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WEF, Ellen MacArthur Foundation Project Circular Economy Can Generate US$1T Annually by 2025

Figure 26: Fibre flows in the pulp and paper value chain — recovered fibre is responsible for almost 50% of pulp supply for paper and cardboard (Source: RISI, FAOStat, McKinsey analysis, expert interviews) | Image credit: World Economic Forum/Ellen MacArthur Foundation

A new report released Friday by the World Economic Forum (WEF) at its annual meeting in Davos, in collaboration with the Ellen MacArthur Foundation (EMF), contends that over US$1 trillion a year could be generated for the global economy by 2025 and 100,000 new jobs created within the next five years if companies focused on building circular supply chains to increase the rate of recycling, reuse and remanufacture.

The report, Towards the Circular Economy, Vol. 3: Accelerating the scale-up across global supply chains, analyses the economic benefits for businesses shifting towards a circular economy, which eschews today’s take-make-waste consumption patterns for a more restorative process, where products are designed and marketed with reuse in mind. The report also highlights a new WEF initiative, Project Mainstream, which could help businesses to shift towards a circular economy, with the potential to save US$500 million in materials and prevent 100 million tons of waste globally.

“The circular economy is an opportunity industry can’t afford to miss,” said Sir Ian Cheshire, Group Chief Executive of Kingfisher. “It can drive our next generation of innovation and business growth, cushion our business from price volatility, provide us with competitive advantage, and help us build better relationships with customers and suppliers.”

With commodity prices almost tripling in the last 10 years, businesses and governments are now recognizing this as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources. The report asserts that manufacturing industries in particular could see their costs reduce significantly by adopting a circular business model. For example, material costs of smartphones could be reduced by more than 60% by entirely rethinking the way they are made and disposed. The report also shows the benefits of sharing economy businesses such as Airbnb and Zipcar, and suggests improvements for profitability throughout the supply chain.

Project Mainstream is a WEF initiative in partnership with the EMF and supported by McKinsey & Co, which aims to work with companies to tackle ways to enable the circular economy through materials management, information technologies and business model innovation. Industry leaders including Philips, Kingfisher, Veolia, DSM and Indorama have already committed to the Project.

“Building on growing momentum around the circular economy, Project Mainstream will leverage the convening power of the World Economic Forum and bring together a group of business leaders capable of triggering widespread innovation and employment. It is about going beyond concept stage, it’s about turning proven potential into an economic reality,” said Ellen MacArthur.

Towards the Circular Economy, Vol. 2, released last year at the World Economic Forum, projected that the consumer goods industry in particular could save $700 billion in materials alone through the adoption of circular economic practices. The report also detailed the benefits of land productivity, supply chain stability and designing products for recycling and reuse. 

Prior to the release of its latest report and the launch of Project Mainstream, the EMF announced last week from Davos that Unilever had joined Cisco, Kingfisher, Philips and Renault as the Foundation’s latest Global Partner. The partnership will find the EMF supporting Unilever as it finds ways to unlock the value of the circular economy within the FMCG industry.


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