Prof. Dr. Martin R. Stuchtey on How a Circular Economy will Save the Planet

Why should this topic be on every company's agenda? Or to put it another way: Why is it worthwhile?

Right now and palpably, we are confronted with a dual crisis. An immediate political crisis that has thrown us back into an era of resource competition in a polarized world, and an environmental crisis. Whilst different in origin they lead us to the same resolution: We must urgently embark on a collective journey to fundamental and systemic change replacing linear, extractive, and non-inclusive patterns of production and consumption. This is the cheapest and fairest way to attain energy and resource independence, and it addresses the impending environmental crisis. The extraction and refinement of natural resources causes 50 percent of global greenhouse gas emissions and 90 percent of global biodiversity loss and water stress. Resource use, climate change, and biodiversity loss go hand in hand. With the levers of a Circular Economy, we can address these crises simultaneously – and thus also contribute to achieving climate targets. As a society, our ability to embrace a Circular Economy based on the example nature holds up to us will be a key success factor: regenerative, circular, resilient.

The extraction and refinement of natural resources causes 50 percent of global greenhouse gas emissions and 90 percent of global biodiversity loss and water stress.

What are the biggest challenges?

Our current economic system favors linear, resource-intensive business models. We need to see a realignment of financial incentives, including taxes, subsidies, and fines for environmental damage, to support climate- and resource-optimal economic decisions. In other words, we need to fine or reward economic actors according to their resource use and environmental impact. The issues ahead of us cannot be solved alone. To decouple resource consumption from economic growth, supply chains must be reconfigured, and stakeholders must come together to find ways to create value within planetary boundaries.

How would you convince people who are still critical of the topic?

The century-long task of dematerializing the economy is not only the innovators' best friend, but also the investors' and, above all, society's best friend. We have to make the leap today, or else others will do it.

A thought-leader, book, or podcast you would recommend?

To understand the systemic nature of transformation ahead of us: Maja Göpel's The Great Mindshift and Donella Meadows' Thinking in Systems. For Circular Economy and resource efficiency analyses, I have done my best to outline the way forward in A Good Disruption video and book.

A Circular Economy cannot be implemented in one country alone. We need to join forces in Europe and worldwide, guided by enabling policies.

What are the key requirements for the Circular Economy to succeed and eventually become the norm?

Technology is a necessary condition for circular value creation against the backdrop of climate change, biodiversity loss, and inequality – but it is not the only condition. We must use our productive powers to decouple material/energy consumption and GDP generation not only on a statistical level, but also on a real economic level. A Circular Economy cannot be implemented in one country alone. We need to join forces in Europe and worldwide, guided by enabling policies. The idea is to provide incentives for extending the product life cycle, as well as reusing materials and moving from selling more products to offering high-quality services. This should be done through a combination of taxes and strict design requirements for products brought to market. My preferred first-best policy would be a “producer ownership” market rule, which would compel all producers to take back their products and only sell the use rights. Every company would immediately turn into a circularity champion.