Circular economy – are we ready yet?

This blog originally appeared on GES International’s website and has been republished following Sustainaltyics’ acquisition of the company on 9 January 2019. See the press release for more information.

The short-sighted focus on producing and consuming as cheaply as possible has created a linear economy in which objects are used and then discarded as waste. For all the good it has brought us, this economic model is in need of a new direction. The global population will continue to grow and many emerging nations will seek to improve living standards. This is putting enormous pressure on the environment and leading directly to resource scarcity. A circular economy seems an ideal alternative to the linear “take, make and dispose” model. This model ensures we make the most of limited resources by reusing or remanufacturing products that would have ended up on the rubbish dump. It makes both environmental and economic sense, and businesses, communities as well as investors, stand to gain a lot from this sustainable model.

Over recent years, the concept of a circular economy has gained momentum. Many elements have already been considered as part of broader political and societal programmes. For example, the UN’s Millennium Goals and the recently articulated Sustainable Development Goals, to name just a couple. The initiatives call for increased resource efficiency in consumption and production, sustainable management of natural resources, and substantially reduced waste generation through prevention, reduction, recycling, and reuse.

Plastics are one of the most wasteful examples of the linear, take-make-dispose economy. Global production of plastics has increased twentyfold since the 1960s, and reached 322 million tonnes in 2015. It is expected to double again over the next 20 years. With 8 million tonnes of plastic leaking into the oceans each year, we all need to re-evaluate the way we make, use and reuse plastics. In practice, it means opting for reusable materials, ending wasteful manufacturing processes, embracing renewables and avoiding toxic chemicals. GES already delved into the topic in a blog post dedicated to plastics.

Fortunately, there are companies such as those which signed the UK Plastics Pact, that understand how important it is to apply circular economy principles to global plastic-packaging flows. The Pact, which was signed in April 2018, is part of an international initiative which aims, through collaborative work of different parties, to eliminate single-use plastic packaging and redesign all plastic packaging to make them reusable, recyclable or compostable.

GES believes that institutional investors can use their role as shareholders of corporations to put the circular economy transition higher on the list of priorities for the private sector. That is why GES has decided to pay particular attention to the issue and shape a stewardship and risk engagement theme to encourage companies to adopt initiatives that address issues with plastic waste and pollution. But are we ready for this new way of doing business?