Evolving towards circular economy

N°275b – Synopsis (8p.) – Environment and Climate
Evolving towards circular economy
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“Extract – produce – dispose”: against this linear economic model, nowadays reaching its limits, a new model is emerging. Circular, it aims at minimizing, regenerating and recycling the resources. Why and how to initiate this transition?

The economist Jean-Baptiste Say stated in 1828: “Natural resources are infinite because, if they weren’t, we would not obtain them freely. Since they cannot be multiplied, nor exhausted, they cannot be the object of economic sciences.” We know today how this vision is dated. Submitted to an exponential exploitation, metals and fossil energy resources are strongly diminishing. In 2018, humanity consumed in 221 days the resources that the earth produces in one year.

Beyond the obvious environmental issue, the challenge is also economical. Constantly decreasing until the years 2000, the cost of raw materials is now increasing: between 2000 and 2013, for each GDP growth point, it grew by 1.9%. The increasing scarcity of some resources, the rise in extraction costs as well as depollution expenses are affecting companies’ production costs. They also generate new risks for the supply chains—and could, ultimately, threaten companies’ financial health. In a status-quo scenario, the firm Accenture estimates that the gap between the supply and the theoretical demand for natural resources would not stop worsening, leading to a loss of 4,500 billion dollars for the global economy by 2030… and of 25,000 billion dollars by 2050!

When considering these somber perspectives, the circular economy proposes an attractive alternative. But it entails breaking from an age-old economic model, based on the “extract – produce – dispose” scheme. Conversely, the circular model first seeks to safeguard raw materials, even if this means revolutionizing our ways of producing and consuming. Resources are collected parsimoniously, reinjected into production for as long as possible, and as a last resort, the inevitable waste is recovered.

Companies that have converted to this model describe it as a formidable lever for innovation, an answer to the needs expressed by their stakeholders, an investment to ensure their future competitiveness. Among them, we find Interface, a global leader in carpets, Michelin, which has totally reinvented its value proposition, and Calera, a producer of ecological solutions for the construction industry. But their transformation has proven demanding…

In this synopsis:
- Adopting circular economy: what are the strategic options?
- Organize your transition towards the circular economy
- Transition towards circular economy: how to proceed?

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