Focus on pure materials stock management at the outset
With these criteria in mind, the analysis shows that the materials flow perspective as the most promising to initiate the project. Catalysing “trigger projects” to develop pure materials flows could significantly accelerate scale-up of the circular economy across many sectors.
Why not the first or the third options? The first—reorganizing global reverse networks for products and components— provides arbitrage opportunities that are easier for individual companies to realise. First movers can quickly capture the benefits, as the many examples in this report demonstrate. However, this opportunity is most accessible to individual companies, or within specific industry verticals [Figure 27].
Figure 27: Archetypes of circular setups—materials flows are the largest common denominator across value chains
Source: World Economic Forum and Ellen MacArthur Foundation circular economy team drawing from Braungart & McDonough and Cradle to Cradle (C2C)
Transition is already gradually underway in most sectors on the third option, business model innovation. The critical lever for accelerating the shift is demonstrating its economic benefits and success. Showcasing its non-economic benefits sufficient to drive adoption by large companies and regulators would also be important. The Forum’s Young Global Leader Circular Economy Innovation and New Business Models Taskforce has been working towards this goal over the past two years. Collaborative Lab, an innovation consultancy, facilitates a large platform for sharing best practice where businesses and regions can learn from one another’s experience. Work is therefore already under way in this field.
Materials flows are the largest common denominator, where multiple stakeholders need support to collaborate effectively in order to generate benefits for multiple players along the value chain, across sectors and geographies [Figure 26]. Relevant pre-work can also be leveraged, yielding substantial improvements in the short to medium term. The analysis in addition to feedback from many companies and expert therefore suggest that the best starting point is to establish pure materials flows for the Golden oldies (paper and card board), High potentials (polypropylene), Rough diamonds (carbon dioxide) and Future blockbusters categories (bio-based and 3D-printing) on a large scale. This will be the fastest way to scale-up the circular economy.
Pursuing this path will likely entail positive second-order effects, such as job creation and higher value added in the reverse cycle decoupled from resource price volatility, which will create a more robust planning environment. This typically results in superior financial returns, from the overall elimination of waste, and the associated wider economic benefits.
The opportunity is huge. The next chapter lays out a proposal on how a joint initiative could capture the opportunity of option 2 on an unparalleled, global scale—and fast.