Speech prepared for delivery on International Mother Earth Day at the third presentation of the Environmental Resilience lecture series, co- organised by the Institute of International and European Affairs and the Environmental Protection Agency – Ireland.
In these trying times, when we talk about resilience, most people’s minds turn to how to respond to and recover from the COVID-19 pandemic. It is true that the pandemic brought a lot of suffering. Millions of people have died. The global economy contracted 4 per cent in 2020. Livelihoods have collapsed, with an estimated 120 million pushed into extreme poverty last year.
But resilience goes far beyond COVID-19. This pandemic is but one symptom of our planet’s ailing health. Today, on International Mother Earth Day, we have to think hard on how to radically alter our relationship with nature for the better. Today, we have to turn our minds to solutions to the three planetary crises that threaten our collective future. The climate crisis. The biodiversity and nature crisis. The pollution and waste crisis.
It is only in addressing these three closely connected crises that we can truly build resilience. And, as unsustainable consumption and production is the core driver of these crises, we can only build resilience if we make the entire global economy circular.
I will shortly get to the tremendous potential of circularity to create a prosperous, sustainable and peaceful planet, and the specific actions we can take. First, though, let me run briefly through why we have no option but to change.
Our climate is in serious trouble.
Atmospheric greenhouse gases are higher than they have been in 800,000 years. As a result, the planet is warming. We have already seen disruptive changes in precipitation. Melting of ice sheets and glaciers. More frequent and more intense extreme weather events.
We know we have not done enough, even with the Paris Accord and its goals to limit global warming to under 2oC and pursue 1.5oC. New net-zero commitments covering most of the world’s emissions are coming online, targeting 2050. But current policies are sending the planet hurtling towards a temperature increase in excess of 3oC this century.
Meanwhile, nature and biodiversity are in serious and accelerating decline.
Humans have altered 75 per cent of the terrestrial surface and 66 per cent of marine areas. Around 1 million out of 7.8 million species face extinction. Around 10 per cent of forests have been lost since 1990.
Again, we have not done enough. In 2010, we agreed on a series of biodiversity targets to be reached by 2020. We met none of them. The bottom line is that we cannot survive without nature and biodiversity. We cannot grow food, regulate the climate, filter water and so much more without it.
Finally, humanity’s toxic trail of pollution and waste is growing.
Every year, pollution causes about 9 million premature deaths, primarily from dirty air. Up to 400 million tonnes of heavy metals, solvents, toxic sludge and other industrial wastes enter the world’s waters annually. An estimated 2.01 billion tonnes of municipal solid waste were generated in 2016; this is expected to grow to 3.4 billion tonnes by 2050 if we keep going as we are.
Have we done enough? You know the answer.
These three crises have devastating economic and social implications.
In the Sustainable Development Goals, we have set lofty ambitions to create a planet of peace and plenty. But the accelerating planetary crises are undermining hard-won development gains and impeding progress.
For example, even small increases in temperature increase risks to health, food security, water supply and human security. In 2018 alone, damages from climate-related natural disasters cost about USD 155 billion.
Already, the loss of animal pollinators, critical to more than 75 per cent of food crops, threatens annual global crop output worth between USD 235 billion and USD 577 billion.
Meanwhile, since the mid-twentieth century, at least 40 per cent of all intrastate conflicts have been linked to the exploitation of, and competition for, natural resources.
The burden of this environmental decline is felt disproportionally by the poor and vulnerable. And future generations will suffer even more.
The way we produce, use and discard is responsible for these crises.
At the heart of these crises lies our unsustainable modes of consumption and production. Metals. Wood. Food. Fibre. Electronics. You name it, we waste it. We are throwing away money, throwing away resources, throwing away our chance for a future of human health, prosperity and equity.
Only a root and branch transformation of the way we produce and consume will enable humanity to achieve well-being for all within the Earth’s finite capacity. So, it is time to change our ways, starting this year. Through a green pandemic recovery. Through stronger Nationally Determined Contributions that make the Paris Agreement goals reachable. Through an ambitious new biodiversity framework, under which commitments are made and actions taken by the whole of government, economy and society.
Scaling up circularity and sustainable consumption and production (SCP) has to be at the heart of these processes.
In every single sector, circularity and SCP can deliver enormous environmental, economic and social benefits. Consider just some of the following.
Applying circular closed-loop approaches and demand side measures to the processing of steel, aluminium, cement and plastic could achieve as much 56 per cent of the EU’s 2050 emissions reductions for industry.
The global clothing industry emits more greenhouse gases than international flights and maritime shipping combined. It is responsible for growing land conversion. By developing circular design measures, using secondary raw materials, and providing consumers with easy access to re-use and repair services, the circular economy can cut these emissions and the use of land to grow materials.
Promoting reparability, upgradability, availability of spare parts, software support and material recovery in electronic equipment can contribute substantially to the fight against climate change and reduce the need to gouge new materials from the Earth. Collection and recycling only applies to 17.4 per cent of e-waste globally produced. In this regard, UNEP is supporting Nigeria – a major importer of used electronics – to develop a circularity model for the electronic value chain, which can be replicated across Africa.
Circularity can also build the resilience of our economies.
The pandemic has shown the fragility and the limited flexibility of many global supply chains.
For example, countries such as Myanmar, Cambodia and Bangladesh, for whom textile products represent around 84 per cent of exports, have seen orders worth USD 1.4 billion cancelled during the pandemic.
Current industrial agricultural models, meanwhile, rely on fossil fuels, practices that damage ecosystems, supply chains that involve long-distance transport, and seasonal foreign workforces. As a result, lockdowns stressed food supplies in many places.
Circularity can provide credible solutions to strengthen such fragile systems. In food systems, for example, large-scale investment in regenerative, peri-urban production can bring food closer to consumers, reduce environmental impact and fragilities. As the Ellen MacArthur Foundation’s research has highlighted, a circular scenario could lead to a 50 per cent reduction of pesticides and synthetic fertiliser use by 2030 in Europe, compared to 2012. At the same time, it would result in a 12 per cent drop in household expenditure.
Friends and colleagues, with many benefits up for grabs, we are seeing a surge in circularity related initiatives.
The EU’s Circular Economy Action Plan foresees a cleaner and more competitive Europe. The African Circular Economy Alliance is concentrating on a low-emission and climate resilient model that emphasizes green innovation and job creation. The Latin American and Caribbean Circular Economy Coalition and the Global Alliance on Circular Economy and Resource Efficiency, both launched in February 2021, are working in the same space.
There are many country-level initiatives and promises. Cities are also doing a great deal. The City of Phoenix, for example, increased recycling of its waste to 36 per cent by mid-2019, from only 20 per cent in 2015. In Accra, Ghana, 95 per cent of all electronic and electrical waste, much of it from Europe, is collected. As most of this collection is informal, with attendant health impacts, efforts are underway to train workers to safely and effectively recycle this waste.
But we need to accelerate the transition. So, let me offer up four suggestions on how we can create the necessary conditions to shift to circularity.
First, governments should use the pandemic recovery to shift gears to circularity in 2021.
UNEP research shows that some investment has already gone to a green recovery.
In 2020, about USD 86.1 billion was announced globally for green transport infrastructure. This is a smart move, as a shared and circular mobility system would mitigate all three crises and potentially reduce the cost of travel by 70 per cent.
Green building investment received USD 35.2 billion, largely for building upgrades and energy efficiency. Such funds could also promote new building techniques or more circular use of building materials.
Investment in green research and development stood at USD 28.9 billion in 2020. These investments can be instrumental in supporting innovative technologies and solutions that support circularity in agriculture, industry and other areas.
However, we must realize that according to a UNEP assessment, only 2.5 per cent of all spending and 18 per cent of recovery spending made in 2020 is likely to reduce greenhouse gas emissions. We need more.
Second, we have to reform economic and financial systems.
Again, we are seeing movement on this front.
No debt and equity instruments related to the circular economy existed in 2017. But by mid-2020, ten public equity funds on the circular economy had been launched. According to the Ellen MacArthur Foundation, assets managed through such funds grew from USD 0.3 to USD 2 billion in the first half of 2020, outperforming other funds in the same category.
Other financiers are seeing the way the market is moving. Since 2019, at least ten corporate bonds to finance circular economy activities have been issued. Since 2016, there has been a tenfold increase in the number of private market funds investing in circular economy activities. A similar trend is unfolding in bank lending, project finance and insurance.
Recent research from UNEP’s Finance Initiative tells us the finance sector needs to do three key things to speed up reform.
Such business and investor leadership is essential, but we also need incentives and regulations to create the right conditions.
A major impediment to sustainable design practices is that sustainable products and services are often more expensive. Businesses offering repaired or refurbished products struggle to compete with newly manufactured products, with labour costs rendering their margins too slim.
So, we need to ensure that taxes and incentives drive businesses and others to adopt circular solutions. This starts with putting a price on carbon, phasing out harmful subsidies and redirecting the subsidies towards supporting solutions that contribute to a circular and regenerative economy. Shifting taxation from production and labour to resource use and waste is important. Taxation can be used as a disincentive, for example by adding a tax to products that do not include recycled content.
Third, we need to improve the ability of small and medium enterprises (SMEs) to deal with external shocks by helping them move to circularity.
Across OECD countries, SMEs account for 99 per cent of all businesses. In many regions and cities, SMEs have been the main drivers of job creation. They are the engines of many economies.
But the pandemic has shown how vulnerable SMEs are to global shocks. SMEs are 8 per cent more likely to have temporarily shut down than larger firms. They are 9 per cent more likely to experience a fall in sales than large firms. The longer the crisis persists, the more likely that decreased liquidity will translate into insolvency and firm exit.
UNEP has started working with Kenya, South Africa and Tunisia to support industries, and particularly SMEs, to shift to new circular business models. But given SMEs’ central role in our economies, we should all engage in removing the three key barriers they currently face in adopting circular business models.
There are financial barriers. So we need public and private financial institutions to identify innovative solutions that unlock sources of capital for SMEs.
There is a lack of government support. We need stronger policy signals and support to reward SMEs, such as targeted funding opportunities, training or public procurement.
There is a lack of technical skills. We need to invest in creating institutions that can support SMEs on adopting circular business models, for example by expanding the Resource Efficient and Cleaner Production network – a network of institutions that UNEP and UNIDO initiated.
Four, we have to manage the shift to support industries, people and resource-producing countries.
If we want the transition to a circular economy to stick and be fair, it must create new and decent jobs, and protect the world’s poor and vulnerable.
The good news is that production in a circular economy is more labour-intensive than in a linear economy. The Club of Rome found that full adoption of circularity would create over a million jobs in just five European nations by 2030.
But there will also be losses as certain sectors wind down. Countries can build on the experience of managing transitions for workers, such as in The Netherlands. From 1963 to 1974, the country closed 12 coal mines and committed to finding fair and just solutions for the 50,000 workers affected.
It is also important to consider the implications for low-income, resource-dependent countries. For these countries, governance strategies can capture a greater share of value of resources, and diversify their economies, including into emerging sectors such as recycling and renewables.
Trade agreements can help by integrating support for circularity into development assistance, such as Aid for Trade. This assistance could help countries transition to circular economies and take advantage of the opportunities presented by the shift to circularity in major trading partners.
Shifting to circularity is a complicated task. And it is one that needs a whole-of-society approach. Today, we have assessed the role of governments, the private sector and financial institutions. But we should not forget that labour organizations, scientific and educational bodies, media, households and civil society groups are also well positioned to initiate the transformation to circularity. They should all be empowered to be part of the solution.
A carefully managed transition to circularity and sustainable consumption and production will be critical as we seek to deliver on the Sustainable Development Goals, the Paris Agreement, and the biodiversity and pollution agendas. It will be essential to recover from the pandemic in a way that does not store up more problems for the future. It will be essential to lift people out of poverty in a way that keeps our species within planetary boundaries. It will be essential to the resilience of our economies.
Inger Andersen, Executive Director