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Lombard Odier Investment Managers ~ Biodiversity, Eco-design & repair
Biodiversity investment case study: eco-design and repair
Biodiversity is essential to economic output and planetary stability. The circular bioeconomy – in which biological resources are renewable, sustainably managed, recovered and reused as much as possible – currently supports up to 6-7% of economic activity. But it has the potential to underpin 30%.
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Sustainability challenges are created by our linear take-makewaste economic model, in which we extract more than we need, make more than is necessary and waste much of this output. This destroys or disrupts ecosystems – and the biodiversity underpinning them –both through excessive materials extraction and waste.
Digging up mountains
We extract 92 billion tonnes of resources each year – equal to more than half the weight of Mt Everest – to produce goods. But 80% of products are used only once each month and less than 20% of refuse is recycled each year, with huge quantities sent to landfill. Plastic is a telling example: of the 8.3 billion tonnes in existence, 6.3 billion has become waste.
Fashion’s faux pas, technology’s dark side
Globally, an estimated 92 million tonnes of textile waste is created each year and the equivalent of a waste-truck full of clothes ends up on landfill sites every second. Our track record on electronic waste isn’t much better. A record 53.6 million tonnes of e-waste was generated worldwide in 2019, driven by high consumption rates, short life cycles and limited repair options. Only 17% of e-waste is recycled each year, resulting in the loss of USD 57 billion worth of goods and materials that could be repaired or repurposed.
Unrelenting pressure on biodiversity
Much non-biodegradable or improperly recycled waste occupies landfills. Over time, it can leak into the natural environment and significantly damage living organisms, with hazardous materials heavily impacting the survival rates of animals and plants.
In addition, clearing areas to create or expand landfill sites destroys existing natural environments, and as landfill piles up, local species are outcompeted by animals attracted to refuse, like rats and crows. Waste that is not sent to landfill often becomes pollution, directly harming terrestrial and aquatic wildlife.
What’s driving the growth of eco-design and repair?
Global consumers. Appetite for products developed from sustainable sources, and which are repairable and recyclable, is growing. Globally, 85% of people have favoured sustainable products in the past five years and one-third of consumers are willing to pay a ‘green premium’.
Regulatory momentum
A key component of the EU’s Circular Economy Action Plan is a proposal for eco-design, making products more durable and fit for reuse and upgrading. Laws such as Right to Repair in the UK, which follows similar US and EU rules, compel manufacturers to make spare parts available to consumers, a move which is expected to extend the lifespan of products by up to 10 years.
Competitive advantages
In the electronics industry, eco-design is becoming a differentiator: improving energy efficiency, leveraging green processing and factoring durability and reparability into product designs are among the approaches used.
Repair over refuse
More brands, retailers and specialists offer maintenance and repair services, and many already enable consumers to perform a range of repair tasks on goods including mobile devices, laptops, refrigerators, washing machines, ovens and coffee machines.
Excessive extraction, accumulating waste: a sustainability challenge
In summary
Our linear economic model is a major driver of biodiversity loss, which threatens ecosystem services vital to economic stability. Within the circular bioeconomy, companies are developing or providing goods that require minimal or no extraction of new materials, and which embed reparability and recyclability into product design, thereby reducing waste. They appeal to increasing consumer demand.
Sources
1 Source: “Investing in nature at scale,” part of the Lombard Odier Zero-Hour Sessions at COP26 (November 2021).
2 World Economic Forum. Circular economy and material value chains. Accessed July 2022.
3 Statista. Size of largest landfills globally as of 2019. Accessed July 2022.
4 DW. There are 8.3 billion tonnes of plastic in the world. Accessed July 2022.
5 Ellen MacArthur Foundation. Redesigning the future of fashion. Accessed November 2022.
6 United Nations Institute for Training and Research. The Global E-Waste Monitor 2020 – quantities, flows, and the circular economy potential [website]. Accessed July 2022.
7 LOIM analysis. United Nations Institute for Training and Research. The Global E-Waste Monitor 2020 – quantities, flows, and the circular economy potential. Accessed July 2022.
8 Business Wire. Recent study reveals more than a third of global consumers are willing to pay more for sustainability as demand grows for environmentally friendly alternatives. Accessed July 2022
9 Pilotto Cenci, M., et al. ‘Eco-Friendly Electronics – A Comprehensive Review’. Advanced Materials Technologies. Volume 7, issue 2, February 2022.
Risk Warnings
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