The circular economy can solve critical crises

Mari Pantsar,
Sitra, the Finnish Innovation Fund,

The world is encountering a global sustainability crisis that has three dimensions: the climate crisis, the biodiversity crisis and the crisis caused by the overuse of natural resources. But instead of trying to mitigate the consequences, we should try to solve the root cause of it all: the growing consumption of resources and energy.

According to the UN Resources Outlook, the extraction and processing of natural resources causes 50% of global air emissions and 80 to 90% of biodiversity loss. To counter these losses, we must change the ways we produce and consume energy and materials. For this, the circular economy is one of the most powerful solutions. We must make better use of materials that already exist in our societies instead of extracting more and more resources – which in turn causes more and more emissions and kills off more and more species.

The carbon budget is already so tight that without the circular economy we are not able to meet the targets of the Paris Agreement. But the biodiversity crisis is seen by many experts as an even more acute threat than the climate crisis. Our current economic model is driving hundreds of thousands – even millions – of species to extinction. And ultimately it is us, the human race, that ends up paying for the damage we have caused.

But there is no reason to be pessimistic, because we already have the solutions.

The circular economy is a new, more efficient model of the economy. In a circular economy, products are designed so that the materials remain in circulation and do not end up being disposed of for good. Instead of extracting new materials, we use the materials that already exist. It is also an economic opportunity that could generate 4.5 trillion US dollars of additional economic output by 2030, according to Accenture.

So, what are we waiting for? Why are we not already rushing to embrace the circular economy?

The transformation to a circular economy requires systemic change. Circular economy solutions call for co-operation between all sectors of society. The key drivers of this transition will be businesses, as solution providers; individuals, as demanding customers; cities, as innovative platforms that can use public procurement as a strategic tool to help new circular economy innovations enter the markets; and decision-makers, to create a business environment that ensures that better business opportunities arrive at the doors of sustainable companies rather than at the doors of those companies that pollute the environment or waste materials.

The transition from a linear economy to a circular economy also requires a change of mindset. This is the most difficult part. Many people believe that buying and consuming more stuff increases well-being and happiness, although several studies show that this is not true. We need to challenge our current understanding of well-being and happiness. Businesses must sometimes even cannibalise their current business models that are based on producing and selling more and more products.

There are many good things happening across the world. But we must pick up speed fast.

The European Commission has emphasised that the circular economy is the environmental leg of the EU’s industry strategy. The Commission has a two-phase circular economy package, which contains the EU’s Plastics Strategy published in early 2018 and a raft of initiatives covering the lifespans of products.

In Europe, many member states are competing – in a positive way – to see which country can lead the way on the circular economy. Ten European states have published a national road map or an action plan – Finland was the first one to do so in 2016.

To mitigate climate change, we need to scale up circular economy solutions on a global level. Co-operation and global leadership are needed. And we must ensure everyone is part of this monumental transition. Europe must show global leadership by ensuring cross-sectoral co-operation and senior leadership in the fields of governance and financial resourcing from the European Commission.

As my friend Daniel Crespo Calleja, the Director General of DG Environment of the EU Commission, often says: “there are not many good options left for tackling the sustainability crisis while simultaneously boosting economic growth – but the circular economy is definitely one of them.”

The Baltic sea region has a lot to offer the world. Let us transform this into a circular economy region. Join us at the WCEF2020 in Canada and be part of the change to a sustainable economy!

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