Circular economy saves more than $700B, report says

Consumer goods companies could be missing out on $700 billion worth of savings by failing to incorporate recycling in their business models.

That is according to the latest report by the Ellen MacArthur Foundation, which attempts to quantify the benefits of the so-called "circular economy," where products are designed so that their materials and components can be easily recycled and reused.

The report focuses on the $3.2 trillion global markets for clothing, food and drink, and associated packaging, which together account for 35 percent of material inputs into the economy, three quarters of all municipal waste and almost 90 percent of agricultural output -- a sector projected to come under increasing pressure as populations increase and climate change impacts take effect.

Only about a fifth of material from these consumer goods sectors is recovered, at an estimated loss to the global economy of $2.6 trillion a year. However, the report concludes recovery rates could be increased to 50 percent simply through wider adoption of reusing and recycling.

It also argues that embracing these approaches would give companies a huge competitive advantage. For example, simply increasing the amount of clothing that is collected and reused or remade could generate $71 billion in material savings.

In addition, $2.35 billion could be generated annually in the U.K. alone for municipalities and investors by collecting household food waste and processing it to generate biogas and fertilizer.

The report also details how the cost of beer could be reduced by a fifth per 100 liters by shifting from using glass bottles to recyclable plastic, subsequently lowering the cost of packaging, processing and distribution.

Even greater progress could be made with wholesale redesign of both products and supply chains, the report adds.

Photo of circular graph provided by Jezper via Shutterstock.

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