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'Circular Economy' Promises Billions: Advocate

Saturday, 26 Jan 2013 | 10:40 AM ET
Ellen MacArthur On the Circular Economy
Dame Ellen MacArthur, chair of the Ellen MacArthur Foundation, tells CNBC why she is a passionate advocate of the circular economy.

Corporations are leaving billions on the table by failing to follow recycling.

That's the message Ellen MacArthur brought back to the World Economic Forum in Davos, Switzerland, with her eponymous foundation's second report: Towards a Circular Economy.

But this isn't about returning soda cans. Shifting toward a circular economy is about, MacArthur says, "changing your business model, changing how you design, your materials, your vehicles, so you can recover the parts or components, so you can sell them or lease them in another way."

"This is absolutely driven by economics," she says. "There is a massive economic opportunity out there to be taken without waiting for government legislation."

MacArthur, better-known as the solo yachtswoman who in 2005 broke the world speed record for circumnavigation of the globe, says she originally took her inspiration from long-distance sailing.

"You take with you the minimum you need for your survival — that's food, fuel, diesel for the generator — and you manage those resources down to the last drop." That notion that supplies are finite, she told CNBC from Davos, "I translate to our global economy."

In 2012, the foundation's first report to the economic conference argued the rationale for transitioning to a circular economy and found that by following proposed models, Europe's manufacturing sector could save some $630 billion in materials costs by 2025.

The new report focuses on consumer goods and finds $700 billion in potential savings in that sector.

"Our global economy is driven by taking material out of the ground, making something out of them, and ultimately they get thrown away," she says. And with the sudden rise of 3 billion new middle-class consumers around the world, that model simply cannot function in the long term.

MacArthur said the UK-based foundation, started with five corporate partners in 2010 including Cisco and Renault, is launching a global alliance of 100 companies in February.

Follow @Matt_Twomey on Twitter.

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