Davos: Circular economy could generate $1trn a year for global economy by 2025

The build-up of 'circular' supply chains that increase the rate of recycling, reuse and remanufacture could generate more than $1trn (£600bn) a year for the global economy by 2025, according to a new report.

Released today at the 2014 Annual Meeting in Davos, the report, by the World Economic Forum and the Ellen MacArthur Foundation, calls for companies to understand the opportunities available through a circular business model.

The idea is to rethink today’s consumption patterns of “take, make and dispose” to a more restorative process, where products are designed and marketed such that components and materials can be reused many times.

The report, Towards the Circular Economy, analyses the economic benefits for businesses shifting towards a circular economy and highlights a new Forum initiative, Project Mainstream, which could help businesses become ‘circular’ and as a result save $500m in materials and prevent 100 million tonnes of waste globally.

Set up by the World Economic Forum with the Ellen MacArthur Foundation, Project Mainstream aims to work with companies on stripping away the barriers to joining the circular economy, largely through materials management, information technologies and business model innovation.

Founder of the foundation that bears her name, Ellen MacArthur, said: “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”.

Global Partner of the Ellen MacArthur Foundation, Kingfisher, is calling for industry-wide acceptance of the circular economy, stressing that it is an “opportunity industry can’t afford to miss”.

Kingfisher CEO Ian Cheshire said: “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 recognising the circular economy as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources.

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 44th World Economic Forum Annual Meeting is taking place from 22 to 25 January 2014 under the theme The Reshaping of the World: Consequences for Society, Politics and Business. More than 2,500 participants from 100 countries are taking part in the meeting.

Leigh Stringer

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