The growing world economy is consuming more resources than ever. Poorly managed resource consumption also fuels climate change. More frequent extreme weather events – floods, storms and droughts – are occurring. These disrupt supply chains, threaten food security and create food price volatility. Meantime, the global population grows toward 9 billion and many of the poorest face rising food insecurity. Yet our growing world economy is consuming more resources than ever.

How do we break this spiral? How do we decouple economic growth from resource consumption and rising environmental impacts? How do we reshape the world to avoid reaching our “peak footprint” on the planet? 

We should celebrate the net decline in chronic poverty since the Millennium Development Goals (MDGs) were introduced. The OECD expects up to 3 billion more people to join the middle class over the coming decades. More people are being lifted out of poverty than ever before, and with the new 2015 MDGs there is a chance to get to zero extreme poverty within a generation. This is good news.

 

There is, however, a downside. The latest scientific assessment presented in 2013 by the Intergovernmental Panel on Climate Change (IPCC), the world’s foremost network of climate scientists, says the warming of the Earth’s climate system is unequivocal. Many of the climatic changes observed in the past 50 years are unprecedented. Each of the past three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850.

The increased risk of extreme weather – similar to Hurricane Sandy in the United States in 2012, or Typhoon Haiyan in the Philippines in 2013 – is a reminder of the economic and social impact this challenge poses. Indeed, climate change and related impacts such as extreme weather events, food crises and water crises are four of the top 10 global economic risks identified by the World Economic Forum Global Risks 2014 report.

The failure to act in a timely manner, at the scale that is required, has the potential to be a significant drag on global growth prospects. The report also identifies global governance failure as a top 10 global economic risk. Furthermore, many important development advances of the 20th century, such as food security, global health or poverty reduction, could also be undermined by climate change, as the World Bank suggests in a recent report on the perils of a 4ºC world.

 

Conversely, building a cleaner, more efficient and more resilient economy offers many economic and technology innovation opportunities. More evidence continues to emerge on the co-benefits of pursuing clean and green development; and this new climate economy agenda is becoming central for many emerging economies.

Industry, civil society, international organizations and individual citizens all have a part to play. By drawing on the combined innovation, resources and effort from across the public, private and civil society sectors, and through mobilizing large-scale, practical collaboration and alliances, significant new opportunities to lower emissions and build economic resilience can be realized. By demonstrating that practical action can be mobilized, such complementary activities may also help to nourish wider political engagement on climate change.

Consequently, the United Nations Secretary-General and the Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) agreed with the World Economic Forum jointly to advance public-private cooperation, action and ambition on climate change and broader sustainability issues. This resulted in a focus on collaborative solutions to climate change – the first “Climate Day” – at the World Economic Forum Annual Meeting 2014. Given momentum by Climate Day at Davos, the drive to deliver large-scale collaborative solutions will continue through to the UN Climate Summit in New York, on 23 September 2014, and on to the UNFCCC meetings in Lima, Peru in late 2014 and beyond.

 

At the same time as widespread collaboration is on the rise, so is innovation. One of the most promising courses is the move towards a “circular economy”. The dominant doctrine of production and consumption in the 20th century was linear or “take-make-dispose”; a circular economy describes an industrial process that is, by design, recyclable and restorative.

Through the Forum’s new initiative “Project Mainstream: Scaling the Circular Economy”, launched with the Ellen MacArthur Foundation at the Annual Meeting 2014, private enterprises will forge new business models based on this thinking, not driven by environmental stewardship, but because they present commercial opportunities. 

Opportunities abound. The European market for fast-moving consumer goods is €3.2 trillion a year, of which 20% could be recuperated through smart circular practices. The potential for materials cost-savings of a more restorative approach are estimated to be US$ 1 trillion a year by 2025. Being a cost-saving, this represents a possible US$ 1 trillion profit uplift. This new way of thinking about the industrial process is so promising it has been adopted by China as part of its most recent five-year plan. 

 

Process innovation is only the beginning of the research and development roadmap for the circular economy. More revolutionary is the concept of so-called digital fabrication in industrial design and manufacture. In this process, materials are programmed as discrete, functional elements that can be assembled and disassembled according to usage. Imagine a circuit board made of nano-scale components which can be arranged like children’s building blocks, then rearranged when recycled.

On the issue of water, the breakthrough global public-partnership of the 2030 Water Resources Group is now working across seven countries. It is helping governments to develop innovative economic analyses of their future water needs – how much water will the economy need to grow as planned? How much water is safely available? So, how best to close the gap? 

Another innovation that is making a difference is water credit, a concept pioneered by an NGO, Water.org. Under the scheme, communities lacking access to safe drinking water or sanitation can qualify for loans that are used to build water infrastructure in their community. This form of catalytic philanthropic investment has already improved the water access of more than 900,000 people. 

 

In agriculture, the New Vision for Agriculture continues to grow. A new innovative partnership, “Grow Asia”, is under development to mirror the successful build-out to date of Grow Africa.

Ultimately, the most powerful force in reshaping global resource consumption will be consumer choices themselves. Here too, promising patterns are emerging. Millennials, roughly defined as people presently aged between 18 and 30, consider themselves as users rather than consumers. This is evidenced by the phenomenal rise of collaborative consumption, efficiently facilitated by the Internet. New digital initiatives to corral the innovation of millennials into creating mass movements on sustainability and climate change issues are under way.