Desso, the European carpet and sports pitch manufacturer, featured in a major new study launched at the World Economic Forum in Davos, which claims that businesses can save up to $630 billion in the EU by moving to the circular economy, a model that enables manufacturers to use resources much more productively.
The report, Towards the Circular Economy: Economic and business rationale for an accelerated transition was launched in January 2012 by Dame Ellen MacArthur, the founder of the Ellen MacArthur Foundation.
The report was produced with the support of its founding partners BT, Cisco, B&Q, National Grid and Renault. McKinsey & Company worked on the case examples and analytics.
Writing the foreword, Janez Potočnik, the European Commissioner for the Environment said that the report, “invites readers to imagine an economy in which today’s goods are tomorrow’s resources, forming a virtuous circle that fosters prosperity in a world of finite resources”.
While the EU was pushing for a shift to a more restorative economic model, he added, it would be up to businesses to drive the change.
“But success in increasing our overall resilience ultimately depends on the private sector’s ability to adopt and profitably develop the relevant new business models.”
Desso’s CEO Stef Kranendijk, who attended the report’s launch in Davos and who has led Desso’s shift to the circular economy, encouraged other entrepreneurs to seize this immense opportunity.
“Waiting for industry-wide coordination will not work. But as there is so much low-hanging potential already at company level, why wait? There is substantial first-mover advantage, especially if you are open to take back materials/products from your competitors.”
The report concluded that the modern challenges of scarce resources coupled with the increase in consumer demand predicted to come from the emerging billions of new middle classes in the rising economies, meant that the time was ripe for a change from the linear ‘take, make and dispose’ economy to the circular one.
“In the face of sharp volatility increases across the global economy and proliferating signs of resource depletion, the call for a new economic model is getting louder.”
CEOs will want to bet on a better model, the report added.
“A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and within this, business models.”
The report cited Desso as one of the pioneering companies that is leading the charge to the new world.
“After buying out the company, the top management team at Desso took inspiration from the Cradle to Cradle movement and decided to pursue C2C certification for the entire company. A major spur to innovation and an inspiration for both customers and employees, Desso’s broad adoption of the circular economy principles has been driving top-line growth.”
The report added that after the buyout in 2007, Desso’s market share grew from 15 to 23% and profit margins (EBIT) from 1 to 9%, with about half of this gain attributable to the introduction of C2C principles.
Desso is also phasing in renewable energy sources for each of its production sites – in line with another core C2C principle.