Corporates failing to make circular economy transition, damning report finds

The report provides an update as to how far business action on resource efficiency is from being "one-planet compatible" 

Unveiled at the World Economic Forum in Davos by Dutch think-tank circle economy, the ‘Circularity Gap’ report measures the difference between global corporate action on resource efficiency, and the action which would be needed to create a circular economy.

The report states that just 8.65% of the 100.6 billion tonnes of raw natural materials which entered the global economy were reused in 2019. Materials covered in this analysis include metals and minerals, fossil fuels and their derivatives and natural gas. Even when recycling was added to the analysis, the overall proportion of the economy which could be considered “circular” was found to be less than 13%.

Given that it is the second iteration of the report, Circle Economy was able to track progress. But the figures remain similar to those detailed in the 2018 report, which analysed resource efficiency according to 2016 data.  

Circle Economy is particularly concerned with a lack of progress in boosting reuse rates, which stood at 8.4 billion tonnes in 2016 and 8.65 billion tonnes in 2018. This represents an increase of just 3%, which pales in comparison to the boom in global virgin material extraction.

The organisation is warning that, without rapid work from national governments and large companies, the annual level of material extraction will rise by more than 170 billion tonnes by 2050, pushing Earth Overshoot Day forward. Circle Economy is specifically calling for the introduction of national circular economy “roadmaps”, bolstered by policies designed to make the business case for reuse and recycling stronger. Such roadmaps, it claims, could help nations deliver on their climate, social and nature targets.

“In 12 months since the launch of the first Circularity Gap Report, the upward trend in resource extraction and greenhouse gas emissions has continued and key indicators confirm that the problems of a linear economy are ‘baked in’ to the global economy and we are heading in the wrong direction,” the report states.

“Governments’ climate change strategies have focused on renewable energy, energy efficiency and avoiding deforestation but they have overlooked the vast potential of the circular economy. They should re-engineer supply chains all the way back to the wells, fields, mines and quarries where our resources originate so that we consume fewer raw materials. This will not only reduce emissions but also boost growth by making economies more efficient.”

The report’s recommendations for businesses, meanwhile, include improving product design, switching to service-based models such as leasing or repair, and working with governments and businesses across their sector’s value chain to close “gaps” whereby materials currently “leak”.

Business backing

The Circularity Gap report has received backing from a range of NGOs present at Davos, including WWF, and businesses including the likes of Philips.

The UN Environment Programme’s International Resource Panel, and the World Business Council for Sustainable Development (WBCSD) have also supported the report’s findings and are calling for businesses and governments to heed its warnings.

WBCSD’s chief executive Peter Bakker said the report proves that “business as usual is dead”, meaning that businesses of all shapes, sizes and sectors will need to shift to circular models before being forced to by either policy changes or resource scarcity.

“Measuring our individual and collective performance in the circular economy is fundamental in knowing whether we’re decoupling resource consumption and financial performance at the rate which our planet is demanding of us,” Bakker said.

“We must commit to taking action at scale to make the circular economy reality.”

Bakker’s sentiments echo those expressed by the Ellen MacArthur Foundation’s chief executive Andrew Morlet at an event in London this month. He maintained that, despite the organisation’s ongoing growth ever-increasing business interest in circular economy activities, the process of shifting resource use at scale is still in its “very early days”.

At Davos 2019, the Ellen MacArthur Foundation released a landmark report detailing the intersections of climate change and resource use. Its headline finding was that the way in which humanity takes, uses and disposes of resources accounts for 45% of global emissions – meaning that action to close the loop on materials will need to form a key component of any net-zero strategy.

Sarah George

Comments (1)

  1. Jagannathan Ramaswamy says:

    While this is discouraging it should be noted the need of the hour is a fundamental shift in the way humanity addresses the wants and needs. Circular economy is a another word being used to reinstate 3Rs. Circular economy would be successful ONLY when we accelerate the reduce and reuse of materials which implies that the needle of responsibility points at several others beyond corporates and businesses. It should begin at the household level where the children are encouraged, advised and coerced into reusing everything possible through awareness, crafts and skills. This strong foundation is bound to direct the society towards circularity. A good example is the Japanese principle of Mottainai which believed in wasting nothing and reusing everything . This word was used in every household in Japan for several decades in the aftermath of the war to caution the children not to waste anything be it paper or a piece of cloth; not to forget thefood.

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