their rivals and achieving ESG (environmental, social and governance) credibility; and by attracting tax breaks from progressive governments to supplement their bottom lines.
Financial concerns aside, there is another sound reason we should be excited by the momentum gathering behind a circular economy: Our ongoing, existential battle against climate change.
Figures suggest we amass an average of 11.2 billion tons of new waste annually, its slow decay contributing a full 5% of global greenhouse gas emissions.[13] Waste is also responsible for one-fifth of the world’s methane emissions, a greenhouse gas 80 times more potent than carbon dioxide.[14]
Worldwide, the shift to a circular economy could provide around 45% (some 22.1 billion tons of CO2/year) of the greenhouse gas reductions needed by mid-century to maintain the +1.5oC post-industrial temperature goal of 2016’s Paris Agreement.[15] In other words, phasing out extraneous materials at the design and manufacture stage, keeping products in use for longer, and regenerating land for the common good, could help spare us the worst ravages of a superheated planet.
Aside from the quantifiable impact of a circular economy on GHG emissions, other environmental motivations are equally promising. Redefining waste as a potentially valuable commodity will also reduce the consumption of precious natural resources. It will minimize natural landscape and habitat disruption, and help put the brakes on biodiversity loss.
With all these inducements awaiting, it is time we consider how, as it matures, the circular economy will manifest in our industries and financial systems.
Key applications of the circular economy
Consumer goods – the things we covet, own and unfortunately often throw away – are set to make giant strides towards circularity, by extending their longevity and recyclability.
The fashion industry is presently something of an environmental pariah, generating around 92 million tons of textile waste each year.[16] By 2030, however, we can expect a tenfold increase in the quantity of clothes recycled, with the ‘used’ market likely exceeding ‘new’ sales by that date.[17] Fewer new clothes also means less water for production, and less dye pollution in our rivers and streams.
The electronics industry is also primed for an overdue jolt. By 2030 there will be a multi-billion dollar market in refurbished small electronics such as laptops and smartphones, and a greater emphasis on repairs for large household white goods.[18] In June 2024, the EU adopted a new Directive on the Repair of Goods, placing the onus for prompt and economic repairs on the doorstep of manufacturers. The news rules aim to eradicate ‘planned obsolescence’ and ensure a steady pipeline of spare parts so consumers can choose to fix, rather than dispose of, their faulty gadgets.
Manufacturers of other non-food goods will, by the same date, also be obliged to package their products in largely recycled or biodegradable material. However, ambitious investment will be needed to help industries meet these stringent requirements, up to US$ 100 million by some estimates.[19]
The impacts of the plastics sector are visible any time you walk along the beach and bristle at the detritus washed up daily by the tides. More than 240 governments and businesses signed up to the Business Coalition for a Global Plastics Treaty in 2022, to help streamline waste management and reduce excess plastics in the environment. The treaty comprises a three-pronged strategy: Eliminating all unnecessary plastic from products; guaranteeing any plastics created are reusable or compostable; and ensuring plastic materials stay in circulation rather than find their way to landfill. Looking ahead, the industry is hoping for some rapid wins by 2040: Reducing the volume of plastics entering our oceans by 80%, cutting greenhouse gas emissions by 25%, and creating 700,000 new jobs.[20]
The agricultural industry might be among the quickest to respond to the allure of the circular economy, given that its financial benefits are self-evident. One study found that crop fields managed with an emphasis on ‘regeneration’ (using crop rotation, natural pollinators and recyclable products such as manure and hay) out-earned conventionally-managed fields by 78%.[21] Vast monocultures, reliant on costly tillage, fertilizers and pesticides, require more interventions that fields designed around soil health and biodiversity – and interventions, whether in terms of manpower, machinery or chemicals, always cost money.
Battery producers are instrumental in the shift away from fossil fuels, as the world considers how to store variable energy supplies from renewable sources. The battery industry – responsible for 180,000 tons of hazardous waste annually in America alone[22] – can approach circularity from two angles. Firstly, redundant batteries can be collected from consumers and have their components (including rare Earth elements like lithium) harvested for reuse in other batteries. Secondly, the core concept of ‘ownership’ could be readdressed with circular business models such as battery-as-a-service (customers purchase an EV but only lease its battery) or mobility-as-a-service (mass transit, car sharing and ride hailing).
The construction industry must also scrutinize its environmental leger. However, it is hoped that by 2050 up to 80% of construction processes could be decarbonized by adopting three circular strategies:
- Alternative fuels: Substituting fossil-based fuels for a combination of either biogas, biomass, liquified natural gas, hydrogen or ammonia
- Carbon curing: Using carbon dioxide to strengthen concrete, making the material more durable while reducing emissions
- Recarbonation / carbon capture and storage: Allowing hydrated concrete to reabsorb carbon generated during its own production, permanently locking away pollutants.
To fully champion the circular cause, we must also focus on extending the life cycles of the various products to which we have as a society become addicted.
Manufacturers could begin by designing modular products which are easy for the average consumer to disassemble or partially replace, component by component, without sacrificing the entire unit. Packaging should be supplied, ideally with prepayment labels, to encourage the return of materials to factories. Once the manufacturer has received the defective or outdated item, they can choose between repair, refurbishment or remanufacture (all leading to resale) or end-of-life recycling. Elements of this value chain are expected to flourish in the near future, with 15% average annual growth in electronic refurbishments alone.[23]
The benefits of the circular economy are there for the taking and are potentially huge in scale. Exploiting circular opportunities throughout Europe, for example, could cut 56% of emissions from the steel, plastics, aluminum and cement sectors by 2050.[24]
But will our journey to this promised land be smooth sailing, and what steps should we begin taking to prepare for a circular economy?
Challenges await on journey to a circular future
Few doubt the wisdom and potential benefits of the circular economy. But that does not mean that its continued evolution is guaranteed.
Unlike, say, the switch from internal combustion engine (ICE) cars to electric vehicles (EV), the notion of the circular economy straddles multiple sectors. Its impacts and pressures will be different in each instance, which makes planning for its widespread adoption – in other words, quantifying the value chain and coordinating strategies – particularly challenging.
Perhaps the diffuse nature of the circular economy is why it lacks sectoral champions, and risks becoming marginalized in national climate policy plans. The question also arises of who pays for the expenses involved in recalling, refurbishing and redistributing items – the customer or the manufacturer? If the latter, expenses are likely to find their way into price tags anyway.
Good intentions are one thing, but efforts can be undermined by a lack of ready infrastructure. Despite warnings about the perils of plastics, almost a third still ends up in landfill. Developing countries in particular must rapidly improve their waste management systems, even though other priorities are competing for the same pool of cash. One alarming report, highlighted by The Washington Post, predicts that by 2050 there will be more plastic in our seas and oceans (by mass) than fish.[25]
If we wish to keep materials in circulation for longer, we need to further develop our recycling technology. At present, due to complications in how used plastics are sterilized and categorized, purity is sacrificed with each reprocessing. As such, only 2% of used plastics are transformed into items of a similar quality[26]; most of the remainder becomes lower-grade products such as carpet fibers. Better recycling technology will help retain purity, but at a higher cost.
If we are expecting consumers to pay more, they need educating about the benefits of the circular economy. Sometimes, penalties prove necessary for noncompliance. In the UK, shops were compelled from 2014 onwards to charge for new carrier bags, a move that reduced demand by 98% in the years that followed.[27]
Some sectors will find the journey to circularity a natural progression; for others, the overhauls required are more fundamental. The fashion industry, for example, has since its inception been tailored around a fast-turnover model. As clothes are fragile, personal and often low price, some bold innovations will be needed to make rival business models – rental or resale, for example – economically viable. For now, we are mired in a system where we collectively purchase some 80 billion new items of clothing annually, a massive 400% increase in two decades.[28]
Given these challenges, the clock is ticking on global efforts to accelerate the shift to a circular economy.
Surefire strategies to help close the ‘circularity gap’
Few of us wish to inhabit a world with polluted waterways and poisoned air, a world blighted by mountains of festering waste and floating ‘trash-bergs’ of rubbish. There are several strategies we can start following now to promote the circular economy and foster a more sustainable world.
Firstly, we need data. Lots of data. Stakeholders in both private and public sectors need to understand the cracks in the value chain through which materials are routinely slipping. Why does a valued commodity suddenly become a liability? Only by understanding the issue holistically can mitigations be designed and progress be evaluated.
Armed with data, we can begin scaling up the circular economy and sharing best practice between countries, cities and private companies. Initiatives such as the Circular Economy Indicators Coalition and the WEF Stakeholder Capitalism Framework are working to improve metrics and standardize key transition indicators.
Next, we need to turn intention into action. That means making meaningful change on a sector-by-sector basis.
The food industry, for example, must encourage transitions to diets that are healthy for the planet as well as the individual. It must also invest in regenerative agriculture; better understand reasons for food loss and wastage; and make excess food and byproducts easily accessible to secondary markets.
Manufacturers of capital equipment (heavy machinery, furniture, vehicles, etc.) can make an immediate impact by adopting ‘as-a-service’ offerings rather than encouraging outright purchases. They can also work to establish efficient and cost-effective reverse supply chains; invest strategically in refurbishing facilities; and exploit new digital technologies to allow for monitoring and optimization throughout an asset’s lifespan.
The plastics industry, meanwhile, must identify which formulations are most environmentally harmful and urgently replace them with less harmful substitutes. It can also design products with reuse and recycling in mind; address hygiene issues around second-generation plastics for food storage; establish customer-friendly plastic collection systems; and help emerging economies develop their own recycling facilities.
The electronics sector must have a different set of priorities: Providing more robust technical support to increase product longevity; ensuring more products are upgradable, rather than simply replaceable; improving access to recycled components to reduce demand for raw materials; introducing new business models, such as leasing, sharing and subscriptions; and increasing incentives for investment in recycling technologies.
As for the textiles industry, it must start producing garments designed to last, opting for higher-quality fabrics and ageless designs unlikely to fall out of fashion. It must also encourage sustainable farming principles in the growing of cotton; explore the commercial ramifications of a repair-centric clothes-for-hire model; establish a vibrant used textiles trade; and improve collection and sorting facilities.
All of these tactics make long-term financial sense. Together, they can help us close the shameful ‘circularity gap’ – the incriminating statistic that of the 100 billion tons of new materials entering circulation each year, more than 91% promptly vanishes from the economy forever.[29]
The circular economy carries the promise of a leaner, cleaner and greener world – providing, that is, we start treating planet Earth as a precious and delicate biosphere, rather than as an endless resource fit only for our own exploitation.
[1] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[2] https://www.genevaenvironmentnetwork.org/events/international-e-waste-day-2024/
[3] https://www.theworldcounts.com/challenges/planet-earth/waste/hazardous-waste-statistics
[4] https://constructiondigital.com/construction-projects/the-state-of-waste-management-in-the-construction-industry
[5] https://www.bbc.com/future/article/20211215-the-buildings-made-from-rubbish
[6] https://www.theworldcounts.com/challenges/planet-earth/state-of-the-planet/world-waste-facts
[7] https://www.ifc.org/en/blogs/2024/the-world-has-a-waste-problem
[8] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[9] https://resortecs.com/circular-economy-forecast-a-billion-dollar-market-opportunity/
[10] https://www.db.com/what-next/responsible-growth/Circular-Economy–Kreislaufwirtschaft/Facts-Fakten/index
[11] https://resortecs.com/circular-economy-forecast-a-billion-dollar-market-opportunity/
[12] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[13] https://www.unep.org/explore-topics/resource-efficiency/what-we-do/cities/solid-waste-management
[14] https://www.catf.us/2022/09/how-our-trash-contributes-to-climate-change/
[15] https://www.ellenmacarthurfoundation.org/articles/unlocking-the-value-of-the-circular-economy
[16] https://earth.org/statistics-about-fast-fashion-waste
[17] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[18] https://www.who.int/news-room/fact-sheets/detail/electronic-waste-(e-waste) https://www.who.int/news-room/fact-sheets/detail/electronic-waste-(e-waste)
[19] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[20] https://www.ellenmacarthurfoundation.org/articles/unlocking-the-value-of-the-circular-economy https://www.ellenmacarthurfoundation.org/articles/unlocking-the-value-of-the-circular-economy
[21] https://peerj.com/articles/4428/ https://peerj.com/articles/4428/
[22] https://healtheplanet.com/100-ways-to-heal-the-planet/batteries
[23] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-circularity
[24] https://www.mckinsey.com/capabilities/sustainability/our-insights/how-a-materials-transition-can-support-the-net-zero-agenda
[25] https://www.washingtonpost.com/news/morning-mix/wp/2016/01/20/by-2050-there-will-be-more-plastic-than-fish-in-the-worlds-oceans-study-says/
[26] https://www.wri.org/insights/barriers-circular-economy-5-reasons-world-wastes-so-much-stuff-and-why-its-not-just
[27] https://www.gov.uk/government/news/plastic-bag-use-falls-by-more-than-98-after-charge-introduction
[28] https://earth.org/fast-fashions-detrimental-effect-on-the-environment/
[29] https://www.circularity-gap.world/2022
Added to press kit
