Transcriber: irem çakır Reviewer: Annet Johnson
We are heading straight for catastrophe with our eyes wide open
due to unsustainable business and consumption patterns.
As business goes on as usual,
many seem to forget that there will be no business and no jobs on a dead planet.
We all know what the consequences of our current consumption patterns will be:
more extreme weather events like droughts or floods,
rising sea levels, melting glaciers.
And these are only the climate consequences.
I’m not even talking about pollution
which is already killing millions of people every year
or mass migration as parts of our earth become uninhabitable for humans
or wars over resources as resources become scarcer and scarcer.
But you all know this.
Here is something you may not know.
71% of greenhouse gas emissions between 1998 and 2015
have been caused by only 100 companies.
And if that were not enough,
the top 15 US food and beverage companies emit more emissions than Australia,
the 15th largest emitter.
It’s actually more than 630 million metric tons of CO2 emissions
that these 15 companies emit.
As you can see, companies are a large part of the problem.
But here’s the upside: they can also be a large part of the solution.
But let’s take a step back and look at where we are today.
We are currently in a linear economy.
That means that we extract our finite resources,
we make a product that we use for a short amount of time
and then throw away, creating tons of emissions and mountains of waste.
What's more is that we consume way too many resources.
As you can see, if we all consumed as much as the average U.S. American,
we would need five planets earth to sustain our levels of consumption.
On average, we need about 1.7 planets earth for our lifestyle.
The problem is that we only have one.
The consequences will affect everyone
as a transformative structural change that we need is nowhere to be seen.
As you can see, demand for our limited resources is projected to go up
while supply is going down.
The consequences of this gap are rising costs for water, land,
materials and energy, supply chain disruptions.
I don’t know if you guys remember,
but recently there were some days in which gas stations were out of fuel.
So this is expected to happen even further in the future
and in the worst case, social unrest and war.
But what if we could do things differently?
What if we could change our economy
so that it’s restorative and regenerative by design,
that it creates prosperity
while at the same time decreasing our environmental footprint?
Let me introduce to you the circular economy.
The circular economy is an alternative economic system
that is based on the following principles.
Number one, design out waste and pollution.
That sounds very simple, but the implications are far-reaching.
Did you know that 80% of the sustainability of a product
is determined at the design stage?
That means that if we mess up product design,
it’s almost impossible for us to compensate for this later on.
So that means we have to completely change how we design our products.
Number two, keep materials and products in use at the highest possible value.
So that means we don’t just want to keep things in the loop,
but we also want to preserve
as much value in the products that we have produced as possible.
Number three, decouple growth from resource consumption.
Currently, we need 1.8% more resources for every 1% additional economic growth.
Obviously, this will not work out in the long run since resources are limited.
And number four, regenerate natural systems
so that our grandkids will still have a beautiful planet to live on.
Now you may say, “Marlene, this sounds really nice and also very abstract.
So how do we actually get there?”
There are five circular business models along the value chain.
Number one is circular inputs.
Circular inputs means that we use renewable energy,
biobased or other materials that are recycled, recyclable,
and allow for the elimination of waste.
One great example is carpet maker DESSO.
DESSO actually managed to reduce the amount of materials it uses,
it changed the yarn it uses for its carpets for the yarn to be recyclable,
and it also managed to eliminate all sorts of toxins
from its production process.
The result?
Eight percent higher profitability and eight percent more market share,
so quite remarkable.
The second business model I want to talk about are “As-a-Service” models.
And “As-a-Service” model means that the company retains ownership
of the product and sells its function or benefit.
To visualize this I want to talk about Signify, formally Philips Lighting.
Signify sells light as a service to its customers.
For monthly fees, Signify installs, operates,
and maintains the lighting systems.
The illuminates and fixtures are designed for repairability and replacement
and can easily be recycled and reused.
As a result, Signify’s lighting fixtures [uses] less 75% than traditional systems.
Light as a service was also implemented at Amsterdam Schiphol Airport.
The result?
Energy consumption dropped by 50% compared to the previous system.
The next business model I want to talk about is “Product Use Extension.”
Here we want to take an existing product
and keep it in the loop as long as possible.
Now we have different strategies to accomplish that
and which one that you actually use matters.
So the goal here is really to take the smallest loop possible.
But let me visualize this using a product that we all know: our phone.
So in the beginning, the raw materials for the phone are extracted,
the components are made, the phone is assembled and shipped,
and finally sold to you, either online or through your local provider.
Now that you have your phone,
the easiest thing to do is just to maintain it
so it lasts for as long as possible.
Or if you drop it and the screen breaks,
as happens quite frequently,
you just repair it so you can use it much longer.
This is the smallest loop.
Now,
there may be a time when you no longer want your phone.
And I don’t know about you,
but most people just stash their phones at home.
Do you have phones at home as well?
And if yes, how many?
Three?
Four?
Well, instead of stashing your phone at home,
what you could do is sell it to the local phone shop around the corner
so the phone can be resold and gets a second life.
And this would actually be the second smallest circle.
Now that your phone has had two lives already,
the components may be outdated,
and, to keep it relevant, we may have to refurbish the phone.
Refurbishment basically means that we update the outdated components,
we polish it, we make it look shiny and new
so that it can then go back into the circle.
The other strategy we have is remanufacturing.
Remanufacturing is a strategy that you’d actually not use for the phone,
but it’s more for heavy industry equipment like machines,
turbines, or other equipment.
Remanufacturing means that we put a product back into an “as new” state,
as you can see here.
Only if we cannot use any of the previous three loops,
we would then recycle a product.
So recycling is really a strategy of last resort that we only want to use
if we cannot use any of the previous strategies.
One great example of remanufacturing is Caterpillar.
Through its Cat Reman program,
Caterpillar remanufactures products like motors or engines and resells them
at a 20% lower price while generating 50% higher gross margins.
So that's actually a really great result.
And what’s more is that Caterpillar really generates a lot of customer value here
because the customer is able to get the same product
at a much, much lower price.
The fourth business model are “Sharing Platforms.”
Sharing platforms mean that it is just a platform that connects a business
or an individual that has an underused asset
with a business or an individual that actually needs that asset
but doesn’t necessarily want to own it.
Why is that actually necessary?
Just think about your car.
Your car sits around unused for about 90% of the time,
using up space and losing value.
So that’s really, really inefficient and sharing platforms can help here.
One sharing platform that you all know is Airbnb.
The last business model I want to talk about is “Resource Recovery.”
In the resource recovery business model what we want to do
is take materials that are left over from the production process
or materials, products, and components at the end of the life cycle
and put them back into the loop.
So think about our dear phone again.
There may be a time when we are no longer able to give the phone an additional life.
In that case what we would want to do is disassemble the phone
and recycle its different parts.
One great example here is General Motors.
General Motors recycles 84% of its global production waste
and operates more than 100 waste-free production sites.
As a result, General Motors was not only able to decrease costs,
but also generate an additional one billion US dollars in revenues.
Now, implementing the circular economy is by no means an easy task.
It’s complex.
It requires change on all levels of an organization
and collaboration within the organization, but also along the value chain.
So why should your business actually go circular?
First, there is the money aspect.
The circular economy is an economic opportunity
valued at 4.5 trillion US dollars globally by 2030, according to Accenture.
Now, that is a lot of money and to visualize this
just imagine that you stacked 100 US dollar bills on top of each other.
You would have to build a tower that is roughly 491,000 kilometers high.
That’s actually much further than the distance from the earth to the moon.
As you see, that is a lot of money that is there to be made.
Additionally, the circular economy enables companies to generate higher revenues
by acquiring new customers
or by developing new products and services.
It also helps companies save costs
either by reducing the amount of materials
that are required to make a product
or by reducing the amount of virgin materials that are required.
This, of course, is also huge,
if we consider that resources are getting scarcer and scarcer.
The circular economy also helps companies build a better brand.
This is necessary not only to attract and retain customers,
but also talent and investment.
Last but not least, the circular economy also helps with risk mitigation.
These include regulatory risks,
as regulations are becoming more and more stringent.
The EU has passed a massive package of regulations aimed at pushing companies
further towards a circular economy.
That means that acting sustainably will no longer be an option
but a precondition to doing business.
Circular economy practices also help with reputational risks.
Just think of the public outcry that Coca-Cola faced recently
when it was announced that it was the main sponsor of the COP 27 event.
Coca-Cola is the largest plastic polluter globally.
So to sum it up,
your business should go circular because it has a lot of benefits.
Also, as regulations are becoming stricter and stricter,
there is no way you can actually avoid it, if you want to continue to do business.
So, where do we go from here?
If we continue on the path that we're currently on,
the consequences of climate change,
depletion of resources and the related wars,
and pollution will be devastating for us and our planet.
But we can also choose a different path.
The circular economy offers a myriad of possibilities
for companies to act profitably and sustainably,
while reducing the environmental footprint, dependencies on resources,
and the amount of virgin materials required.
Implementing the circular economy is possible, but it's not easy.
It requires courage and perseverance from all of us,
with businesses at the forefront, to keep this planet a livable place.
But if you look around,
you see some companies demonstrating courage and perseverance already.
They have realized that if you don’t have a circular business model,
soon you will not have a business model at all.
Now if you’re all sitting here and you’re thinking,
“Yes, that’s great, companies just have to change”
and you’re preparing yourself to just lean back and watch it happen,
you are doing it wrong.
Because what do companies consist of?
It’s people, right?
And you’re one of them.
So, I’m asking you to be courageous
and take the first step towards a circular economy.
Bring change to your company or organization.
Discuss the circular economy with your colleagues
and bounce ideas on how to implement it.
Because we have a lot to do and time is running out.
In doing so,
you will not only do your part in preserving this planet,
but also build the circular economy of the future.
You are responsible.
The circular economy is a huge opportunity,
so seize it.
The time for change is now.
Thank you.
(Applause) (Cheering)