Climate Change + Resource Scarcity = Opportunity

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Wednesday, August 17th, 2016
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While climate change and resource scarcity are two of the greatest risks we face, tackling it is also one of our biggest economic opportunities.

According to analysis by We Mean Business, a coalition of the world’s most influential businesses and investors working to secure sustainable economic growth and prosperity for all, implementing the Paris Agreement will unlock at least $13.5 trillion of economic activity globally.

Many around the world believe there has been an unprecedented shift in both attitude and action among the world’s policy and business players because of Paris, and while action to address climate change used to be described as “a burden and cost to be shared,” now it is being described as a huge opportunity for innovation, investment and job growth.

The emergence of the blue and circular economy is also helping us make better decisions about resource use, designing out waste and providing added value for business and the economy. It aims to keep products, components, and materials at their highest utility and value at all times. The concept distinguishes between technical and biological cycles where the waste of one is food for another business/industry.

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Both concepts provide continuous positive development cycles that preserve and enhance natural capital, optimise resource yields, and minimise system risks by managing finite stocks and renewable flows, working effectively at every scale and across all industries and sectors – helping us to do better, smarter, more profitable business.

Earlier this year, the World Economic Forum suggested the circular economy (which can dramatically cut carbon) was the largest business opportunity of our time. Famed architect, designer and thought leader Bill McDonough affirmed that “the circular economy was an innovation engine that puts the ‘re-‘ back into resources. It allows for continuous benefit to be provided to all generations by the reuse of things, of material, energy, water, [etc.]”

In Europe, the Circular Economy is a key policy to aid the decoupling of energy to that of jobs and strong economic growth. The European Union Commission action plan states “the transition to a more circular economy, where the value of products, materials and resources is maintained in the economy for as long as possible, and the generation of waste minimised, is an essential contribution to the EU’s efforts to develop a sustainable, low carbon, resource efficient and competitive economy. Such transition is the opportunity to transform our economy and generate new and sustainable competitive advantages for Europe.”

A study by McKinsey and the Ellen Macarthur Foundation, A Circular Economy Vision for a Competitive Vision, provides new evidence that a circular economy, enabled by the technology revolution, will allow Europe to grow resource productivity by up to three per cent annually. This alone would generate a primary resource benefit of as much as €0.6 trillion per year by 2030 to Europe’s economy. This would translate into a GDP increase of as much as seven percentage points relative to the current development scenario.

From a built environment perspective, it suggested structural waste in the built environment was high and that this would be an industry of focus.  The average European office is used only 35 to 40 per cent of the time, even during office hours. This includes offices on expensive inner-city land.

Retrofitting existing buildings could profitably reduce energy consumption by 20 to 40 per cent. Passive and zero-net-energy houses are already making money in several market segments but remain a minority of new buildings. Modular construction techniques can also reduce total construction costs 30 to 60 per cent, and with over 50 per cent of demolition materials (including many toxic materials) going to landfill sites, it was considered ripe for disruption because use of today’s resources does not match the possibilities, especially for an industry that is mature and managed professionally.

The EU believes if there were adequate disruption in the built environment and a focus on the circular economy, that it could reclaim inner city land unlocked by a circular mobility system to create high quality spaced where people would live, work and play. The system would integrate green infrastructure with durable, mixed use buildings, designed in a modular way and constructed with looped and non-toxic materials.

Buildings would generate, rather than consume, power and food. They would have fully closed water, nutrition, material and energy loops. They would be highly utilized, thanks to shared and flexible office spaces, and flexible, smart and modular homes. This could lead to a reduction in the cost per square metre of more than 30 per cent versus today.

Whilst these resources of growth exist to some extent today, they receive little corporate attention. This historic lack of focus on these resources, the considerable formal and informal barriers, and the rapid development of technology create a tremendous growth opportunity not only for Europe, but for the the world over.

Surely we owe it to ourselves to go beyond the current status quo, to play catch-up with Europe and learn new, more profitable ways of doing business. One that is about abundance, not sacrifice – one that truly innovates and disrupts. Are you ready to take the plunge into an emerging blue and circular world?

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