CEO Guide to the Circular Economy has been developed by the World Business Council for Sustainable Development (WBCSD) in collaboration with Accenture. The guide offers a general framework to support business leaders to be more effective in the transition to circular economy.
The guide presents CEOs and business leaders the tools they need to implement circular economy principles and emphasizes the important role leaders play in establishing a circular mindset.
Circular economy is defined as the biggest step to transform global production and consumption since the First Industrial Revolution and also stated that it represents a business opportunity of $4.5 trillion which can help fulfill the UN Sustainable Development Goals.
Why Circular Economy is Important?
Today's linear economy is based on take-make-dispose model. This model has the disadvantages of causing high rates of waste generation as well as environmental degradation, climate change, rapid consumption of natural resources along with increasing raw material and energy demand. The current linear model causes significant economic, social and environmental risks due to growing pressure on the use of natural sources and raw materials as a consequence of increased population and economic growth.
Research shows that the annual extraction of materials has more than tripled over the last 40 years and is expected to be over 400% by 2050 resulting in an overuse of the Earth’s total capacity. This means rising cost for materials, energy, land and water as well as extreme volatility in commodity markets, and supply disruptions.
The aim of the circular economy is to shift towards sustainable growth via a resource-efficient, low carbon economy by keeping resources within the economy even at the end of a product or service’s lifecycle. The key actions that ensure circularity of a product are based on creating more efficient processes, preventing waste generation, reusing, repairing, reproduction and recycling.
What Businesses Can Do?
According to the guide, leaders have the potential to accelerate this transition by adopting a “circular mindset”.
This transition to circular economy provides significant benefits for companies such as economic growth, innovation and competitive advantage as well as reduction in costs, energy consumption and CO2 emissions, increased supply chain and resource security.
The guide points out the circular economy potential of eight key materials. These 8 materials; steel, aluminum, plastic, cement, glass, wood, primary crops and cattle are responsible for 20% of global greenhouse gas (GHG) emissions, 95% of water use and 88% of land use. All sectors who use these materials are expected to accelerate their circular economy implementations in order to substantially reduce GHG emissions, water use and land use.
Accenture identified five business models and three disruptive technologies for businesses to create a circular value chain by decoupling growth from resource consumption. 3 disruptive technologies are classified as digital, biological and physical whilst the 5 underlying business models are presented as below;
1. Creating sustainable supply chains
2. Recovering useful resources
3. Creating sharing platforms
4. Extending the life of the product
5. Serving the product as a service
Implementation of circular economy requires involvement of the complete value chain, from raw material extraction through manufacturing, consumer use and end of life. The guide therefore recommends to increase collaboration among all value chain partners and to be able to reach economic, environmental and social goals.