LONDON: A new report from Accenture warns that if businesses don't adopt the new circular economy now, in just 45 years there'll be no such thing as business.
Noting the world is already using 1.5 times its total resources every year, Accenture says that if nothing is done, total demand will rise from 50 billion tons in 2014 to 130 billion tons by 2050 - a 400 percent overuse of Earth's total capacity - and "the economic impact of resource scarcity on this scale would be devastating".
So with business as usual clearly no longer an option, the report authors suggest the circular economy is one of the few viable and scalable growth models that can radically improve resource productivity to reverse the prospect of a global catastrophe.
Acknowledging the historic linear approach to growth inhibits the adoption of a circular economy, Accenture has identified five business models - collectively called the 'Circular Advantage' - that it says can help companies grow in a non-linear way:
- Circular Supplies: Provide renewable energy, bio based- or fully recyclable input material to replace single-lifecycle inputs;
- Resource Recovery: Recover useful resources/energy out of disposed products or by-products;
- Product Life Extension: Extend working lifecycle of products and components by repairing, upgrading and reselling;
- Sharing Platforms: Enable increased utilization rate of products by making possible shared use/access/ownership;
- Product as a Service: Offer product access and retain ownership to internalise benefits of circular resource productivity.
To make any of these options happen, Accenture says companies will have to change their business planning and strategy; recognize that innovation and product development will be different; determine whether material inputs for product designs are renewable or fully restorable; generate greater revenues from the use of products and services instead of the purchase of them; and optimize reverse logistics and return chains to manage opportunity-driven take-back/ buy-back from the markets and facilitate local reuse.
The company argues that if successful, the result will be a "massive" gain in productivity: "How much? Up to four times the amount— enough to tackle the estimated 40 billion ton material shortage we'll reach by 2050. Not a bad advantage considering that in a typical modern manufacturing company materials make up around 40 percent of total costs, compared to less than 20 percent for labor," it says.
And if the circular economy is not adopted? Well according to the report, by 2050 it won't matter.