exelixis

The only way forward is the Circle

23 January 2024 10:13

Our current economic system is easy to describe: "take - make - waste".  We extract resources that we superficially enrich with energy and labour. We use the results and in the majority of cases ultimately produce waste. That does not work any longer. We have to make the economy circular, write Günther Dobrauz and Nicolas Huras.

In the last 15 years, the production of clothing has doubled. One driver behind this is clearly the fast-fashion phenomenon. More and more clothes being worn less and less. According to the Ellen MacArthur Foundation, about one truckload of clothing is now either burned or buried in landfills each second.  Specifically, this means that we are simply and unwarrantedly destroying around 460 billion US-Dollars. 

The same applies to all other industries without exception. The statistics paint the same picture throughout our economy: hyper optimised companies with their focus on costs and turnover, ultimately on profit. 

Recently, however, and fuelled by the COVID-19 crisis, we have also seen an accelerated shift towards sustainability. A lot of emphasis is placed on the recyclability of products. But for all the good it does, it is also based on the current system - the linear model described above. The formation of waste is deferred, but inevitably waste is produced wholly or in part.

Nature, from which everything is basically derived, knows no waste. Every leaf that falls from a tree is put back into the natural lifecycle. Everything is determined by cycles. So why would this principle not apply to our economy? Just because we switched to the linear model during the industrial revolution and drove it to an extreme? A simple look at the world with all the crazy human destruction on land, at sea and in the air makes us realise that we are clearly on the wrong track. 

What is the solution? It is obvious: what we need is an interdisciplinary and all-encompassing shift to circular models. For us and especially for our children. No excuses! The future is what it has always been: a circle.

Circular models create closed material and energy cycles - without waste. In the end, waste is and remains only an indicator that something is not going right. As long as there is waste - be it the paint which cannot be dissolved back into its natural components, or the packaging that is non-degradable, or insulating material that that can't be fully recycled -, we face a problem. All "loss" should either be useable as a by-product or as an essential resource for another industrial process or degraded into natural decomposable soil.

We think there will be two big themes in the next few years that will drive us towards the circular economy. 

Firstly, the younger generations. We are astounded every day when we talk to them about ideas on reaching a sustainable tomorrow. Even at the rapidly growing circular economy conferences, they are the ones who really believe, promote and drive the exciting projects. 

Secondly, exponential technologies. In their manifold combinations they allow leaps in development at unprecedented speeds. Among all the different possibilities, we are particularly excited about the practical application of blockchain technology in combination with artificial intelligence and quantum computing. 

Sooner or later, I also expect an accelerated and sustainable decentralisation. Fewer young people will want to work in the phallic buildings of old tradition with military hierarchical structures. Instead, they will strive to work in their own companies by applying their strengths at a local level while benefitting from a global network. This “going local” movement in addition with a sustained global acumen is a precious asset.

Undoubtedly, in this shift from the linear to the circular, we are talking about a disruption of familiar models and structures. Historically, change always meant a replacement of the old players by new ones. No carriage manufacturer is a car producer today.  What will next technological advancement look like? Certainly, there is a lot of expectation on start-up companies. However, the established companies also have opportunities to develop. Compared to the past, companies are much more diversified and dynamic. Some have already launched circular projects as part of their future strategy.

Will this be enough? It remains to be seen. Ultimately, the regulatory framework will be crucial. Significant efforts in regulation at the EU level, but also in Switzerland, are already outlining where this journey may lead. The decisive question remains: Is it just a matter of greenwashing, or do we embrace the underlying considerations and are able to cast these into binding laws?

 

Dr. Guenther Dobrauz-Saldapenna is a Venture Capital Investor in Circular Economy, Exponential Technologies and Longevity as well as a Partner at PwC Zurich and Leader of PwC Legal Switzerland. 

Nicolas Huras is an experienced governance, venture builder in FinTech and impact investing serves as advisor, lecturer and chairman of professional bodies in Europe and Asia. 

This text is an abridged version of their chapter in “Circular Economy. New solutions for a better tomorrow”, published by Stämpfli in Bern 2023.