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How the Circular Economy Tackles Climate Change

04/24/2015 03:37 pm ET | Updated Jun 24, 2015

It sometimes gets forgotten that the circular economy addresses directly the problem of climate change.

The logic of businesses being more frugal in the way they extract finite resources from the planet has largely been won. More and more, the question is how to develop circular systems that enable existing materials to be used over and over again delivering high value goods and services. That is the real challenge of circular implementation.

A new report from the Club of Rome, a global think tank, underlines why we need the circular approach.

It now takes the Earth almost one and a half year to regenerate what we use in a year... Both governments and businesses are beginning to realize that our linear systems of resource use expose both societies and businesses to a number of serious risks. Resource constraints as well as increasing volumes of waste and pollution are likely to impose increasing threats to welfare and wellbeing and, from a business point of view, to competitiveness, profits and business continuity.

The report adds later that:

If all citizens of the world would live by US standards, for instance, we would need more than 4 planet Earths.

But there is a harder business reason to follow the circular path: meeting the needs of a growing world population of new middle class consumers in a way that does not drain the planet of its resources. McKinsey & Co. estimate that by 2030, five billion people (60% of the world's population) will live in cities, compared with 3.6 billion today. In another study, they forecasted that just 600 cities (most of which are in the rising economies in Asia, South America and Africa) would drive as much as 65 percent of global growth, equivalent to $30 trillion from 2010 to 2025.

When business sees that profitability and sustainability go hand in hand like this, they usually bring to bear their powers of innovation and ingenuity. That is the first and foremost important step and we are starting to see fora like the World Economic Forum's Project MainStream -- where we and other world businesses are collaborating to find new routes to the circular economy -- taking up the mantel.

But the bit that gets missed often is that the circular economy through philosophies such as Cradle to Cradle makes the switch to renewable energy another of its principle goals. In fact, companies like ours that seek C2C certification for their products or want to comply to the UN Global Compact's principles must address this issue.

If we are to build a system inspired by nature, we too must utilize natural energy systems be that wind power, solar, tidal, biomass or others, many of which are becoming more efficient and economically viable

This is an important year in the global approach to climate change. The world will be watching to see whether the international community at the UN climate change COP21 conference in Paris at the end of the year agrees to sufficient reductions in carbon emissions to avert a two degree warming of the planet, as warned by many scientists.

Last year, the UN's Intergovernmental Panel on Climate Change (IPCC) released its first IPCC report since 2007 and the UK newspaper, The Guardian reporting on its findings, said that man-made global warming:

...is set to inflict 'severe, widespread, and irreversible impacts' on people and the natural world unless carbon emissions are cut sharply and rapidly, according to the most important assessment of global warming yet published.

The report concluded that global warming is "unequivocal", that humanity's role in causing it is "clear" and that many effects will last for hundreds to thousands of years even if the planet's rising temperature is halted.

At the time, the UN secretary general, Ban Ki-moon said: "Leaders must act. Time is not on our side."

And what perhaps should be more at the forefront of people's minds is that the circular economy model, a topic currently being discussed at EU level by policy makers, can offer a key stimulus to business reductions in carbon emissions.

Indeed, the new report from the Club of Rome concludes that by 2030, carbon emissions could be cut by almost 70 percent if a key set of circular economy policy measures were adopted.

Now, that is what I would call a worthy goal.