Transcriber: Virginie Labeye Reviewer: Oren Szekatch
The world is currently undergoing a radical transformation.
Technology is evolving faster than ever,
changing the way we work and communicate year on year.
More and more people are getting access to more comfortable living-standards.
It's been estimated that by 2030,
3 billion more middle-class consumers will join the global economy.
That means that 3 more billion people will have access to electricity,
means of transportation, of communication, health care.
This is fantastic news, and it's happening at unprecedented speed.
In China, in India today, average incomes are rising ten times faster
than they did in UK during the industrial revolution.
And that's for 200 times the scale.
However,
these changes are happening in a system that is not designed to support them.
Our current economy can be largely described as linear:
we take resources, we make products, and then we dispose of them.
Most of these products are largely made of new virgin materials
that eventually end up as waste.
And this whole economy is largely powered by fossil fuels.
These materials and energy at a human-time scale
can be seen as finite resources:
since they don't regenerate,
the more you consume, the less there's left.
Because of this linear model,
the rapid development of economies globally
is putting unprecedented pressure on resources,
as we can see when we look at the evolution
of the prices of commodities.
Those are things like food, energy, metals, etc.
Over the 20th century, we saw a steady decline in average prices.
That was driven by the discovery of new reserves
and improvements in resource productivity.
But since the turn of the century,
prices have gone back up to their levels of 1900.
In some industries, this is putting direct pressure
on the profit margin of businesses.
And at the same time, price volatility, which is how much prices fluctuate,
has been increasing too; which means that for the same companies,
it's becoming increasingly hard to predict what future costs are gonna be.
And if businesses are in trouble, so are economies.
A number of solutions to this have been focusing on optimizing the linear model:
trying to find new sources of supply, new efficiency gains,
or simply consuming less.
But all these solutions come back to making the line a bit longer
or a bit thinner, eventually just saving some time.
However, a radically different solution was developed too:
replace the line with a circle,
move from a linear economy to a circular economy.
Rather than trying to make it work within the current system,
a circular economy is suggesting to completely rethink the system itself
and to replace it with one that is restorative by intent.
This is not a new idea. This is how living systems work:
constantly reusing their own materials as nutrients for future life.
After 4 billion years of natural selection through evolution,
maybe they can teach us a thing or two
about systems that can work in the long run.
In mathematics, turning a line into a circle
would be called a change of topology,
and it implies that you end up
with a completely different set of properties.
But this is not just an elegant and nerdy idea.
A number of thought leaders have articulated it
into a realistic and pragmatic vision,
and it's the mission of the Ellen MacArthur Foundation
to accelerate the transition towards this vision.
A circular economy has the potential to deliver benefits at all scales,
from individual citizens to the global economy.
And that's for businesses too, small and large,
which is probably one of the key reasons
why this model has been gaining so much attraction over the past years.
To understand this, we need to go a little bit deeper into the model.
In a circular economy, we would separate between two types of materials.
Biological materials are everything that can safely flow back into the biosphere
while restoring natural capital.
It implies in particular that you would have managed to avoid all toxic chemicals.
Technical materials are everything else: things like plastic, metals, etc.
In this vision, the whole economy is fueled by renewable energy
and the mere concept of waste becomes nearly irrelevant.
Now, let's look at for example the case of a mobile phone.
In a circular economy, a mobile phone would first go through a few cycles
of maintenance and upgrade, so that you can keep
a well-functioning phone for longer.
After this, you could still remarket it to different users.
At the next stage, you could still remanufacture it,
say change the battery or the screen.
And only once you've fully exploited all these steps
would you finally recycle the materials,
and you would this at the highest possible quality,
for example by first separating the different types of materials.
Now, you might think
"this sounds like an awful lot of extra costs for companies."
So we did an analysis to see what was the profitability
of these different approaches. And this is what we found:
We found that reuse was the most valuable approach,
with about six dollars per phone after deducting costs.
Recycling had very low value, just about ten cents per phone,
but that's better than nothing.
And especially it's better than remanufacturing,
which we found actually costs more to do than the value you can recover from it.
This is actually quite representative of what's happening today.
There are a number of companies that will buy back your mobile phone.
And often what happens
is either the phone still works and then they sell it to a new market,
or the phone doesn't work any more, and then they recycle it.
They usually don't bother trying to remanufacture it,
because it just doesn't make economic sense.
This of course is not the whole story.
This is the businesses as usual story, because in a circular economy,
you wouldn't wait till the end of pipe to start solving problems;
you would avoid them altogether at the design stage.
A mobile phone can for example be designed to be easy to disassemble,
its components can be made to last longer, you could design a modular phone
that you can repair or upgrade every time there's a new technology.
And you can also improve the treatment methods
so that you're up with this more valuable, and your costs are lower.
So now we did a new analysis,
taking into account the small tweaks in design and in treatment.
And what we found is a very different picture.
Reuse was still the most valuable approach
with improved profitability.
Recycling was much more profitable, over a dollar per phone could be captured;
but especially remanufacturing got very decent profitability
of about 2.5 dollars per phone.
The trend that we're seeing here,
where reuse is more valuable than remanufacturing,
is more valuable than recycling,
is one where the strategies that preserve more of the integrity of the products,
more of its complexity, of its embedded energy,
are more valuable approaches.
This is just logical after all. But now, how are we gonna go about this?
Because it's all nice and smart to redesign our products,
but if they all end up in a drawer at home,
like it's often the case with our mobile phones,
or worse, simply in the bin, this is all for nothing.
A key success factor for this to be worth it
is that you need products to go back into the supply chain.
As a business, this means that you need to change the way
you interact with your customers.
You could for example put in place a take-back scheme, say
"I give you X euro if you give me your phone back",
or you could think a little bit more innovatively
and actually change your whole business model.
For this, you could learn from the experience of car-sharing models.
These are models through which you can rent a car for a few hours or longer.
In these models, we see that people are actually increasingly interested
in getting access to a product, rather than owning it.
For mobile phones, in many countries today,
you already don't actually pay your phone up front,
so it's only a small change to move
from this to one where the ownership remains within the producer.
And once you do this, it becomes really valuable for the producer
to design a product that can be used several times,
because that means that they can actually sell it several times.
Now, so far, I've really talked mostly about the technical side of this model,
things like phones, cars,
but there are many more opportunities on the biological side as well.
In that case, rather than trying to go for a strategy of trying to circulate products
for as long as possible in the economy,
we'd rather go for a strategy of flowing materials back into the biosphere,
while restoring natural capital, and after having captured as much value
from these materials as possible.
Some of the opportunities there are designing a packaging
that can easily be composted,
or making textiles that are exempt of all toxic chemicals.
You can improve the collection of food waste,
as well as you can improve its treatment, for example through anaerobic digestion.
There are many more opportunities here.
Of all these opportunities, both on technical and biological side,
most of these can be largely driven by businesses themselves.
This is one of the key strengths of this model:
it doesn't require any top-down control.
However, there are a number of enabling conditions
that could greatly help this transition to happen.
The first and foremost is education.
In many industrialized countries today, education is optimized for linear model:
it's rigid, mechanistic and focused on throughput.
A number of thought leaders are exploring the education models of the future.
What do we need to teach and in what way
so that the professionals of tomorrow can think in systems
and can think of a circular economy as something obvious?
Second, policy and regulatory frameworks can greatly help this transition as well
by setting the rules of the games and setting conditions for success.
Third, collaboration is key for a circular economy,
whether it's collaboration between businesses and policy makers,
between business and research,
between big corporates and small innovators,
collaboration across sectors, collaboration across supply chains,
collaboration across geographies, collaboration is key for this transition
and to take place, it requires
the right, legal frameworks, and the right platforms.
In a series of analysis that we did over the past years, we estimated
the total material cost savings that a circular economy could yield.
We first looked at the sector of medium-lived complex goods.
Those are things like machinery, automotive electronics, furniture as well.
And there, we found that in EU alone,
we could achieve up to 630 billion dollar cost savings a year.
That's like 3 full percent of the GDP of EU.
Then we did a next analysis in the fast-moving consumer goods,
which includes things like food, package food, clothing, hygiene products,
and we found an additional 700 billion dollars
in material cost savings, at the global level this time.
Altogether, it means that globally,
we could achieve over a trillion dollar material cost savings per annum.
And this is only part of the story, because circular economy principles
can also enable businesses to find new sources of revenue
and improve their customer relationship,
because of these new business models and because of just better products.
This model can also help businesses become more resilient to external shocks
and less dependent on the constantly fluctuating prices of virgin materials.
And, for consumers too this is good news, because in a circular economy,
some very high quality products could become much more affordable.
Finally, a circular economy
has the potential to create resilient and prosperous economies
within healthier natural environment and with restored natural capital.
And this is the right time to act.
Governments and businesses alike
are becoming increasingly aware of theses resource constraints.
Investors are getting more and more concerned
about the long-term viability of their actions.
New types of business models keep popping up,
and there's a number of technologies that were created over the past years
that would also greatly enable this transition.
This is the time
to prepare companies for the change and to demonstrate the benefits.
This is the time to adapt our policy frameworks.
This is the time to educate the professionals of tomorrow,
to redesign products and services, and to just do business differently.
This is the time to reinvent our future. Thank you.
(Applause)