Wharton Has Been Walking On The Circular Economy For Years

By David Mazzocco, LEED AP
Associate Director of Sustainability and Projects, Wharton Operations

 

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In anticipation of IGEL’s 10th anniversary, Wharton Operations would like to showcase an IGEL founding sponsor, Interface carpet.  When I joined the Wharton community, I was pleased to hear Wharton Operations used Interface carpet for the majority of our projects.  Early in my career as a young professional making the case for ‘green building’, I found company founder and chairman Ray Anderson’s 1998 book very influential.  It demonstrated how the vision of a single leader can challenge us to make real, sustainable change and, in his words, “become restorative through the power of influence.” Interface’s bold, pioneering vision to create a sustainable company and measure success beyond the bottom line steered the company away from the typical take-make-waste business model toward one that’s “renewable, cyclical, and benign.”  This mission not only defines a circular economy, it has also revitalized an industry.

In anticipation of IGEL’s 10th anniversary, Wharton Operations would like to showcase an IGEL founding sponsor, Interface carpet.  When I joined the Wharton community, I was pleased to hear Wharton Operations used Interface carpet for the majority of our projects.  Early in my career as a young professional making the case for ‘green building’, I found company founder and chairman Ray Anderson’s 1998 book Mid-Course Correction very influential.  It demonstrated how the vision of a single leader can challenge us to make real, sustainable change and, in his words, “become restorative through the power of influence.” Interface’s bold, pioneering vision to create a sustainable company and measure success beyond the bottom line steered the company away from the typical take-make-waste business model toward one that’s “renewable, cyclical, and benign.”  This mission not only defines a circular economy, it has also revitalized an industry.

Each year, the United States dumps approximately 4 billion pounds of carpet into our landfills; roughly 800 million square yards or equal to covering the floor area of Wharton’s Huntsman Hall 22,000 times over.  According to the Carpet & Rug Institute, 70% of all carpet is replaced each year for reasons other than wear, such as it’s the wrong color, a dated look or a change in tenant.  Carpet manufacturing is also a resource intensive process, consuming billions of pounds of petro-chemical and other non-renewable natural capital to provide the energy and base ingredients in the final product.  Take.  Make.  Waste.  This cannot go on indefinitely.

In 1994, Ray Anderson had his awakening when he realized his company was part of the problem and not part of the solution.  He challenged his company to “make history rather than just making carpet.” With Interface’s “Mission Zero” promise, a new focus emerged: to radically redesign processes and products and to pioneer new technologies and systems to eliminate any negative impact the company has on the environment by 2020.  Their innovative, holistic approach where everything is examined is an example every company should emulate.

In support of Penn’s Climate Action Plan, the Wharton Operations Green Campus program works to minimize solid waste and pursue sustainable building practices.   We must also uphold a level of quality within our facilities that one has come to associate with Wharton.  An effective carpet management strategy is part of that plan.  In 2012, Operations leadership visited Interface and were impressed with their manufacturing process, waste reclamation program and sustainability goals. Working with our vender Metropolitan Flooring, we began using Interface carpeting almost exclusively.  Through Metropolitan and the Carpet America Recovery Effort (CARE), all carpet removed from Wharton buildings is either returned to Interface to make new product or recovered for other industrial uses.  No carpet enters a landfill.

From a design standpoint, our projects group appreciate Interface’s aesthetic and high quality products that wear extremely well.  Of course from a sustainability perspective, their products meet our requirements to contain high recycled content, natural fiber options and adhere to strict indoor environmental quality standards; critically important for building occupants with chemical and allergen sensitivities.  Stemming from the company’s origins, Interface products are also a modular carpet tile rather than a roll product.  From an operations standpoint, the modularity provides flexibility in patterning, installation and maintenance.  If a tile is stained or damaged beyond repair, just that tile is replaced rather than the entire carpeted area minimizing waste, cost and down time to the affected area.  The damaged tile is then returned to the manufacturer to make new product, completing the cycle.

Other carpet companies have since started following the Interface model to varying degrees.  They provide great products and are used regularly across Penn’s campus.  Interface will always be the standard bearer, however, by taking a leadership role to demonstrate that the principles of sustainability and financial success can co-exist within business.  It created a new level of success that includes cultural dividends.  Innovation and leadership.  Values Wharton knows well.

So, on your next visit to Wharton, look down.  Know that the carpet you are walking on is doing more than covering the floor.  It is part of the solution.

 

Going Local: The impact of renewable energy on circular economy

By Sirui Ma

Moving toward circular economy, rethinking and redesigning the production and recycling cycle is crucial to diminishing externalities. In order to “close the loop”, a variety of efforts are concerned, including materials used in production, easiness to dismantle disposed products, etc. Among all efforts that contribute to a “closed loop”, introducing renewable energy to the production process is one of the most essential. The significance of renewable energy is not limited to the concept “renewable”, which is often related with less carbon emission. One other advantage of renewable energy is its peculiar characteristics: LOCAL.

Why Renewable Energy?

Carbon emission is one of the major barriers to “close the loop” since a large percentage of manufacturers are still heavily relying on burning fossil fuels such as coal and refined oil products. In the perspective of reducing carbon output into the environment, introducing renewable energy input in the production line has gained its importance more than ever before. According to EIA statistics, 1364 million metric tons of carbon dioxide was produced by coal power plants in 2015, accounting for 71 percent of carbon emission by the national electric power sector. Given the huge quantity of carbon emission by coal burning, it is intuitive to imagine how renewable energy can reduce carbon emission at an extraordinary scale.

From Global to Local

However, in the process of replacing traditional energy with renewable energy, several properties of renewable energy need to be addressed: energy density, energy storage and transportation, as well as the match-up of energy suppliers and end-users.

While it is hard to generalize the characteristics of all renewable energy, different type of renewable energy has different advantages and limits. Among all renewable energy, hydroelectric power is one of the most stable energy types with a relatively high energy density. Wind power is strong but relatively unstable due to variation of wind speed and direction. Solar power has a smaller density but overall a stable output. Based on limits and advantages of different types of renewable energy, it is essential to characterize the type of energy demand of a specific type of production and find the most appropriate renewable energy to serve a local industry. The process of determining the energy source(s) for a factory should thus be added into the “rethinking” procedure of circular economy agenda.

In rethinking and redesigning of the industry, it is also momentous to understand the characteristics in the production and transportation of renewable energy. Fossil fuel, which stores energy in a condensed form, often needs a series of energy “dilution” steps before it can be used in daily life, in the form of electricity. Renewable energy, on the other hand, is in a relatively loose form with energy density of equal or less than 1 kW/m2 in its original state. Although the energy density cannot be compared with fossil fuels, the level of energy may be used directly by households without extra steps of “dilution”. Avoiding the “dilution” process can significantly increase the efficiency of energy use. What’s more, because of global scattering of fossil fuel reserves, the energy often experiences a “long haul” before reaching users. A huge energy loss is induced in the transportation process. In the case of renewable energy, “long haul” is definitely not an ideal choice. Based on the fact that long distance transportation is both technically difficult and costly, the use of renewable energy should be concentrated on the local economy.

Circular Economy is not just about reducing the environmental externalities of an industry. In fact, reducing energy loss is also vital in the idea of “closing the loop”. By relying more on renewable energy, an appropriate match between renewable energy and end-user demand can significantly improve the efficiency of energy use. In a well-designed circular economy structure, raw materials and energy resources are all from local suppliers. Appropriate match-ups between energy suppliers and end-users should be designed beforehand. For existing manufacturers, retrofitting the energy and raw material supply based on current circumstances is also promising and cost-effective. Overall, a more efficient management system is required to approach the goal of localizing circular economy, either designing or retrofitting.

 

 

 

 

 

 

 

 

 

Announcing the Release of “Becoming a Sustainable Organization,” by Wharton MBA Alumna, Kristina Kohl

Kohl Book Cover

Wharton MBA Alumna Kristina Kohl, managing principal of Becoming Sustainable, a division of HRComputes, has just released a book! See below for a summary and links to purchase.

Organizations find that a performance gap exists between sustainability vision and benefits realization. Effecting transformational change requires incorporating sustainability into an organization’s culture including policies, processes, and people. This book lays out a framework to improve sustainability integrations including case studies, lessons learned, best practices, and tools and templates to facilitate transforming into a sustainable organization.

Becoming a Sustainable Organization: A Project and Portfolio Management Approach is an ideal resource for project and portfolio managers, as well as executive managers, in organizations that are embarking on a sustainability journey. It explains how to engage both internal and external stakeholders in order to reframe strategy to drive this transformation. It examines the role human capital management professionals and policies can play in ensuring that employees become fully engaged in sustainability. It also recommends baseline measurements and metrics to help managers ensure sustainability initiatives remain on track.

The case studies and interviews in this book include sustainability stories and projects from a variety of organizations in both function and size, including family-owned businesses, higher-education institutions, NGOs, municipal and federal government agencies, and large global organizations. These cases are based on interviews with experienced sustainability and project management professionals who have not just “talked the talk” but also “walked the walk.”

The voices of these professionals provide invaluable inspiration and guidance to sustainability champions and to program and project managers tasked with moving their sustainability portfolio components forward within their organizations.

Buy It Here: CRC PressAmazon

Austin Bream, Junior in the Wharton School, Wins First Place in 2016 College House Deans Integrates Knowledge Awards

The Initiative for Global Environmental Leadership (IGEL) would like to congratulate Austin Bream for winning first place in the 2016 College House Deans Integrates Knowledge Awards.  The description provided by the College House Deans is below.  Although IGEL claims no credit whatsoever for Austin Bream’s accomplishments, we lift up his example as an inspiration for all of us. True progress on environmental sustainability will come from leaders such as Austin who are developing here on Penn’s campus.  Congratulations!

Austin Bream

Austin Bream is a man with a passion for practical, forward-thinking sustainability. Currently serving as a Resident Advisor in Kings Court English College House, he is also working as an intern with Green Campus Partnership, running the Green Living Certification program and the Power Down Challenge.  He works with the Penn Program in the Environmental Humanities as a member of the Academic Advisory Board, and he helped launch WetLand, a “mobile, sculptural habitat and public space constructed to explore resource interdependency and climate change in urban centers” (www.wet-land.org/). In Kings Court English, he is developing a solar-powered, hydroponic food garden and leads House programming on sustainability and environmental issues.

“Austin has unobtrusively but consistently combined acknowledgment of his responsibility to his community with expressions of his community’s responsibilities to its world. He provides an ongoing but understated example of how to integrate one’s passion for the pursuit of meaningful and tangible change with a rigorous pursuit of one’s intellectual and academic goals. He is, in short, a stellar role model for his residents, and for the residents of KCECH more broadly. And he achieves all of this without ever standing on a soap-box or stridently calling for change.” — Prof. Cam Grey, College House Fellow, Kings Court English College House

 

Share & Reuse in Demanding Times

By Kim Rumph, President, CHEP North America

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An Old Fashioned Zeitgeist

I’m not sure if it’s comforting or disturbing when, from an analysis of history, we witness today’s supposedly zeitgeist concepts alive and well from many moons ago.  That’s what we at CHEP discovered when we began to study the principles of Shared & Circular Economics.

For example; over 2,000 years ago terracotta vessels were used to transport olive oil and wine by the Egyptians, Greeks & Romans; over a hundred years ago, glass milk bottles were used in England to deliver fresh milk from the farm to customers’ doors everyday.

These vessels were the earliest examples of a circular & shared economy that we could find.   And today, most urban cites have a versions for the CitiBike phenomena we’ve witness in the United States.

Of course that does not dilute the power of their principles at all.   All are fine human examples of human sharing.

The Intersection of Shared & Circular Economics

CHEP is in the business of sharing platforms for our customers along their supply chain.  Whether that’s a platform (pallet, reusable plastic container, container) or a transport lane (one truck journey from A-to-B) or knowledge that we utilize across all our customers; we have a business need to share and eliminate unwanted or wasted resources.

Given this, our business model is a demonstration of the efficiency and effectiveness of sharing.

The Extreme Conditions we all Face NOW

Our planet is under incredible stress to feed & water our burgeoning population.  For example, we waste far more food than is required to feed all the hungry people in the world.  What a tragedy of modern (re)distribution.

Governments are turning to the intellectual and organizational capital of organizations to lead practical solutions to this problem.   And organizations turn to their supply chain experts for 75% of their efficiency gains.

Everyday, we at CHEP are eliminating a handling touch here, a transport lane there, packing more efficiently everywhere and sharing everything.   If we give you one example, all the transport efficiencies we bought to our customers last year eliminated 26 million miles of truck trips – that’s the equivalent of 100 trucks traveling 100 times around the world.

And it’s just one rather long example of what’s possible when we share.

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Circular Economy – Business Perspectives:  Moving from Discussion to Implementation

By Rekha Menon-Varma (WG ’06), Managing Partner, Vertaeon LLC

Vertaeon LLC

Recent discussions, white papers and seminars on the benefits of the circular economy, as opposed to the traditional “cradle-to-grave” linear economy, serve to increase awareness of this issue and challenge industries to rethink the status-quo. The timing is right – one could point to the need to conserve natural resources, the ever-increasing impacts of climate change, growing population, increasing urbanization, more efficient waste management and a whole host of other reasons to make the case. For instance, The Ellen MacArthur Foundation’s report titled Towards the Circular Economy provides staggering numbers that illustrate the broad-based impacts.   82 billion tonnes of raw materials expected to enter the economic system in 2020, highest ever price volatility levels for food and non-food agricultural outputs, opportunities to save $billions by segregating food waste from other wastes, to name a few.  Multiple business models are emerging including product lifecycle extensions and sharing platforms.

Multi-faceted approach to implementation

Moving from thought leadership to practice on a larger scale would require a multi-pronged approach – one that forces a holistic view of product and byproduct lifecycles, leverages the interconnectivity of value chains, and spawns innovative companies. Even resource optimization, manufacturing footprints, and pollution prevention would be completely revamped in this new paradigm.  At Vertaeon, we envision this multi-pronged strategy would add yet another dimension to growth and expansion opportunity assessments and can eventually create truly integrated, global conglomerates. The seemingly endless scope and scale of opportunities and related challenges make this task seem daunting. So, how do we move past the hype to operationalizing the circular economy?

Key notions

The key would be to aim high while not losing sight of opportunities at the smaller scale/level – and create success stories that help fuel the discussion by delivering economic returns.  From a manufacturer’s perspective, we believe ongoing strategic assessments that include analyses of (a) data on market trends and potentials, (b) waste/byproduct value chains that intersect your primary value chain, (c) improved KPIs both for opportunity assessment and implementation, and (d) effective product innovation are the key to operationalize the circular economy.  From a corporate strategy point of view, growth option assessments will take on new dimensions via evaluating multiple value chains and new product-technology roadmaps including environmental as well as economic considerations.

Another key aspect is to leverage technology in developing transparency in information for collaborating partners as well as developing insights for individual company opportunities.  If we think that the current volume and variety of data within a company is complicated enough to aggregate and analyze, imagine the level of complexity a circular economy business model can bring about to the types and scope of data.

Vertaeon is uniquely positioned as a specialized strategy advisory and data analytics firm to address these planning and implementation challenges.  Our manufacturing and strategy experiences have given us an in-depth look at supply chains both from sustainability as well as from business strategy points of view.  Our data analytics offerings concentrate on operational and market aspects, including resource optimization as well as supply chain analytics.  Our goal is to bring in an easy to deploy solution to complex business operations while synthesizing the data to give clear, actionable insights to decision makers.

In conclusion 

The concept of circular economy has given industrialized economies a wonderful opportunity to create additional value in environmental, market and social dimensions.  Effective implementation with strong organizational commitment will be the key to realizing that value.

Vertaeon (www.vertaeon.com) participates in Wharton IGEL activities and Co-founder Dr. Vipin Varma (WG ’11) serves on the alumni advisory board of IGEL.

Putting the Circular Economy in Motion

By Jennifer Gerholdt, Senior Director, Environment Program, U.S. Chamber of Commerce Foundation

Dell created a closed-loop recycled plastics supply chain to recycle computers back into new computers.  Philips sells lighting as a service instead of a product that a consumer would otherwise purchase and own. The Dow Chemical Company recovers non-recycled plastics to convert into a usable energy source.

These examples, taken from the U.S. Chamber of Commerce Foundation report Achieving a Circular Economy: How the Private Sector is Reimagining the Future of Business, help illustrate the concept of the circular economy, in which resources are endlessly cycled back into supply chains and waste does not exist.

The circular economy, according to the Ellen MacArthur Foundation, is an economic model that is restorative or regenerative by design and intent, in which products, components, and materials are kept at their highest value at all times. In essence the circular economy about is re-using, repairing, refurbishing and recycling products and materials, turning waste into a resource, and managing all resources through their life cycles. It is about keeping molecules endlessly in motion.

The concept of eradicating waste, which underpins the circular economy, is not new, but is being fueled by megatrends including rapid population growth, resource constraints, uncertain commodity markets, shifting consumer attitudes and preferences, and more.

In the U.S. Chamber of Commerce Foundation and Trucost research report, Trash to Treasure: Waste Streams to Profit Streams, we identified the 5,589 largest publicly traded companies in the U.S. sent 342 million metric tons of waste to landfills in 2014. In addition, on average, companies generate 7.81 metric tons of waste for every million dollars in revenue.

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If the 5,589 companies reduced their waste by 1%, it would save nearly $1 billion in total.

The report found that companies are not accurately estimating, measuring and managing their waste streams, which means they are throwing away huge opportunities for profit and increased efficiency. Adopting circular economy methods is the best way to eliminate waste and recapture its value.

Companies are pursuing the circular economy as an alternative approach to the linear “take-make-dispose” model that decouples economic growth from resource constraints. The circular economy is, at its core, an economic innovation opportunity. It is about a fundamental rethinking and redesign of products, components, materials, and systems of commerce in which resources are endlessly cycled back into the system. All this represents tremendous opportunity for business and society. Shifting to the circular economy could unlock an estimated $4.5 trillion in additional economic growth by 2030 by turning current waste into wealth, according to research from Accenture.

Despite the megatrends and compelling business case, practical approaches of how companies can put the circular economy in motion are not yet mainstream. To address this, the U.S. Chamber of Commerce Foundation, in collaboration with the Ellen MacArthur Foundation and PYXERA Global, is hosting Better Business: Better World: Mainstreaming the Circular Economy May 16-17 in Washington, DC. This event will provide an interactive and collaborative platform for more than 300 private and public sector leaders to explore real world examples and gain practical insights for how companies can achieve a circular economy that helps make the world a better place.

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Rethinking Waste Through Technology in a Circular Economy

By Felix Faulhaber, Vice President, Business Intelligence & Supply Chain, Rubicon Global

imageWith the planet facing a resource crunch, our consumption-hungry culture is quickly becoming unsustainable. The linear “make, use, dispose” economy depends on vast amounts of resources — and creates huge amounts of waste. According to “Gone Tomorrow: The Hidden Life of Garbage,” 80 percent of goods in the U.S. are thrown away within their first six months of life.

An alternative that’s gaining traction is the circular economy, which aims to weed out waste through a regenerative industrial system. In a circular economy, waste doesn’t exist – all products and materials serve a purpose within the system for as long as possible.

The circular economy’s success rests on four basic building blocks:

  • A cradle-to-cradle view of materials that promotes a waste-free, efficient system
  • An understanding of industrial ecology and how to deploy waste as a resource
  • A commitment to including diverse players from across the market
  • Systems thinking and leveraging technology and data to find solutions

For the model to work, manufacturers, service providers, product users and collectors all have to be on the same page. Adapting to this mindset will require many industries to change, including the waste industry itself.

Viewing waste in a new way

Traditional waste management providers also own landfills and hauling assets, creating incentives for them to break the regenerative cycle and pile landfills high with trash. Waste and recycling provider Rubicon Global is disrupting the industry, however, through a new asset-light, technology-driven model that benefits businesses and the environment.

Rubicon’s proprietary technology platform helps to facilitate a circular economy by connecting haulers and customers in a new way.  Businesses can use Rubicon’s technology to request waste pickups when needed, instead of on a fixed schedule, eliminating unnecessary transportation costs and fuel consumption. Haulers bring the material they collect to processors instead of landfills, and Rubicon’s cloud-based auction site enables businesses to bid on the collected materials. By sending less trash to landfills and selling their waste for recycling or reuse, Rubicon’s customers boost their bottom lines while also doing good for the planet.

The power of technology

Gaining insight into sustainability initiatives is key for businesses that want to create successful circular economies. Rubicon provides customers with detailed pickup data so they can track their progress against diversion targets and manage high- and low-performing materials. Companies can also use data to optimize diversion efforts and the frequency of trash removal, resulting in financial and environmental benefits.

As resources grow more precious, our old industrial system just doesn’t work anymore. By enabling businesses to turn their trash into someone else’s treasure, Rubicon is working to create a more sustainable circular economy.

Rubicon Global has been a longtime supporter of Wharton IGEL and is an active member of its corporate advisory board. Rubicon Global has partnered with Wharton IGEL on two reports that were issued in Knowledge@Wharton; Disrupting the World’s Oldest Industry was issued in March 2014, and more recently The Sharing Economy: Restacking Industry in the 21st Century was issued in December 2015.  

World Water Day: Help XSProject Bring Clean Water to Trash Picker Families

By Karen McDaniels

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Tuesday, March 22 is World Water Day. 633 million people around the world drink contaminated water every day. Would you drink contaminated water? Probably not, so why should anyone have to drink it?

In Jakarta, Indonesia there are more than 500,000 people who earn a living picking through garbage cans and dumpsters for anything they can sell to feed their families. On a good day they earn about $5. One to two dollars of that goes to buy bottled water for drinking and cooking every single day!

This World Water Day, I am asking you to help XSProject bring clean water for bathing, cooking and drinking to 100 trash picker families supported by our non-profit organization. Our MISSION is to break the generational cycle of trash picking by giving the children in this community a K-12 education. Our GOAL is to provide piped clean and filtered water to our community. With your donation to www.xsproject-usa.org and the engineers at Mercy Corps, we can radically change the lives of these families and produce happy, healthy students. And, I will personally send you a note of thanks!

As XSProject’s General Manager, Retno Hapsari (my boss) says: “It takes each of us to make a difference for all of us”.

Circular Economy – Why the Hype?

By Edwin Pinero
Senior Vice President, Sustainability and Public Affairs, Veolia North America

There is quite a bit of hype over the concept of the Circular Economy, yet it is rooted in some older concepts. Fundamentally, a Circular Economy is one that is restorative by design, characterized by material reuse and recycling, and renewable energy. The intent is to move away from the linear “take-make-use-dispose” model.

I have been in the environmental and sustainability business for the better part of my 36 year career, and I recognize this idea from before. The concept of Circular Economy can be traced back to the ideas of industrial ecology and design for the environment popular circa 1990s. These movements were based on the concept of mimicking nature by efficient use of materials and energy. The complementary movement of Design for the Environment encouraged product design such that end-of-use disposition resulted in less waste.

So what makes it different? What is so “new” now? The increasingly urbanized middle class is expected to mushroom from 1.8 billion to 3.2 billion people by 2020. This growth is aggravated by the impacts of climate change and previously unseen pressure on existing resources. We knew this already. The fact that growing population and economies strain natural resources is not new. Whereas the earlier movements were largely environmentally based, what’s new is a closer balance of environmental and market and economic forces.

It is the interconnectivity of environmental and economic factors that makes the current discussion new and timely. The Circular Economy concept builds on earlier efforts by adding visibility to the need to address market impacts of growing non-renewable resources shortages and corresponding price volatility. For example, a study by the Ellen McArthur Foundation and McKinsey noted that certain precious metals have only a few decades remaining of supply at current consumption rates. In addition to the obvious impacts of shortages, such stressed reserves lead to wide swings in price volatility, adversely impacting prices and markets.

Still not convinced? There is another driver towards the circular economy, and it comes from the fortuitous timing alignment with the Paris climate agreement. We know that even before the airplanes carrying the negotiators landed back in their home countries after COP21, there was stress about which countries would ratify the agreement. But as we learned from the Kyoto Protocol experience, ratifying and legislating the agreement does not guarantee goals would be met; and conversely, not ratifying does not doom a country to failure. Some countries who signed Kyoto were late or never met their goals. The United States did not sign the Kyoto agreement and we actually met our goals! How can that be and why is this point relevant to the Circular Economy?

The Circular Economy demonstrates that sustainable solutions are those that integrate environmental and economic factors. More efficient use of materials and more use of renewable energy are not only lower in carbon footprint than the fossil fuel-only, “take-make-use-dispose” economic model, but also can be linked to underlying economic drivers.

And that is the wonderful epiphany of the Circular Economy. It will help us deal with environmental and resource issues, temper market volatility, and contribute towards COP21 goals, regardless of what happens with agreement ratification. And that is a pretty good outcome!