The global economy is only 7% circular. How can we reorient an economic system based on resource consumption to focus on human prosperity within the limits of the planet?
The extraction of materials increases year after year, beyond the Earth's capacity to regenerate and recover. The traditional linear economic model, based on "extract, produce and throw away," rather than improving the conditions and well-being of people, threatens their survival by undermining the very systems on which humanity depends for its livelihood.
A circular economy, included among the strategies of the European Green Deal, could reverse this situation by reducing the extraction and use of natural resources worldwide by one third. How? With four key actions to achieve circular goals: use less or do more with less (narrow), use longer (slow), use again (regenerative) and clean up (cyclical) to complete the circle.
Our modern world relies almost exclusively on new materials (virgin raw materials). The global economy consumes about 100 billion tons of materials and, according to the Circularity Gap Report 2023, only 7.2% are reintroduced into the economy after the end of their useful life; these are the so-called secondary materials. In other words, more than 90% of materials are wasted, lost or "locked up" without any possibility of reuse in buildings or other goods.
This edition of the annual report on the circularity gap, published by the Circle Economy Foundation in collaboration with the international consulting firm Deloitte, warns about the reduction of the circularity: from just over 9% in 2018 to 8.6% in 2020 and 7.2% in 2023. Likewise, the document draws attention to the need to reverse the excess by implementing effective strategies to make progress in this area.
Individual needs and basic goods, such as food, housing and mobility, can be met in a sustainable way by adopting a circular model. To this end, the publication offers a series of solutions as a roadmap with which businesses, cities and countries can reduce the use of raw materials and environmental impacts, such as greenhouse gas (GHG) emissions, without compromising living standards.
According to the 2023 report, we can meet people's needs and desires with only 70% of current material demand. The transition to a global circular economy will ensure that human activity returns to safe planetary boundaries, as well as limiting global warming to 2 degrees.
To achieve this, they target four priority systems: the food system, the built environment, manufacturing and transportation. If a circular economy is implemented in these four global systems, new material extraction could decrease by 34%, from 92.7 billion tons to 61.2 billion tons.
Agriculture consumes 70% of available freshwater and contributes one third of global emissions. Circular solutions for nutrition involve the entire agri-food value chain following the approach of the European Green Deal strategy "Farm to Fork", from production, processing and transport to consumption and disposal of food. These include prioritizing organic, local and seasonal food, avoiding food waste and supporting regenerative agriculture.
The construction sector is responsible for 40% of global GHG emissions. Designing energy-efficient residential and commercial buildings and infrastructure; reducing building and demolition waste; reusing, recycling and renovating with secondary materials; and favoring organic materials such as wood over steel or concrete are some of the solutions proposed for circular built environments.
This system encompasses all activities of production and consumption of goods, from metals, chemicals, electronics, paper and cardboard to textiles and plastics. It is necessary to prioritise the manufacture of products of higher quality and durability, the support of circular business models to extend the useful life of machinery and equipment or collaboration between industries.
Current transport systems fragment the territory, consume a lot of material and are dependent on fossil fuels. Circular mobility measures such as investing in and encouraging quality public transport, minimizing air travel or electrifying the public and private vehicle fleet can save significant amounts of materials and greenhouse gas emissions. All of these can save significant amounts of materials and greenhouse gas emissions.
Achieving this systemic change will require a profound and large-scale transformation of production and consumption processes through strong policies, institutional reforms and business strategies to meet the goal of wellbeing without exceeding planetary boundaries. In this sense, companies are increasing their commitment to reduce emissions, although most companies worldwide are still taking the first steps in their decarbonisation process.
Nearly eight out of ten companies (77%) are still in the early stages of decarbonisation or have not started, according to a report by the rating agency EcoVadis. The Carbon Action Report 2023 study, which analyzed 24,500 organizations, concludes that the largest companies are leading the way in reducing carbon emissions, while progress is much slower in medium-sized and especially small companies. Among other strategies to reduce their emissions, more than half of large companies use renewable energy.
By fiscal year 2023, and as part of the European Green Deal, the Corporate Sustainability Reporting Directive (CSRD) will oblige companies with more than 250 employees operating in the European Union to publicly report their total GHG emissions . In this regard,according to EcoVadis data, almost 50%already do so and 29% verify this information through third parties .
"We have found that setting climate targets is essential for companies to move forward in the decarbonization process," said Giulia Borsa, senior advisor for ESG solutions at EcoVadis. Companies need to plan their climate action, for which resources and tools for emissions tracking, management and reporting are essential. "The outlook for the future is positive, with 20% of companies commit ting to an emissions reduction target this year, up from 9% in 2022," she adds.
Applying concrete circular solutions on a global scale from the public and private sectors can encourage systemic change that keeps us within environmental limits. The Circle Economy report notes that we need "a shared vision that unites us toward a common purpose," that of guiding the economy toward new principles: to reduce, regenerate and redistribute resources equitably. "With every company, city and nation embarking on its circular journey, we are returning humanity to the safe limits of our planet."
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