A shift towards circular model of growth will have huge potential for innovation, job creation and economic expansion, and is expected to generate $1 trillion a year for the global economy, according to a report.
Linear consumption wherein goods are manufactured from raw materials, sold, used and then discarded or incinerated as waste, is reaching is limits, according to the report released on Friday by the World Economic Forum in collaboration with the Ellen MacArthur Foundation.
A circular economy is an industrial system that is "regenerative" by intention and design, and the economic benefit of transitioning to this new business model is estimated to be worth more than a trillion dollars in material savings.
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"Over $1 trillion a year could be generated by 2025 for the global economy and 100,000 new jobs created for the next five years if companies focused on encouraging the build-up of 'circular' supply chains," said the report.
It further highlighted a new Forum initiative - Project Mainstream, in partnership with Ellen MacArthur Foundation and supported by McKinsey, which aims to work with firms to tackle ways to enable the circular economy through materials management, IT and business model innovation.
There are already many industry leaders that have committed to be part of this effort, including Philips, Kingfisher, Veolia, DSM and Indorama, the report said.
"Building on growing momentum around the circular economy, Project Mainstream will leverage the convening power of the World Economic Forum and bring together a group of business leaders capable of triggering widespread innovation and employment," the Ellen MacArthur Foundation founder Ellen MacArthur said.
The report, analyses the economic benefits for businesses shifting towards a circular economy, which rethinks today's consumption patterns of "take, make and dispose" to a more restorative process, where products are designed and marketed such that components and materials can be reused many times. Citing examples, the report said, the material costs of smartphones could be reduced by more than 60 per cent by entirely rethinking the way they are made and disposed.
"The circular economy is an opportunity industry can't afford to miss," Kingfisher Group chief executive Sir Ian Cheshire said.
"It can drive our next generation of innovation and business growth, cushion our business from price volatility, provide us with competitive advantage, and help us build better relationships with customers and suppliers," the report added.
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