Circular Supply Chains Inc.

Setting the stage

We talk a lot about sustainability. Climate change, greenhouse (GHG) emissions, carbon footprints and a host of other related topics that bounce around the Internet or become the topic of speakers at countless seminars or conventions around the world and lead us to believe that we’re actually doing something to combat these demons or, more often than not, what we should be doing. So, the question remains, what are we actually doing to make a difference? And a big enough difference to fend off the threat of global warming?

The 2015 United Nations Climate Change Conference, COP 21 or CMP 11 was held in Paris, France from 30 November to 12 December 2015 and on its final evening – to claps, cheers and tears – a new landmark deal was born. It was agreed by 195 nations. They will attempt to cut greenhouse gas emissions to a level that will limit the global average temperature to a rise “well below” 2C (3.6F) compared to pre-industrial levels – a level of warming deemed to be the point when dangerous climate change could threaten life on Earth.

Some of it is legally binding within the United Nations framework. The regular review and submission of emission reduction targets will be binding.

So too will the $100bn fund from developed economies to help emerging and developing nations decarbonize their energy mix which means moving away from burning fossil fuels to clean energy sources, such as renewables and nuclear.

What won’t be legally binding will be the emission targets. These will be determined by nations themselves.

Within the agreement the targets are known as Intended National Determined Contributions (INDCs). To date, 187 countries have submitted their INDCs.

Observers have calculated that all of the targets, if delivered, will only curb warming by 2.7C. This is well above, not well below, the 2.0C goal of the Paris Agreement.

This begs the question why the targets themselves are not legally binding under international law.

This relates back to the 2009 climate summit in Copenhagen. Observers say the attempt to impose binding targets on countries then was one of the reasons why the talks failed.

In Paris, a number of big emitting emerging economies – including China, India and South Africa – were unwilling to sign up to a condition that they felt could hamper their economic growth and development and herein lies the conundrum.

What happens next?

Only elements of the Paris pact will be legally binding.

The national pledges by countries to cut emissions are voluntary, and arguments over when to revisit the pledges – with the aim of taking tougher action – have been a stumbling block in the talks.

The pact promises to make an assessment of progress in 2018, with further reviews every five years.

As analysts point out, Paris is only the beginning of a shift towards a low-carbon world, and there is much more to do.

“Paris is just the starting gun for the race towards a low-carbon future,” says WWF-UK Chief Executive David Nussbaum.

Prof John Shepherd of the National Oceanography Centre, University of Southampton, says the agreement includes some welcome aspirations but few people realise how difficult it will be to achieve the goals.

“Since the only mechanism remains voluntary national caps on emissions, without even any guidance on how stringent those caps would need to be, it is hard to be optimistic that these goals are likely to be achieved.”

Reality bites…

Even the most supportive observers accept that it is going to be a very tall order for the world to deliver a package of measures that will result in limiting global temperature rise to “well below” 2C (3.6F), let alone 1.5C, above pre-industrial levels.

Finance departments of governments around the globe are going to have to put decarbonization at the heart of their fiscal policies. Past evidence suggests that this will be a big ask. To date, it has – at best – been on the margins and as soon as there have been wobbles in economic activity, green policies have either been put on the back burner, diluted, ignored or removed from statute books altogether.

There will have to be a paradigm shift in the philosophy of political parties. Lip service and nods, accompanied with a little tinkering will not be enough to deliver the aims of the Paris Agreement.

Campaigners say this is where you come in. Fiscal policy shapes economic activities. Governments, made up from elected politicians, shape fiscal policy. You elect politicians.

Quit talking in circles!

You begin to see what we’re up against; wobbles in economic activity vs. voluntary national caps on emissions. Which do you think will win out every time? What’s wrong with this picture? It’s the same problem that got us here in the first place so, what can we do? It’s nice to talk about change but nothing’s going to change without economic incentives and there seem to be very few “green” initiatives that offer any sort of economic incentives so, what chance do we really have of slowing climate change?

There are several major players developing driverless vehicles and others are producing electric vehicles and these are good steps in the right direction but, why stop there? If we’re truly serious about tackling climate change then we need a paradigm shift in our very thinking and supply chains are as big a culprit as any for GHG emissions and physical waste; much of it from excessive packaging.

The linear take-make-dispose economy, highly successful in delivering economic development throughout the 20th century, is no longer viable for continuing progress in the 21st century. Our current systems of commerce and production processes follow the linear model, in which very little attention is paid to how product — and its components — will be used and reused over and over. The result is most resources are used merely once or for a single purpose and then discarded as waste.

The circular economy is, at its core, an economic innovation opportunity. It is about an opportunity where we are rethinking the business models and material choices we make so products and materials can be upgraded, re-manufactured and kept in production longer, and converting products as they are currently designed and produced and used to new services and revenue models.

All this represents tremendous opportunity for business and the global economy. Shifting to the circular economy could unlock an estimated $4.5 trillion in additional economic growth by 2030 by turning current waste into wealth and could be the biggest economic revolution in 250 years, according to research from Accenture. The circular economy represents a net materials cost savings opportunity of $340 billion to $630 billion annually just within the European Union, according to the Ellen MacArthur Foundation.

Designing a circular system will often require a reconfiguration of a company’s model and business practices. But how exactly does company enter the circular economy and optimize its value over the long-term?

With the technology available today there’s no reason we couldn’t take the physical human component out of the supply chain and focus it on the reverse chain where it will be in much greater demand. Between sensor technologies (IoT), analytics, robotics, driverless vehicles, electric vehicles and the Cargo Carousel System, GHG emissions could be dramatically reduced in many supply chains.

This may sound far-fetched to some but, each of these technologies is already in use today to varying degrees and, if properly combined, could create supply chains of superior safety, efficiency and sustainability while developing the infrastructure for a functional circular economy.

The greatest threat to our planet is the belief that someone else will save it ~ Robert Shaw