By Jocelyn Blériot, Executive Lead, International Institutions & Governments, Ellen MacArthur Foundation
The Covid-19 crisis has disastrous human and economic consequences, revealing our system’s exposure to a variety of risks. The call for a more resilient, circular and low-carbon economic model has garnered support from a growing number of businesses and governments over the past few years, and appears today more relevant than ever. Identifying opportunities, keeping a clear sense of direction and fostering a strong public-private collaboration will help usher in redefined growth towards the next wave of prosperity.
As the pandemic forces us to adapt our daily lives in ways we would not have imagined, it also challenges us to rethink the systems that underpin the economy. While there is no question that addressing public health consequences is the priority, the nature of the equally crucial economic recovery effort raises some interrogations. Should stimulus packages focus on finding the way back to growth by kicking business as usual into overdrive, or could they accelerate the shift that has already started towards a more resilient, low-carbon circular economy?
One way to tackle this polarising question is to reject the idea that rapidly getting back to economic dynamism is incompatible with a wider system transition. Given the sums at play and the unprecedented — in peace times — rise in prominence of public authorities, this isn’t a simple equation to resolve, yet there are signs of agreement on the horizon. While the European Bank for Reconstruction and Development has declared it will devote its entire activities to addressing the economic impact of the pandemic, the Investor Agenda group, which collectively manages trillions of dollars in assets, said that “Governments should avoid the prioritisation of risky, short-term emissions-intensive projects.”
The recovery effort will, of course, require a variety of strategies. Looking at the pre-Covid-19 landscape, it is clear that momentum had already been increasing around the need for a system reset, with a visible consensus on the potential of a circular model. Over the course of the last decade, a number of leading businesses have stepped onto and invested in this transformative path, while pioneering institutions and government bodies put forward significant legislative proposals to enable the transition. This is notably true in the European Union and in China but it plays out in other regions as well, at national and municipal levels with the same degree of vitality.
Far from pushing that agenda to the bottom of the list, the current crisis makes the circular economy more relevant than ever, as it holds a significant number of economically attractive answers. The early stages of the Covid-19 crisis have revealed the brittleness of many global supply chains, not limited to but illustrated by medical equipment availability issues, for example. In this specific case, circular principles provide credible solutions: design and product policy factors such as repairability, reusability and potential for remanufacturing offer considerable opportunities in resilience (stock availability) and competitiveness.
It is notably telling that the global refurbished medical devices market is expected to grow by over 10% a year between 2020 and 2025, which represents market opportunities as well as increased asset utilisation rates (therefore less reliance on new raw materials). The importance of these strategies have notably been highlighted in the US, where several state treasurers have urged ventilator makers to make service manuals and repair-related resources available to help hospitals deal with the crisis. This has cost reduction implications which will appeal to cash-strapped public health authorities, but is also conducive to lowering the greenhouse gas footprint, since remanufacturing has been shown by the United Nations’s International Resource Panel to reduce emissions by over 80% in key sectors. As witnessed in countries severely hit by the virus, being able to quickly adapt industrial facilities and shift production — of automotive to medical equipment parts, for example — has been crucial. Factoring in that flexibility upstream — by designing both tooling and products to be repurposable and versatile — could be a way to enhance value-creation potential and achieve greater resilience of industry, which are both valuable beyond the current situation.