In Davos, calls for a circular, inclusive economy

Davos 2019, World Economic Forum
World Economic Forum / Benedikt von Loebell
An estimated 3,000 government officials, business leaders, economics experts and non-profit representatives flocked to Davos, Switzerland, for the 2019 edition of the World Economic Forum’s annual gathering.

To create a new world, we need a new world order. And that order should be guided by a vision for shared prosperity and shaped, at least in part, by a circular economic model.

That mantra was espoused by many of the estimated 3,000 government officials, business leaders, economics experts and non-profit representatives who flocked to Davos, Switzerland, last week for the World Economic Forum’s annual gathering.

Amid the kerfuffle about the comings and goings of an estimated 1,500 private jets, consternation over the U.S. no-show and muted cheers over record numbers of female delegates, calls for circularity — including the bold push for reusing consumer products packaging fronted by TerraCycle — and inclusivity sounded again and again.

"This next phase of globalization needs to deliver economic growth — but deliver it such that it is equitable growth," said Microsoft CEO Satya Nadella, one of the conference co-chairs, in prepared remarks for his speech at the event. "Let’s challenge the status quo with innovation and ingenuity."

That requires an intergenerational, international perspective: This year, six of the eight meeting agenda co-chairs were millennials representing Colombia, Iraq, Japan, Kenya, Sweden and the United States. Noura Berrouba, member of the Governing Body of the European Youth Parliament, challenged participants to find empathy. "These are not threats; these are not problems," she said, referring to the distance between the Davos attendees and those whose voices need louder amplification. "These are change agents and opportunities, and if we want to create a world where we tackle our common challenges, we need to work with the people outside of these halls."

The tone of these remarks was echoed later in keynote addresses by the prime ministers of Spain and Italy, as well as the United Nations Secretary-General António Guterres, who spoke extensively about the need to address the growing wealth gap in Europe and the rest of the world. The "yellow vests" movement in France, for example, has been a wake-up call to other members of the European Union.

"I am a multilateralist; I am deeply convinced there is no other way to deal with global problems but with global responses," Guterres said. "It is also not enough to vilify those that disagree and call them 'nationalists' or 'populists.' We need to understand the root causes of why large sectors of the population in different parts of the world today disagree with us — and we need to address those root causes and show these people that we care for them."

Just one more exacerbating factor: New data from Oxfam suggests that Earth’s 26 richest individuals own as much as the poorest 50 percent. In 2017, it took 43 billionaires to get to that number.

In an essay penned for the World Economic Forum (WEF) media center, the chief sustainability officer for Indian equipment and vehicle conglomerate Mahindra, Anirban Ghosh, suggested that the ingredients to build compelling circular economy businesses and models in poor or developing nations — including India and China — are plentiful and potent. He noted that addressing climate change offers an unparalleled opportunity to "reboot" the world economy, pointing to materials recovery and higher rates of repair as steps in the right direction.

"Often handled informally, these activities provide the only source of livelihoods to some of the world’s poorest populations," wrote Ghosh. "By turning these existing trends into core development strategies, these countries could generate significant economic savings and massively cut down on carbon emissions. While developing countries must learn to do more and do it better, developed economies have an opportunity to re-orient the ‘take-make-dispose’ economic model towards a more circular paradigm."

A sense of urgency

Much has changed globally in the 12 months since the last Davos gathering, most especially the publication last fall of a report by the Intergovernmental Panel on Climate Change signaling that humans are acting far too slowly to meet the climate-mitigation goals of the Paris Agreement.

Everyone needs to get a move on, to stay within just 1.5 degrees Celsius warming of global temperatures by 2030, the panel urged. "Unprecedented changes in all aspects of society" are required to get there — touching land use, energy, buildings, transport and cities — costing an estimated $2.4 trillion a year worldwide, it warned in October.

We’re already witnessing the fallout in the form of more frequent hurricanes, droughts and wildfires around the world. As is tradition, the forum released its annual report (PDF) about global risks shortly before the gathering: the top three dangers, in terms of likelihood, are all related to global warming — extreme weather events, failure of mitigation and adaptation and natural disasters. That’s almost the same as last year’s list, with the exception of the weight the forum placed in 2018 on cyber attacks and data privacy concerns.

"Renewing and improving the architecture of our national and international political and economic systems is this generation’s defining task," wrote World Economic Forum's president, Børge Brende, in the risk report introduction. "It will be a monumental undertaking, but an indispensable one."

The upside potential of circular economy strategies

It also could be lucrative for the businesses that step ahead, according to several economic analyses and reports published this week alongside the forum.

Research from Dutch-based Circle Economy estimates that just 9 percent of the global economy operates in a circular manner. Only by prioritizing broader reuse of the roughly 92.8 billion metric tons of minerals, fossil fuels, metals, biomass and other materials that enter the economy annually can countries meet the United Nations target of limiting global warming to 1.5 degrees C, the organization suggests.

"Governments’ climate change strategies have focused on renewable energy, energy efficiency and avoiding deforestation but they have overlooked the vast potential of the circular economy," said Circle Economy CEO Harald Friedl in a statement. "They should re-engineer supply chains all the way back to the wells, fields, mines and quarries where our resources originate so that we consume fewer raw materials. This will not only reduce emissions but also boost growth by making economies more efficient."

Certain industries could have a massive impact. A separate report (PDF) published by WEF and the United Nations E-Waste Coalition estimated the annual value of electronic waste at $62 billion, three times the worth of all the silver produced in a single year. Put another way, the current "volume" of e-waste produced annually, almost 50 million tonnes, weighs more than every commercial airplane created.

The data heralds a new collaboration between several U.N. agencies and technology giants Dell, HP Inc., Microsoft and Philips, which are investing $15 million to begin constructing an e-waste recycling industry in Nigeria.

The Ellen MacArthur Foundation also weighed in with an updated report about the connection between food waste and circular economy principles, which the organization estimates could be worth $2.7 trillion annually to the global economy.

The paper is essentially a call to action for city planners, given that urban areas will consume roughly 80 percent of all food produced by 2050. Three practices that will be particularly imperative: local sourcing that prioritizes agribusinesses using generative soil techniques; more creative ways of making use of food by-products to eliminate waste; and more weight on plant-based protein alternatives.

Here are some ways that technology can help

One company that has factored the implications of circular economy principles for some time is Google. One of its quests has been researching and imaging ways in which it can help cities rethink energy management, transportation systems and waste diversion, recycling and reuse systems.

Naturally, Google believes technology will be central to accelerating and enabling the transition. This week, the company’s cloud software organization kicked off a social entrepreneurship contest in collaboration with SAP called Circular Economy 2030 to surface "original ideas" for transforming anything from agriculture to packaging. 

Google also believes artificial intelligence has a big role to play in accelerating and scaling the circular economy transition, a position it defends in a white paper released in collaboration with the Ellen MacArthur Foundation. Two of the bold claims: Design choices enabled by AI could help eliminate up to $127 billion in spending per year related to food waste and up to $90 billion in electronics production — both predictions are pegged to 2030.

AI could be particularly useful in overhauling the product design process, according to the paper. Here’s why:

Circularity requires more features to be taken into consideration for the design of products, components, and materials, such as disassembly, upgradability, or recycled content. Add to this list of features the wide choice of materials and the possibilities of manipulation of structures with 3D printing and other manufacturing techniques, and the design options become countless. AI technology can be a helpful tool to enable designers to manage this complexity when making decisions. A continuous feedback process where designers test and refine AI generated design suggestions could lead to a better design outcome in a shorter time period.

For a hint of other technologies that could play a role in the transition, peek at information about Accenture’s latest The Circulars awards, meant to recognize trailblazers. This year’s program attracted more than 450 applications. The winners included Lehigh Technologies, which helps reincarnate end-of-life tires for new uses; TriCiclos, a company that has reinvented the waste management infrastructure in Brazil, Chile, Colombia and Peru; and Winnow, which makes a "smart meter" used by companies such as IKEA and Hilton to reduce food waste in commercial kitchens. 

An infinite loop for consumer products, inspired by reusability

Davos was also the launch pad for a new initiative, Loop, convened by consumer products giants such as Procter & Gamble, Unilever, Danone and Mondelēz to test a system of reusable packaging imagined by upcycling pioneer TerraCycle. 

In the first phase, available this spring near Paris and in the New York metropolitan area, about 300 products will be made available in reusable, durable containers. Once an item is consumed, the empty container can be returned for a refill.

"We realized that recycling and using recycled content is about trying to do the best you can with waste, but it's not solving the foundational reason we have waste," TerraCycle founder and CEO Tom Szaky told GreenBiz. "We did a lot of reflection on that and realized that the foundational cause of garbage is disposability and single-use. We tried to come up with a way to solve for disposability but maintain the virtues of disposability, which are convenience and affordability."

Whether consumers embrace the idea remains to be seen, of course, but the need for more business models build on the concept of reuse never has been more urgent.