How multi-stakeholder collaboration is transforming green industry to sustainably manage natural capital

 

The projected quadrupling of global GDP by 2060 presents both tremendous risks and opportunities for the sustainable management of natural capital. By 2060, global average per capita income is projected to reach the current OECD level (around US$40,000), bringing with it higher material use from increases in consumption and production—unless there is a transformation to greener economies. Conversely, embracing a circular economy model presents great potential for economic growth, with an estimated US$4.5 trillion business opportunity. However, the degradation of natural capital threatens the ecosystem services on which more than 40 percent of total world employment, or 1.2 billion jobs, depend directly, along with billions more jobs with indirect linkages to natural capital.

 

There are numerous examples of public and private actors beginning to tap into these market opportunities. Below, we feature some of our latest resources and case studies that illustrate the role green industry can play in strengthening the sustainable management of natural capital. However, while much is being done across a variety of different sectors of the global economy, much more is needed to transform industry to become more sustainable and transition from a linear take-make-waste to a circular economy model.

 

Companies of all sizes are increasingly profiting by offering consumers more sustainable products and services. However, the green economy still only represents 6 percent of the market capitalisation of listed global companies, amounting to approximately US$4 trillion. Wood markets in Africa, for instance, are expected to exceed US$100 billion by 2030, but 93 percent of its current wood supply comes from natural forests. Several companies have emerged to respond to increasing demand for more sustainable sources of wood, including:

Likewise, with an estimated growth in demand of 20 million homes each year, global materials use is projected to more than double by 2060. Therefore, new materials and methods are required, with recycling projected to become more competitive than primary extraction. Several companies are tapping into this market by selling green building materials, such as green concrete made from fly ash, recycled construction waste, and interlocking blocks.

Certifications and standards are important means of implementation for the green economy—they provide a mechanism to internalize the environmental costs of production, incentivize producers to improve their environmental track records, and give consumers more sustainable options. Examples of their use are increasing, with the global organic food and beverage market expected to grow 16 percent per year to reach US$327 billion by 2022. Recent research includes a report on the growth of standards, a guide on the costs and benefits of certification, and a handbook on building sustainable supply chains. They also feature case studies, including:

Recent resources also highlight that many corporations define their own standards. Examples include Starbucks’ CAFE practices, Olam's Livelihood Charter, and Mondelez International’s Cocoa Life program. In particular, one report looks into how pollinator-friendly practices can be better integrated into certifications. For example:

By moving towards the circular economy, business can capture significant benefits, including increased growth, competitive advantage, cost reduction, and supply chain and resource security. Embracing a circular economy is also projected to create around 6 million new jobs, along with an additional 18 million jobs if there is a transition to greater energy efficiency and use of renewables. However, despite a growing interest in circularity, efforts to reduce, reuse, and recycle remain insufficient—just 9 percent of plastic produced globally has been recycled. Each year, this plastic pollution results in a loss of US$500 billion to US$2.5 trillion in the value of benefits derived from marine ecosystem services.

 

Transforming economies and industries to become more circular will require collaboration—governments can set targets and establish regulations and policies with financial incentives such as taxes, whereas businesses can drive innovation in product design and services. Together, the public and private sectors can also bring greater financial and human resources to accelerate research and development. For instance:

Plastic is not the only material that needs an improved recycling system. As the circular economy increases our use of renewables, it is also producing waste. PV solar modules, which have a lifespan of about 30 years, eventually degrade, but the capacity for recycling their valuable materials remains limited. There is increasing momentum to change this, but more is needed to deal with PV waste globally—estimated to grow to 60-78 million tons by 2050. Collaboration between the public and private sectors is critical to improve process efficiency, recycling rates, and environmental performance in the waste sector. An example: