Companies Worth $1.3 Trillion Pledge a Boost for the Circular Economy

Circular economy, closed loop, waste diversion, zero waste, Leon Kaye, supply chainWe predicted earlier this month that business commitments to scaling up a global circular economy will be one of the biggest sustainability stories during 2018. An announcement made during this week’s World Economic Forum in Davos could help make zero-waste, closed-loop and circular economy supply chains more of a reality.

Yesterday, the World Business Council for Sustainable Development (WBCSD) announced that 30 companies across 16 industries will participate in the coalition’s Factor10 project. The initiative aims to persuade companies to adopt systems in which more waste is eliminated – or prevent the generation of garbage in the first place.

The economic case for reaping cash from trash is hardly new. The global accountancy Accenture, for example, estimated in 2015 that the worldwide circular economy comprises a potential $4.5 trillion in additional economic output by 2030. Tactics from improving recycling and recovery, to the adoption of digital products, as well as the development of products-as-a-service businesses, can all help reverse what Accenture concluded has been a “choke” on economic growth due to volatile raw material prices and more expensive disposal costs.

Companies participating in this partnership with WBCSD include BMW, Dow, ExxonMobil, Honda, Novartis Philips and Rabobank.

For businesses that are at the forefront of generating a truly effective circular economy, the rewards could be great, and not just in the remunerative sense. As more consumers base their purchasing decisions on which companies they believe are the most sustainable, brands that are breaking new ground on waste diversion efforts could see themselves as leaders. After all, the “hard stuff,” like committing to clean energy or reducing greenhouse gas emissions, has already been done. The same goes for companies pledging supply chain transparency and a respect for human rights – if your company not started such programs, then you are already left behind.

But a push to not only reduce, but eliminate, waste offers opportunities for companies to show how they can innovate while boosting their sustainability chops.

The sword, however, cuts both ways.

Companies that fall short in this initiative, and will not be able to show any progress on the circular economy front over the next several years, could be seen as laggards, or in the worst scenario, find themselves accused of “greenwashing.” For companies participating in this initiative, including ExxonMobil with its lucrative plastic industry, they could find themselves stuck with the reputation of yet again talking the sustainability talk but doing little to walk that walk.

Watch for more companies to put themselves out there and declare circular economy plans, even though these programs face a bevy of challenges, ranging from the scaling up the recycling of materials like plastics, to convincing their customers and partners to buy be willing participants in this transformation.

Nevertheless, more brands are embarking on their circular economy journeys anyway. This month, Evian announced it would have a closed-loop system in place by 2025. And last summer, UPS and TerraCycle offered proof that similar plans could work, as the companies announced they had successfully diverted 40 million pounds of waste from landfills due to their partnership.

Image credit: Bo Eide/Flickr

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Based in Fresno, California, Leon Kaye has written for TriplePundit since 2010. He has lived across the U.S., as well as in South Korea, Abu Dhabi and Uruguay. Some of Leon's work can also be found in The Guardian, Sustainable Brands and CleanTechnica. You can follow him on Twitter (@LeonKaye) and Instagram (GreenGoPost).

One response

  1. Commitments and pledges to ‘do better’ are better than nothing, but in my view it is high time we got a way stronger way of holding companies accountable for their behavior. I want to know how unsustainable companies are and the present value of the future cost of cleaning up the environmental damage that they have caused. It is good that companies are going to do a few pennies worth of less damage, but over the past decades these same companies have been responsible for introducing hundreds, or thousands or millions of dollars (or pounds) of polluting materials and related damage into the socio-enviro-economic system.
    Peter Burgess …

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