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What was missing from the sustainability conversation at Davos

<p>Sustainability needs to be embedded in all business conversations to help companies move from a &quot;take-make-waste&quot; approach to a circular economy.</p>

While sustainability has become a top priority for many leading global businesses, adoption remains slow and patchy. That’s reflected by the fact that, at the World Economic Forum in Davos, sustainability has continued to be discussed as a standalone topic, rather like the Internet was a decade or two ago. Only when it is eventually embedded in all conversations will we know progress has been made.

Building the circular economy stoked particular interest in Davos this year. How long we must wait until the concept becomes the norm for businesses at a global scale will depend on our ability to break down barriers through new forms of collaboration.

In the circular economy, goods are produced and consumed through integrated flows of raw material with zero waste and powered by renewable energy. That’s a break from today’s business models, which are designed to drive revenue at lowest possible cost, reward shareholders and enable opportunities for future growth -- three indicators of business success.

These linear models have led to a ’take-make-waste’ mindset, resulting in huge negative consequences around the globe. According to the World Bank, global urban solid waste generation is expected to grow from 3.5 million tons per day in 2012 to more than 6 million tons in 2025 -- fueled largely by increased consumption of goods in middle-income countries that are becoming more affluent.

The big question facing business leaders is how to pool the right resources, identify and overcome barriers inhibiting progress and implement practices that drive a circular economy on a global scale. Obstacles include a business culture in which competition precludes collaboration, and in which success is measured at business level rather than sector level. Weak international support from government can also be a barrier.

Collaboration on a global scale, however, can help change today’s business orientation from ‘take-make-waste’ to ‘recycle-reuse-resell’ and result in remarkable growth in resource productivity.

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A great example of such collaboration can be seen in the carpet industry.  Interface Inc., a global carpet manufacturing leader, has created a process called ReEntry2.0 that reclaims, reuses and resells old carpet. It partners with recyclers to ensure no piece of the carpet goes to waste and with building owners to 'mine' the raw material. Considering more than 5 billion pounds of old carpet is extracted each year -- 95 percent of it ending up in landfill -- Interface is giving a raw material a “second” lifecycle, reclaiming competitors’ carpet and obtaining these materials at significantly lower cost.

Similar results can be achieved by transforming business processes through other forms of collaboration -- data sharing, investing in infrastructure and sharing best practices. At the same time, governments must work alongside the private sector to establish realistic goals and the right sustainability metrics and emphasize the entire value chain rather than individual company performance. Wal-Mart has taken a first step by requiring all its upstream suppliers to properly measure their carbon footprint and find ways to reduce it.

Global leaders such as Unilever, Nike, Marks & Spencer and IKEA are exploring circular-economy business models. To scale these, they are focusing on the massive volumes of materials and goods moving back and forth across complex global supply chains.

Traceability is a key enabler of the collaboration needed to underpin this. The use of RFID tagging and 'smart bins' is one technology, already tested by many U.S. cities, that enable efficient and safe circular flow of resources. Traceability plays a vital role in turning waste from a negative externality into a valuable resource, moving through the economy between producers, consumers, waste management and recycling companies. 

Governments have a role to play in driving the circular economy and can lead by example. One promising initiative is the U.S./Brazil Green Themes Partnership, which began in 2011. Under the program, General Electric and Petrobras have collaborated to obtain the world’s first use of sugarcane-based ethanol in a gas turbine system to produce electricity on a full commercial scale.

Separately, the Dutch Sustainable Growth Coalition (DSGC) has established a joint venture with other business leaders through which DSGC members are committed to shaping their individual business models in a sustainable manner, sharing their approach with the international business community and stimulating thought leadership focused on overcoming boundaries to sustainability.

A circular economy is achievable, but adoption on a global scale will require government, business leaders, NGOs and consumers to come together to collaborate internationally.

Illustration of group pushing ball forward provided by PLRANG via Shutterstock.

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