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The Five Factors Driving Circularity

Businesses, consumers and governments alike recognize the increased urgency and potentially detrimental impact associated with the looming climate and environmental crises. As awareness grows, governments, NGOs, consumers, industries and investors are all taking action in the form of demands, legislation and financial incentives that drive businesses to circularity.

Circularity comes of age in business

January 31, 2019

In 2010 when Dame Ellen MacArthur established a foundation to improve the way the world manages its resources, she helped advance awareness of circularity to the point where it is a commonly used term today. As the MacArthur Foundation set the stage to deliver more information around circularity, simultaneously, forces were emerging in the greater global environment that are now driving advancements in circularity.

The Newsweek Vantage study, “Going Circular: How global business is embracing the circular economy,” outlines five key drivers of the circular economy:

  1. Climate change – The need for action to halt global warming is dire. The Intergovermental Panel on Climate Change has warned that greenhouse gas emissions must halve by 2030.[1]
  2. Sustainable Development Goals (SDGs) – Companies are increasingly aligning their sustainability goals and reporting with the United Nation’s Agenda 2030, where they outline SDGs. See how circularity contributes to SDG goal 12 for responsible consumption and production.
  3. National regulations and policy – Many governments are introducing guidelines and regulations that align with circularity in areas such as energy conservation, waste reduction and reduced consumption. Learn how one in particular, China’s Blue Sky / National Sword policy which restricts imports of recyclables into China, will affect businesses.
  4. Consumer awareness and activism – A growing awareness of environmental crises has sparked a wave of interest and activism among consumers who are now voting with their dollars on companies that champion circularity in their businesses.
  5. Business continuity – Despite the fact that circular strategies are often driven by corporate social responsibility (CSR) and sustainability teams, the research showed business were also pursing them for return on investment, meaning circularity makes good business sense. Waste diversion activities are one activity that can yield positive businesses results.

These important global trends are encouraging companies to move toward circular economic models. While these trends act on a macroeconomic level, many companies are driven by factors closer to home such as risk of lawsuits, inability to compete, or supply chain disruptions.

To learn more about the drivers of circularity, download the complete Newsweek Vantage report. Or see how UL can help you determine how to start transitioning to the circular economy. 

[1] IPCC (2018). Global Warming of 1.5 Degrees.