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Circular economy can generate $1 trillion annually by 2025

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Staff writer ▼ | January 24, 2014
More than $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 to increase the rate of recycling, reuse and remanufacture.
Circular economyMore than $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 to increase the rate of recycling, reuse and remanufacture.


This would maximize the value of materials when products approach the end of their use, according to a new report released today by the World Economic Forum, in collaboration with the Ellen MacArthur Foundation at the Annual Meeting 2014 in Davos.

The report, Towards the Circular Economy, 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.

The report also highlights a new Forum initiative, Project Mainstream, which could help businesses to shift towards a circular economy and as a result save US$ 500 million in materials and prevent 100 million tonnes of waste globally.

With commodity prices almost tripling in the last 10 years, businesses and governments are now recognizing this as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources. Manufacturing industries, in particular, could see their costs reduce significantly by adopting a circular business model.

For example, material costs of smartphones could be reduced by more than 60% by entirely rethinking the way they are made and disposed. The report also shows the benefits of innovative business models such as Airbnb and Zip Car, and suggests improvements for profitability throughout the supply chain.

Project Mainstream is a World Economic Forum initiative in partnership with the Ellen MacArthur Foundation and supported by McKinsey & Co, which aims to work with companies to tackle ways to enable the circular economy through materials management, information technologies 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.

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