While the term circular economy is increasingly gaining traction with academia, industry, and policymakers, we caught up with Emily Healy from The Ellen MacArthur Foundation in order to capture the role of the Foundation and why investments are crucial to secure the transition to a circular economy.
- Would you please explain your role in Ellen MacArthur Foundation?
The Ellen MacArthur Foundation is a charity with the mission to accelerate the transition to a circular economy. We work with business, government and academia to catalyse a shift from an extractive, throughput-focussed ‘linear’ system, to a circular economy, where waste and pollution are designed out, products and materials are kept in use, and natural systems are regenerated.
We have recently stepped up our focus on scaling finance for the circular economy. As part of these efforts, I am managing the development of a position paper which sets out a perspective on the role of finance in propelling the circular economy and the opportunities the transition offers to the financial sector.
- Why is finance a theme for Ellen MacArthur Foundation?
The circular economy is starting to transform entire industries, such as plastic packaging. Companies around the world, from emerging innovators to large corporates, are adopting circular economy practices, supported by stricter regulations and shifting consumer demands. Finance has an important role to play to support and rapidly scale these efforts, for example, by enabling the development of innovative materials, funding new product-as-a-service business models offering access rather than ownership and building infrastructure for effective reverse supply chains. At the same time, the circular economy framework offers investors and financial institutions a value creation strategy which helps manage the risks of the current linear system and addresses some of the greatest challenges of our time, including climate change, biodiversity loss, and pollution.
- You are developing a Finance Initiative at the foundation. What is the aim of the initiative?
At the Foundation we have several Systemic Initiatives, which aim to accelerate the global transition to a circular economy by applying its principles to key material streams. Our current Systemic Initiatives focus on the plastics, fashion, and food value chains, and we are in the process of shaping up an initiative which focusses on finance. Our work aims to scale finance for the circular economy, by, among other things, putting circular economy on the agenda of the finance sector as an opportunity, collaborating with leading financial institutions on this topic, and developing thought leadership and evidence on the role of the finance sector in a circular economy, and the opportunity it offers.
- Why is there a need to direct finance towards circular economy and transitions to a circular economy?
As it acts as a delivery mechanism to achieve goals on climate change and other SDGs, directing finance towards rapidly scaling the circular economy is needed to match the size and urgency of global challenges. For example, moving to currently available renewable energy can address 55% of global greenhouse gas emissions. The remaining 45% of emissions come from the way we make and use products, and how we produce food and manage land – for which shifting to a circular economy represents a large part of the answer. When rebuilding the global economy post-Coronavirus, there is an opportunity to do so in ways that much better address future global challenges like climate change, biodiversity loss, and pollution while generating economic value. Finance will be crucial to support existing circular businesses, boost and scale innovation in circular solutions, and build the infrastructure required to meet these objectives.
- How do you envision companies will adapt and continuously develop their business models to accommodate a circular economy?
Companies will continue to seek competitive advantage by applying circular strategies, as well as seizing emerging opportunities as the shortcomings of the current linear ‘take-make-waste’ system become more apparent across industries. Similarly, applying circular economy principles will help companies mitigate risks of the current linear economy, as shown by the plastic packaging industry with stricter regulation and consumer backlash related to plastic pollution. We already see companies setting circular economy as a strategic priority, launching internal learning programmes, designing road maps for business model shifts, preparing innovation briefs, running pilot projects, and applying circular principles to their products and services. Measurement tools like Circulytics can help shed light on company circular economy progress and performance through both historical and forward-looking metrics.
Large corporates have the global reach and power to drive the transition to the circular economy, and many have already started moving in different ways. By seeing both waste and pollution as design flaws, companies can create value by designing products to be made from regeneratively grown or secondary inputs and to be repaired, upgraded, disassembled, reused, repurposed, recycled or composted. For example, Desso’s carpet tiles are made from recyclable yarn and designed to be separated from their backing so they can be used again and again.
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