Andrew Morlet had spent over two decades leading strategy roles in firms such as Accenture and McKinsey & Company when a chance meeting with Ellen MacArthur, a retired sailor, changed the course of his life and his career.
MacArthur is no hobbyist. She holds a world record for sailing solo around the world. In an inspiring TED talk delivered in 2015, MacArthur said, "In sailing, the boat is your entire world and what you take with you is all you have, whether it is food or fuel." Nothing defined the idea of finite materials to me better, she explained.
In 2010, MacArthur set up a foundation focused on accelerating the transition to a circular economy, a system that works in the long term and encourages using durable products, reusing materials and sharing resources.
Three years later, Morlet took charge as the CEO of the Ellen MacArthur Foundation. "When I stepped back from working towards optimizing the linear economic model, I became aware of how wasteful it is. In a circular economy, there is a perspective of material flows, which is totally neglected by the linear economy and I felt the need for a more restorative approach," says Morlet. Unlike a circular economy, the historic, linear economic archetype relies heavily on cost cutting measures because companies are driven by quarter-on-quarter performance, presenting a rather fragmented view, he adds.
THE ROLE OF TECHNOLOGY AND INNOVATION
A circular economy makes a compelling argument against what it describes as a "take-make-dispose" economy.
Ideas that are grounded in digitally enabled solutions and connect customers and businesses, such as Uber and Airbnb are creating new business norms.
"If companies can reveal the structural waste in a system, they can provide new opportunities for people to participate in a way that ensures larger wealth distribution as well as deliver a cost effective solution in one go," says Morlet.
In a world entrenched in linear economic definitions, circular principles represent disruption, which aligns with the ideologies of entrepreneurial organizations.
San Francisco based company, Method is one case in point. All its products meet the cradle-to-cradle certification, designed to be energy efficient, cost effective and circular-compliant.
$2.2+ Trillion opportunity revealed in the Foundation's 2015 report reaffirms the economic rationale of moving towards a circular economy.
Angaza, a pay-as-you-go platform, also based in the Bay area, is another example. It provides solar energy solutions to emerging markets, laying the foundation for grid free societies and countering the need for capital intensive traditional power infrastructure.
"There are tremendous opportunities for start-ups to tap into in this field. Technological innovation can dramatically change how we use resources. Specifically, applications that can shrink the palette of materials-in-use will find favor" says Morlet.
Developing materials from biological sources that have technical properties and hence can substitute petro-chemical based plastics will also be a vital part of the solution, as the Foundation continues to focus on turning the tide on plastic waste, believes Morlet.
Other works-in-progress include innovations that will exploit tracking capabilities and refine the ability to trace material flow.
"Tracking technology will play an essential role in developing easier methods of product recovery and recycling. For example, if there is a small smart fiber embedded in a fabric that can tell someone what sort of materials are found in the product; separation, recycling and decomposing will become much easier and more scientific," says Morlet.
An estimated $500 Billion value is lost every year due to clothing that's barely worn and rarely recycled.
THE ROLE OF THE CONSCIOUS CUSTOMER
Digital penetration, access to information and social media are fundamentally re-shaping thought around product-use.
"People now have the tools to not only gain knowledge about products and services but also provide direct feedback that will create a more circular economy," says Morlet.
Brand strategies around sourcing, product testing, health benefits and inclusiveness are getting increasingly amplified.
In the food industry for example, a number of restaurants are now promoting the farm to fork concept. Moreover, new practices that can deliver better food systems at competitive prices, such as urban and peri-urban farming, selling direct to consumers and recovering organic waste to feed back into the farming system are becoming prominent, Morlet remarks.
Cosmetics and apparel retailers are among other industries that are raising the standard of their practices.
These contributions are significant and cannot be undermined but their relative impact might be limited in the scheme of things.
Research indicates, should nothing be done to address the situation and business-as-usual continues, total demand for limited resource stocks (like biomass, fossil energy and metals) is expected to reach 130 billion tons by 2050, up more than 400 percent from 50 billion in 2014.
An issue of this scale is all pervasive.
The need to assess a product, reinvent the value chain around it and recalibrate business processes cannot be accomplished on an individual level. It mandates a deeper collaboration of all stakeholders
THE CRITICAL NEED FOR COLLABORATION
According to Morlet, individual companies can look for innovative approaches in choosing to design products that can be repaired or upgraded but more often than not, the problems run so deep, no single company can address them.
The fashion industry is one example.
In the report, A New Textiles Economy: Redesigning fashion's future, the Ellen MacArthur Foundation said that globally, more than half the fast fashion production is disposed of in less than a year and that one garbage truck full of textiles is landfilled or burnt every second. The report also highlights that less than one percent of materials used is recycled per year.
This magnitude of problem requires a far deeper engagement. The need to assess a product, reinvent the value chain around it and recalibrate business processes cannot be accomplished on an individual level, Morlet reiterates.
If start-up ideas have been touted as the ones that will oil the wheel of the circular economy and provide solutions, multinational corporations and governments must ensure ground level change. They have the muscle to provide reach and influence for the shift to be meaningful. "The concept of an economy is a complex one and we have to stimulate it at different levels," Morlet says. "A combination of innovation, regulation and industry works."
The Foundation has joined hands with leading companies such as H&M, Nike, Philips and Unilever etc. "Each of these companies are recalibrating their business models and boldly committing to transform and be the frontrunners in their sectors on the topic of circular economy," Morlet says.
In particular, he is excited about Unilever's promise to convert to reusable and recycled packaging by 2025. "When large multinational companies adopt, others follow," Morlet believes.
Two years back, in a groundbreaking report, the Ellen MacArthur Foundation said in a business-as-usual scenario, our oceans are expected to contain more plastics than fish (by weight) by 2050, which propelled Unilever to renew its commitment towards packaging materials that stay in use and out of the ocean. So Morlet's optimism is understandable.
Another major collaboration is one that the Foundation has forged with H&M. The Swedish clothing giant has committed to becoming "circular" on 80% of the store concepts by 2025 and use 100% recycled materials by 2030. Additionally, it also runs a garment recycling scheme.
Dutch tech giant, Philips, drives a circular economy-led value creation by refurbishing pre-owned components, using upgradable products and also delivers 50% reduction in energy consumption versus comparable systems in some cases, the company website states.
Products can be designed for maintenance, repair, upgradation and refurbishment, with the business model beneficial for both customers and manufacturers. It's not that costs cannot be controlled. I see it more as a design challenge; in most cases, the right questions have not been asked.
PUBLIC POLICIES PROVIDE THE SECRET SAUCE
What often stands in the way of large scale adoption is regulation.
According to some critics, policies that suggest environmental benefits are not necessarily vote winners because often, they result in job losses or increased household utility bills, at least in the short term.
Meanwhile, countries such as India and China have contended in the past that it is unfair to be constrained by carbon-reduction targets when their OECD (Organization for Economic Cooperation and Development) counterparts have harnessed development, exploiting an emissions-heavy growth path.
Morlet argues that we have to move away from what signifies economic prosperity and ask the question - what is it that we want to grow?
Is pollution led prosperity worth the price?
Research suggests that for every one percent increase in GDP, resource usage has risen on an average 0.4 percent. This means population and economic growth are the key drivers of resource demand and economic development, as we know it, collides with resource scarcity.
If anything, emerging countries can participate, lead the charge and redefine how we perceive growth. "People have to understand we cannot scale the linear model anymore without a severe, debilitating impact," Morlet says.
Still, it might be naïve to imagine that people will choose more environment friendly options if it is not price competitive. Consumers prefer sharing versus owning because it is also convenient and cost effective.
In the majority of countries, particularly in the developed world, the cost of repairing products are often higher than buying new ones. "People are price sensitive and a great example of where a new product can cost less than repair is a washing machine. But this is largely a design challenge," Morlet believes.
Products can be designed for maintenance, repair, upgradation and refurbishment, with the business model to match so that customers and manufacturers can both benefit, he elaborates. "For example, Splosh uses a reusable bottle and detergent concentrate, which is dissolvable. One can order it online, it's convenient, cost effective, reminds you when supply is running low etc. it's not that costs cannot be controlled; in most cases, the right questions have not been asked," Morlet explains.
The world is on track to have more plastic in the ocean than fish by the year 2050
NURTURING THE CIRCULAR ECO-SYSTEM
Connecting to a common cause and closing the loop on the lifecycle of products remain at the heart of "circular" philosophies. The Ellen MacArthur Foundation collaborates with major companies to shift the needle but also believes in guiding micro-level change.
If a company considers a change towards nourishing the circular economy system, the confusion often is, where to begin. "Often the shift begins with a new design idea," says Morlet. To institute a neutral resource that can help companies design better, the Foundation launched "the Circular Design Guide" a year back.
Additionally, the Circular Economy 100 platform, brings together members from across the economy to provide opportunities for multi-stakeholder collaboration. Member groups include corporates, governments, cities, academic institutions, emerging innovators, small and medium sized enterprises (SMEs) and affiliates.
It also works with student communities in order to intervene at an early stage through fellowship programs and open learning opportunities. "We constantly provide support, collaborate and implement initiatives that accelerate the transition to a circular future. It is our belief that shared learning, creating avenues for the industry, governments and communities to co-create will catalyze the change, from what is now take-make-dispose to made-to-be-made-again," says Morlet.