Barriers to a Circular Economy: 5 Reasons the World Wastes So Much Stuff (and Why It's Not Just the Consumer's Fault)
June 14, 2018
By Mathy StanislausCover Image by: Flickr/Clifton Beard
If you need motivation to skip the straw at lunch today, consider this: Scientists found that even Arctic sea ice—far removed from most major metropolitan areas—is no longer plastic-free. According to Dr. Jeremy Wilkinson of the British Antarctic Survey, "this suggests that microplastics are now ubiquitous within the surface waters of the world's ocean. Nowhere is immune."
Humanity has a waste problem. Globally, we generate about 1.3 billion tons of trash per year, far more than we can properly process or recycle. This leads to environmental tragedies like ocean plastic pollution and geopolitical tensions as Western countries search for new places to stash their trash.
Because we waste so much, we must extract unsustainable quantities of natural resources to keep pace with growing consumption. OECD has calculated that flow of materials through acquisition, transportation, processing, manufacturing, use and disposal are already responsible for approximately 50 percent of greenhouse gas emissions. The UN International Resources Panel projects the use of natural resources to more than double by 2050.
How did we get here? In short, most of our global economy is designed for linearity—take, make, waste—rather than circularity. To create a truly circular economy, the world must overcome the following five barriers:
1. Meeting consumers' expectations for convenience.
Imagine living your life without producing any trash. How would you do it? Bea Johnson, author of Zero Waste Home, coaches everyday people on how to live a trash-free life through habits like bringing linen bags to the grocery store and buying rice, beans and other staples from bulk bins. The lifestyle she models was typical before disposable, single-use plastic products and packaging became the norm, but today we use 20 times as much plastic as we did 50 years ago. Can we expect consumers to change the way they operate and the types of products they buy? Will they abandon commonplace conveniences like plastic bottles and bags?
These consumer choices matter, but much of the problem lies with the business and regulatory environment that keeps our economy running. Which brings me to the next four points…
2. Government regulations can create waste.
Sometimes, laws and regulations unintentionally incentivize wasteful behavior among companies and consumers. This is a common problem in the food and beverage sector. For example, expiration date labels are often required by law to protect the consumer, but may not account for differences in how food is stored—so the date label on eggs in Europe may be labeled for pantry storage, but will last longer when refrigerated. Expiration dates are also often misunderstood to mean that a food is no longer edible, when in reality it is still safe to eat but may not meet the manufacturer's quality standards. (Good news: a consortium of companies have agreed to fix this.)
3. Many places lack proper waste infrastructure.
Nearly one-third of plastics are not collected by a waste management system and end up as litter in the world's lands, rivers and oceans. There could be more plastics than fish in the ocean by 2050, shows one study. This problem is especially severe in developing countries that lack strong waste management infrastructure. More than half of plastic litter comes from China, Indonesia, the Philippines, Thailand and Vietnam, so improving waste management and recycling systems in these countries could make a big difference in keeping plastic out of our natural spaces.
4. Recycling technology isn't good enough.
Most plastics that are recycled are shredded and reprocessed into lower-value applications, such as polyester carpet fiber; only 2 percent are recycled into products of the same or similar quality. This is largely due to limitations in how plastics can be sorted by chemical composition and cleaned of additives. We need better recycling technology that can maintain quality and purity so that product manufacturers are willing to use recycled plastics. Once this technology is deployed at a large scale, we can start recapturing the economic value of plastics, incentivizing their recovery and recycling.
5. We use the wrong business models.
The world is on track to exceed 9.5 billion people by 2050, with far fewer living in poverty than today. Thanks to the rapid industrialization of developing countries like China, Brazil and India, the global middle class is exploding—meaning a lot more people want to buy a lot more stuff.
This is a human development victory, but a grave threat to our environment unless the businesses that produce and sell goods can reinvent how they do so. For example, clothing companies can lessen their environmental impacts by using non-toxic dyes and recycling cloth scraps. But to clothe the booming middle class within planetary boundaries, they will need to upend the current "fast fashion" business model in favor of alternative models such as rental and resale. For example, Rent the Runway allows consumers to rent designer clothing for a fraction of the retail price. This service is great for consumers, and it benefits the planet because an item of clothing is used more than if it were sold to single buyer.
Companies should also design products for circularity. For example, if lithium ion battery manufacturers designed their products with similar mixtures of chemicals, it would allow for more recycling because recyclers could standardize their process.
How Do We Overcome the Barriers? Partnerships Are Key
The barriers listed here prevent companies, governments and consumers from solving our trash problem and making better use of natural resources. Each of these barriers must be overcome, but we cannot rely exclusively on companies, governments or consumers to do it all.
We need innovative public-private partnerships like the ones sought by platforms P4G and PACE. Companies, investors, governments and civil society each offer unique financial, intellectual and operational assets that can be strategically deployed to solve big problems they couldn't solve alone. For example, the World Bank found that private-public partnerships to build water infrastructure in Africa were most effective when financed by a mix of private and public sources, since public funding reduced risk to private investors and private investors' return requirements improved efficiency and prevented cost overruns.
We need government policies that provide essential protections while fostering innovation and risk taking by the private sector to advance circular solutions. We also need to ensure that the most vulnerable in society have a strong voice in designing solutions so that their concerns for jobs and health are assured. This is an "all-hands-on-deck" moment in history—and early movers are likely to capture significant market opportunities. The coalitions are forming. If you run a major company, investment vehicle or government agency, you should be securing your seat.