A fundamentally new model of industrial organization is needed to de-link rising prosperity from resource consumption growth – one that goes beyond incremental efficiency gains to deliver transformative change.
A 'circular economy' (CE) is an approach that would transform the function of resources in the economy. Waste from factories would become a valuable input to another process – and products could be repaired, reused or upgraded instead of thrown away.
In a world of high and volatile resource prices, a CE offers huge business opportunities. Pioneering companies are leading the way on a CE, but to drive broader change it is critical to collect and share data, spread best practice, invest in innovation and encourage business-to-business collaboration.
Policy-makers should focus on accelerating transition to a CE in a timescale consistent with the response to climate change, water scarcity and other global challenges. Smart regulation can reward private-sector leadership and align incentives along the supply chain – for example, to deliver a step-change in remanufacturing rates.
Resource consumption targets that reflect environmental constraints should be considered at a global level. Coordination of national policies would help create a level playing field across major markets, easing competitiveness concerns and reducing the costs of implementation.