Incentivizing Circularity Businesses are responding to the economic logic of going circular, and attracting more customers by sharing the financial rewards that result Commodity price increases since 2000 have erased the real price declines of the entire 20th cenTHE POTENTIAL
tury,1 giving businesses and consumers a good reason to break free of the linear model of resource use. Nineteen solutions this year provide examples of businesses and consumers reacting to clear economic incentives to adopt more circular consumption patterns. By embracing reuse, recycling, or take-back systems, these solutions are reaping fi nancial rewards while protecting themselves from the rising cost of resources. For costumers willing to participate in the circular economy, the incentives are clearer than ever, with several solutions within this trend off ering irresistible ways of saving money through circular business models. Vigga.us, for example, saves parents up to $2,100 in the fi rst year of their baby’s life by leasing out children’s clothing for a period before exchanging them for larger sizes as the child grows (pg. 54). Likewise, Nudie Jeans makes it fi nancially attractive for customers to make use of its take-back system, as customers who return their worn out clothing receive a 20% discount on the next purchase (pg. 62). This trend also includes examples of how companies have gained from cost savings in the produc-
In addition to signifi cant reductions in CO2 emissions, more than $1 trillion a year could be generated by 2025 from a successful transition to a more circular economy. 2 This is partly because commodity prices are skyrocketing, with the prices of metals alone having increased by an average of 176% since 2000. 3 This increases companies’ incentives to reuse, recycle, and retain control of resources within a closed loop. Overall, companies that participate in a circular economy enjoy cost savings and can increase their top line through branding and lower product prices than competitors.
tion process due to the reduced energy and raw material consumption enabled by moving closer to circularity. They illustrate how companies are recognizing and acting upon the strong economic incentives to rethink the conventional defi nitions of waste and value. For example, Diseclar’s process
INSIGHTS FROM THE SUSTAINIA100
of turning non-degradable plastic and agro-industrial waste into a timber-like material for furniture reduces energy consumption by 85%, resulting in lower costs for the company (pg. 152). Olleco’s
The solutions relevant to this trend originate from 17 diﬀ erent countries. Of these, Sweden is the source of four solutions, making it the top innovator.
comparable approach involves producing heat and power out of food waste in the UK, which companies are happy to hand over in order to avoid paying waste disposal costs (pg. 156).
A CIRCULAR ECONOMY WOULD SLASH VIRGIN MATERIAL DEMAND IN PRODUCTION
These solutions are incentivizing circularity in 38 countries across six continents.
Among the many beneﬁts of transitioning to a circular economy is the opportunity to reduce the amount of material consumed by substituting virgin with circular materials.4 2010 = Index100
Demand for virgin materials in production under circularity
Demand for virgin materials in production under business as usual
Ellen MacArthur Foundation, McKinsey & Company, Ellen MacArthur Foundation. “Towards the Circular Economy”. Report. 2014.
400 Volume of virgin materials substituted by circular materials
World Economic Forum. “Towards the Circular Economy: Accelerating the scaleup across global supply chains”. Report. 2014.
The Global Commission on the Economy and Climate. “Better Growth Better Climate”. Synthesis Report. 2014. 2
3 McKinsey & Company. “Resource revolution: Tracking global commodity markets”. Report. 2013.
Want to explore this trend? Have a look at these five solutions. USED AIR FILTER
Circular Model for Air Filter Reuse
Global Repair Service for Jeans
Circular Workwear Production
CLEAN AIR FILTER
Furniture from Recycled Plastics and Agro-Waste
Circular Food Waste Processing into Heat and Power