Peak stuff: Businesses need to redefine growth to help save the planet
The global population is expected to reach 9.7 billion in 2050, land is being degraded at an ever-quickening pace and by 2030 an additional 1.3 billion people are expected to have increased purchasing power than on current levels. When looking at the trends, businesses have to ask themselves “when are we going to reach peak stuff?”
The world is obsessed with growth. Nations use gross domestic product (GDP) – the added value of goods and services – to showcase growth, businesses are incessant in growing profits and revenue and individuals can now “grow” their own personal brands on social media.
In the pursuit of relentless growth, the planet’s finite resources have been toiled and degraded to a point of almost no return. Studies suggest that just 3% of the planet remains untouched by human activity, as nations look to catch up with the G20 in churning out products and services at the expense of the planet.
More than 200 years ago, the UK was the world leader in manufacturing. Research suggests that 80% of the world’s coal and iron was mined by the British, cementing the nation as one of the global powerhouses.
The UK has actually slowed its production in recent years. UK statistics show that the consumption and production of materials are now more than 30% lower than what it was in the 1990s, and consumption actually peaked in the early 2000s.
This has assisted the nation’s climate goals, first the Climate Change Act and now the net-zero emissions target for 2050. Indeed, since the 1990s, the UK economy has grown by around 65%, while emissions have decreased by 40%. However, while domestic material consumption has declined sharply, the UK’s imports have increased by 20%.
Across the water, research suggests that Europeans are, on average, consuming less than they did in 2008. The European Commission claims the reduction is around 18%.
This is largely because Europe is “developed”. Major infrastructures have been carried out, urbanisation continues to blanket over the land to a point where nations almost seem settled in an increasingly gentrified cityscape.
Most nations, however, have not reached “peak stuff” to the point where reductions are being recorded. Research suggests that the world’s “consumer class” could reach 5 billion by 2030, an increase of 1.3 billion people.
As this spending power increases, supported by the frantic manufacturing boom being witnessed in Asia in countries like China, so too will the production of goods and services. Unless the circular economy is embraced, then this growth will come at an even greater cost to our ever-depleted planet.
While global issues always require solutions driven by world leaders – take the recent Plastics Treaty as an example – there is a clear role for businesses to play in looking at how they perceive growth and value.
During edie’s Circular Economy Inspiration Sessions, Alenka Turnsek, EMEIA Sustainability Tax Services Leader at EY noted the need for businesses to start “self-editing” their product and services portfolio to examine what will be fit for the pressing issues of a future society.
“We have limited land use and at some point, in the future, you’re going to have to prioritise what you want to do,” Turnsek says.
“You need to self-edit your portfolio and diversify and look at other ways of preserving products, such as servitisation and remanufacturing in ways that keeps them in the loop.”
Turnsek points to the interrelations between the circular economy and nature. Deforestation is increasing at an alarming pace and even the land that hasn’t succumbed to that practice is being captured for a booming offsets market. With food scarcity on rise as the population grows, there simply isn’t enough land to continue consuming as we do.
Some businesses are, therefore, looking at the longevity of their products, in a bid to reduce the amount of materials needed to keep producing the same items. Do more with less. They can then couple this with service-based models, takeback schemes and other initiatives that offers the consumer a way to extend the life of an otherwise damaged good or commodity.
The Spotify route
Of course, not all sectors can switch to this mode of working. Circle Economy has been championing ways that businesses can “close the circularity gap” and contribute to a net-zero world in the process.
For the organisation’s director of strategic alliances Marc de Wit, some businesses will be able to go the “Spotify route” where by they can improve access to something while “making it less dependent on material reality”, but that not all these shifts will be in alignment with the aims of the circular economy.
“For some sectors, you can’t see the business model change from owning stuff to accessing stuff in a way that is synonymous with the circular economy,” de Wit says. “There could still be sectors where you want to keep a business model alive where you sell stuff but the waste processing end of use is optimised for resource efficiency.”
Many key commodities, such a food, aren’t suitable for these remanufacturing, service-orientated business model shifts. But, in the quest to respond to the approaching peak of stuff, organisations in those sectors still need to align to circular principles to lessen the burden on the planet.
One such firm is Toast Ale. The company crafts award-winning beer from surplus fresh bread that would otherwise be wasted.
As a B-Corp, Toast Ale walks the talk when it comes to social and environmental sustainability and must regularly prove that it is fine-tuning its approach.
Aside from the fact that reducing waste is literally baked in to its business model – Toast Ale has diverted more than 1.7 million slices of fresh surplus bread from waste as of 2020 – the circular economy model has climate benefits too. Wasted food left in landfills emits greenhouse gas emissions, so, by saving it, Toast Ale estimates that it has mitigated more than 44 tonnes of CO2e equivalent.
The actual brewing process is low-impact, too, with the brewer using energy recovery technologies. Toast Ale has also invested in measures to reduce the land and water use across its barley supply chain.
The company’s chief operating office Louisa Ziane notes where switching business models isn’t a viable strategy, organisations can start to look at how their products can become more regenerative to help protect, preserve and improve our natural assets.
“How we move away from growth is a difficult question” Ziane said during the Circular Economy Inspiration Sessions. “We have finite resources and can’t afford to keep consuming at the current rate.
“Part of the circular economy is limiting materials rather than finding alternatives. For food we can think about regenerative agriculture, by making our food systems work with nature and not seeing food going back into the land as waste, provided it is done correctly. We need to look at how we start thinking about circularity as us being part of nature and not separate from it.”
“I don’t know how we move as a society away from views on growth but there is something much deeper connected to us and nature. People value experiences and connections and can move away from consumerism as a way of showing your love and making yourself feel better.”
Experiences and impact
Indeed, part of the reason that consumerism can fall is that people are starting to value experiences over materiality. This can come in the form of trips – which have their own climate impacts to consider – to wellbeing activities like Yoga.
But most businesses can’t sell an experience, or at least don’t have the research and innovation to hand to think they can. Therefore circular principles need to be at the heart of any business strategy, whether that is focused on growth or not.
The Ellen MacArthur Foundation has been working with businesses to close the loop on our linear economy. As the Foundation’s strategic partners manager Alice Bodreau, more businesses are starting to have conversations about what value they create, rather than what growth they can generate.
“For us at the Foundation, we focus our conversations as a decoupling of revenue growth from material use,” Bodreau says. “It’s a key battle and business innovation is needed to pilot solutions. We need a scaling of pilots and innovation to make this more impactful and create a bigger control shift.
“This reality is a long way off, but what makes me hopeful is that, in the past year, I’m having more conversations about this. It’s a good sign and its started to feel like a more realistic option for businesses, which in the past wouldn’t even be mentioned or discussed.”
So, the shift is slowly starting to take shape, but it is always hard for businesses to focus on a transition that may be disruptive, especially in an economic climate that has been ransacked by the coronavirus pandemic.
As such, incremental steps may be the way forward, but steps that can get exponentially bigger as innovation grows and conversations around de-growth become more mature and steeped in scientific understanding of the needs of society.
Allison Lin is global vice president of packaging sustainability at Mars and notes that businesses need to examine all business decisions across the lens of consumer use, resource efficiency and carbon impact.
“When looking at any business innovation, the consumer and their role needs to be considered. What choices do they have? What can they do with the product?” Lin says.
“Reducing is still one of the main things that we can do to help the circular economy and we need to look at growth that drives climate-smart technologies that also contribute to closing the loop.
“It’s part of the conversation now, companies are looking at growth in new ways so we need to look at what we’re trying to replace in our products and ensure they are aligned to climate and circularity.”
Peak stuff isn’t here yet it seems. But as more developing countries build up populations with more disposable income, it is the role of business to ensure that the products they are offering have improved longevity, options for second life and repair and remanufacturing built in. For those that can, pivoting to a service-based model that offers experiences over material goods can also be a way to strengthen ties with consumers while protecting the planet.