John Coyne is vice-president of legal and external affairs at Unilever Canada. Brendan Seale is head of sustainability at IKEA Canada. Both companies are members of CELC along with the Smart Prosperity Institute, the International Institute for Sustainable Development, The Natural Step Canada, and the National Zero Waste Council.
Every business aims to develop a competitive advantage, create value for stakeholders, satisfy customers‘ needs and ensure long-term sustainability. Successful companies tend to do this by adapting their business models to changing market conditions.
Until quite recently, those adaptations occurred within a global economic model that has existed since the industrial revolution, a linear “take-make-dispose” system. We now know that the system is dangerously flawed and unsustainable. It’s time to adopt a different approach.
Our two companies – Unilever and IKEA – along with others in Canada and around the world are embracing a new way of doing business based on the principles of a “circular” economy. The system decouples growth from the use of scarce resources and focuses on longevity of products, renewability, reuse, repair, upgrade, refurbishment, capacity sharing and the use of more biological materials that can be assimilated into nature. Similarly, circularity in farming and food production promotes sustainable agriculture to eliminate waste, promotes biodiversity and protects ecosystems.
This transition is crucial to push waste out of the system, protect the environment, reduce our reliance on finite natural resources and help meet Canada’s sustainability goals, including carbon-emission reductions in line with the Paris Agreement.
Make no mistake; circular economy is not simply recycling 2.0 – and it’s not a new concept. In many ways, it’s about rediscovering what we used to know. Indigenous traditions have long worked with the concept that nothing is wasted, and European countries such as Finland are far advanced in adopting circularity.
There are good economic reasons to move in this direction. Preventing future resource shortages and the associated rising and volatile prices and supply chain interruptions could result in upward of US$4.5-trillion by 2030 in global economic activity.
For Canadian businesses, it could mean opportunities to lower input and manufacturing costs, create new jobs, encourage innovation, keep Canada competitive as supply chains globalize and reduce pollution – including carbon. It could also mean a limit to environmental damage caused by waste management and resource extraction, and a connection with consumers who increasingly expect companies to meet sustainability standards.
The bottom-line benefits are clear. At Unilever, for example, our Sustainable Living brands, which combine a strong social or environmental purpose with products that contribute to achieving the company’s sustainability goals, grew 46 per cent faster than the rest of the business and delivered 70 per cent of turnover growth. We are also committed to ensuring that our plastic packaging will be fully reusable, recyclable or compostable by 2025.
For IKEA, it’s about reorienting our business from a mass-consumption model to a mass-circularity model to demonstrate that our business growth is good for the world. We will save on raw material and waste-management costs, spur innovation in design, and most crucially, unleash new opportunities to engage with our customers to prolong the life of products they love and offer solutions for those they are ready to part with.
But in spite of some Canadian companies embracing circular economy practices, the country as a whole lags many of our global competitors on the international stage; we risk being shut out of the benefits as they take hold elsewhere. Domestically, we are missing great opportunities to make life better for all Canadians while protecting the environment.
We need to see what is now regarded as waste as a resource with value that can continuously circulate back into the supply chain.
It’s a necessary shift because, simply put, we are running out of raw materials globally. Research shows that at the current rate of consumption, total demand for limited resource stocks such as metals, biomass and minerals would reach 130 billion tonnes by 2050, exceeding the Earth’s total capacity by a physically impossible 400 per cent.
Management consulting firm Accenture Strategy has warned that resource supply disruptions and rising and volatile prices will within 20 years translate into trillion-dollar losses for companies and countries whose growth remains tied to the use of dwindling natural resources.
Our two companies and others like us have seen the future and recognize that it’s very different from the past. But we need an even more concerted effort to make a circular economy a reality for all of Canada. That’s why we recently joined a new organization called the Circular Economy Leadership Coalition (CELC). It will be formally launched on Sept. 20 to coincide with a meeting of the Group of Seven environment, energy and oceans ministers in Halifax.
CELC is a collaboration of experienced business leaders, academics and non-governmental organizations working together to accelerate Canada’s transition to a circular economy. We will consult with decision makers in government and business to re-engineer policies, products, services and related infrastructure to help them lead the way toward a Canada based on policies that protect our natural wealth. The goal is to make it more valuable for companies to invest in an innovative circular economy than to continue on their current unsustainable path.