More sustainable does not mean sustainable: how to use circularity to make the change

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This article is sponsored by Anthesis.

Despite the success of the last 40 years in manufacturing products with a smaller footprint, we do not respect the constraints of the limits of our planet. Seventy percent more virgin material was extracted than the Earth can safely replenish between COP25 in Paris in 2015 and COP26 in Glasgow in 2021. Today, biodiversity is declining faster than in any time in human history, largely due to the North’s insatiable consumer habits. . Global resource use has doubled since 1990 and is expected to double again by 2060, which is deeply problematic as it accounts for 50% of global climate impacts and 90% of global biodiversity loss.

We find ourselves in a situation where we are more sustainable, but that is not the same as being sustainable. While the per-product impacts of what we make are decreasing, the total number of products made is growing even faster, resulting in a greater overall impact.

To live sustainably, humanity must reduce its demand for natural resources and ecosystem services to levels that our planet can sustain permanently. These “planetary boundaries” define what is sustainable and what is not, yet very few companies use them as the basis for their environmental goals. Instead, most companies set targets designed to improve their environmental performance relative to a historical baseline, allowing them to quantify how “more sustainable” they have become, but never how close they are to sustainability. achieving sustainability, the only goal that matters. It’s like judging your progress in a race by your distance from the start line instead of your distance, or even if you’re even clocked at the finish.

Setting meaningful sustainability goals is not an abstract process. Similar to the IPCC Global GHG Emissions Budget, we also have a widely accepted Global Materials Budget of 50 gigatonnes per year. By allocating this budget on a per capita basis, we can formulate regional budgets and then compare them to current use to determine how resource consumption needs to change to achieve sustainability and development goals. It is important to note that the burden of reduction should not be shared equally. In high-income countries, the material footprint per capita is more than 10 times larger than in low-income countries and the method described above creates a fair and equitable approach to saving our planet.

The role of companies is to achieve these regional objectives. But how?

Leading experts agree that the circular economy has a crucial role to play in managing resource consumption and, by extension, all other environmental issues, including climate change. The Ellen MacArthur Foundation estimates that transitioning to renewable energy will achieve 55% of global climate goals, but the remaining 45% of emissions attributed to the production of materials, products and food must be addressed through circularity. Similarly, the 2021 Circularity Gap Report found that if global circularity was doubled and all countries’ climate action plans were implemented by 2030, it would allow us to reach zero new emissions by 2050.

A key element of the circular economy is circular business models (CCMs). Examples include resale, rental, leasing, product as a service, and subscription. MDCs encourage the least use of hardware for the most utility by monetizing products that already exist. But beyond that, CBMs can be cost-effective, allowing companies to largely disconnect natural resource use and waste and emissions generation from revenue generation. There are few things with a greater overall environmental benefit than reduced material usage, and CBMs are an incredibly powerful way to do that.

Fortunately, CBMs are increasingly being adopted by brands and consumers because they can drive new customer acquisition, engagement, and loyalty. Examples of successful programs span industries ranging from medical equipment and apparel to heavy machinery and office equipment:

While these are well-established examples of CBM, we still have a long way to go in converting linear economies to circular economies and, as a result, see planetary health indicators improve. What would dramatically accelerate this course is for companies to start setting real sustainability goals based on planetary boundaries and using circular business models to achieve those goals.

However, very few CBMs set meaningful financial goals to replace linear business revenue with circular revenue. At worst, some CBMs are simply whitewashed sustainability marketing ploys that reinforce linear economic systems due to CBM’s poorly planned structure. It is no longer sufficient, or even morally right, to claim that a company is circular without demonstrating that its CBM reduces the environmental impacts of the organization.

MDCs are not box-checking exercises; companies should apply life cycle thinking to the design of their CBMs to assess and measure impacts resulting from transportation, cleaning and refurbishment processes. They must also take into account the negative externalities that could result from faulty incentive structures that encourage the continued purchase of new items or the continued use of inefficient products.

And it is critical that companies fund CBMs with levels of manpower and financial resources commensurate with what would be applied to developing a new line of business in an organization. Finally, progress towards circularity must align with sustainability goals set by planetary budgets. More specifically, it means that an organization commits to reducing the production of new things with the revenue generated by a CBM.

These recommendations have real transformational potential. Establishing a forward-looking approach to sustainability goals based on planetary boundaries, not historical benchmarks, will put humanity on a path to being sustainable, not just “more sustainable.”

And a key strategy to achieve these goals is to transition our linear economy to a circular economy. To build this new economy, we need companies to develop commercially efficient circular business models that drastically reduce the use of virgin raw materials. By reducing resource consumption, we not only reduce the environmental impact of the resources we consume; we can almost eliminate them completely – and not just GHG emissions, but all. This simple but essential change will be a powerful catalyst for living within the limits of our planet.

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