Whitepaper on circular economy
There is a broad global consensus that we need a fundamental shift in the way goods and services are produced and consumed. Our current consumption of resources exceeds the planet’s capacity for generations, and by 2050, waste production will outpace population growth by more than double.
Responsible consumption and production (RCP) are about improving life quality without compromising the resource needs of future generations, decoupling economic growth from environmental degradation, applying a life-cycle approach and avoiding increasing consumption because of efficiency gains. Studies show that consumer demand for sustainable products is increasing, as is the willingness to pay for them.
With growing customer awareness and demand in addition to global, regional, and local legislation pushing companies to change, there will be a market for suppliers of key technologies and components that enable sustainable product development and sustainable consumer behaviour.
Facts and figures
28 million
Hectares have been cut down every year since 2016
1 million
Species are in critical risk of extinction
300%
Increase in food production since 1970
800 million
People currently do not get enough food to meet their nutritional needs everyday
71 %
Higher recourse use is estimated per person in 2050 than today
7,2 %
Resources are recycled back
The SDGs as an investment theme
All United Nations member states adopted the UN Sustainable Development Goals (SDGs) in 2015. The SDGs represent a shared blueprint for global peace and prosperity towards 2030 - including safeguarding natural habitats, oceans and tackeling climate change. Circular economy is relevant for several SDG targets.
With the global effort to transition to sustainable societal development, investment opportunities arise when new solutions need financing. Estimates show that realising the SDGs could open a USD 12 trillion market value by 2030, creating 380 million jobs in the process.
Investment potential in circular economy towards 2030
The last few decades have brought economic progress and prosperity to a rapidly growing population. However, these changes have come at a cost. The world faces an unprecedented challenge regarding resource depletion, pollution, environmental degradation, and climate change. Our current consumption of resources far exceeds the planet’s capacity. It is estimated that by 2050, we will need the equivalent of three worlds to provide the necessary natural resources to support our current lifestyle. Thankfully, several studies show that consumer demand for sustainable products is increasing, as is the willingness to pay for them.
Consumers are now reading product information carefully and more and more actively choose brands with more evident sustainability credentials on the packaging. In addition to consumer demand, regulations also pressure companies to change. 170 countries have pledged to ”significantly reduce” the use of plastics by 2030. The regulations are fuelling the growth of new markets, and the market research company IMARC expect the biodegradable cutlery market to grow at a Compound Annual Growth Rate (CAGR) of around 5% during 2020-2025.
In a circular economy for food, waste does not exist but is simply used as feedstock for another cycle. A shift to sustainable food systems can bring environmental, health and social benefits, offer economic gains and ensure that the recovery from the crisis puts us onto a sustainable trajectory. The global pandemic has shown us that food systems need to be robust and resilient, function in all circumstances, and be capable in ensuring access to a sufficient supply of affordable food for all global citizens.
Recycling and re-use
A circular economy aims to redefine growth, by designing waste out of the system, ensure continual use of products and materials, and regenerate natural systems in a circular system, products are reused, repaired, shared or recycled, hence products get a longer lifespan, minimising the use of resources, waste generation, pollution and carbon emissions.
Many of the products we use every day are disposable products, made of materials that will take years to degrade. To solve this problem, we need companies that can address the global take-make-dispose economy and adopt a circular approach. Moreover, platforms where companies offer services that build upon sharing our resources is also a key enabler to transition towards a circular economy.
Production
Consumption per capita is expected to grow in the coming years. However, consumers are reading product information and are increasingly aware of their power in influencing the market. Some companies are finding new ways to ensure traceability to provide customers with relevant information, making it easier to navigate the myriad of over 400 environmental labels in the world. Moreover, biomaterials have the potential to replace a wide range of components originally using fossil resources in a vast range of products. The market for bio-based and bio-gradable materials is still considered small on a global scale. However, innovation in sustainable products are evolving constantly. Companies that are first-movers or well positioned in the delivery of sustainable products and solutions, are well placed for long term profitability.
Food systems
Global food production must increase 60 percent by 2050 to meet the demands of our growing population. It is estimated that about 30-40 percent of global food is lost after harvest, which means that approximately 30 percent of the land, water, chemicals and GHG emissions from production is unnecessary. To close the food, land and GHG mitigation gaps we need to reduce growth in demand for food and other agricultural products by reducing food loss and waste, shifting to healthier, more sustainable diets, and avoid competition from bioenergy for food crops and land. Food production must be increased without expanding agricultural land, and it is vital to protect and restore natural ecosystems. By improving wild fisheries in addition to the productivity and environmental performance of aquaculture, sustainable fish supply can be achieved. New technologies can reduce GHG emissions from agricultural production, and by eating more sustainable foods, plant-rich and plant-based, emissions from meat and dairy agriculture can be reduced even further.