Why Ellen MacArthur is still going round in circles

Peter Day
Global business correspondent

image copyrightGetty Images
image captionEllen MacArthur has successfully switched from the world of sailing to that of business

For 200 years of the industrial revolution, much of human kind has prospered as a result of one particular business model.

We dig up finite raw materials, turn them into products, and after they have brought utility to the consumers who buy them, the things are thrown away as waste.

Simple, linear, straightforward... and now being seen as horribly wasteful.

Now that we are well into the 21st century, many people are becoming more conscious of living in a finite world.

And one of them is the British record-breaking, solo round-the-world yachtswoman Ellen MacArthur.

During her circumnavigation voyage in 2004-5, she became very aware of self sufficiency. Everything she needed for her 73-day trip had to be chosen and carried on her yacht. This practical fact led her to wider considerations.

It brought home to her the realisation that the globe we live on was no different from her trimaran. The earth carries everything with it necessary for life. And we are using up much of that everything, very fast.

Ellen MacArthur was awarded a damehood as soon as she arrived home, part of a long tradition of British circumnavigation. She is a self-possessed and thoughtful woman.

The ideas that had taken root sailing round the world were translated into an organisation launched in 2010 - the Ellen MacArthur Foundation. It is devoted to what is called the "circular economy".

Big implications

The concept has been developing for some time. In particular, the Swiss architect and economist Walter Stahel put forward the concept of a "cradle to cradle" economy in a paper he wrote for the European Union in 1976.

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image captionEllen MacArthur's interest in the circular economy theory was sparked by her sailing exploits

In contrast to the conventional economic system based on taking, making and disposing of things, he described a non-linear economy running in loops, reusing materials, and with big implications for job creation, competitiveness, resource savings and waste creation.

Mr Stahel went on to found the Product-Life Institute in Geneva in 1982, refining the idea of the circular economy and attempting to eliminate the idea of "waste" altogether.

There is no waste in nature, goes the argument... waste is food. This is a revolutionary (and frightening) way of thinking about our human all-consuming world.

Other ideas have converged around this concept - a closed-loop system whereby factories send nothing to landfill and reuse their products at the end of their life.

The key proposal is that products should be leased by manufacturers, not sold to consumers. In this way, companies become service providers retaining overall ownership of the things they make. Tyre manufacturers selling travel kilometres, not tyres, for example.

Limited resources

There is also the concept of "natural capitalism", evolved by Paul Hawkins and Amory and Hunter Lovins, and set out in their book of the same name in 1999.

They argued that the world view of most corporations has not changed since the start of the industrial revolution. But 200 years ago natural resources were abundant, and it was the availability of labour that was the thing that limited production.

image copyrightAFP
image captionCarmaker Renault is one company which is backing Ellen MacArthur

In the 21st century, things are different - labour is abundant, but it's natural capital that is running short: natural resources and our environmental support system.

For a long time, the proponents of natural capitalism and the circular economy were voices crying in a business wilderness.

One corporate leader who did take notice was the founder of one of the world's biggest carpet companies, Interface.

The late Ray Anderson had what he called an epiphany 20 years ago, when his company was already 21 years old.

It was then that he read an earlier book by Paul Hawken - The Ecology of Commerce. This argued that only industry leaders could reverse the destructive harm industry was doing to the planet.

Ray Anderson was stunned by this. In response, he turned it into a company cause, pledging to turn Interface into a sustainable company without any negative impact on the environment by 2020.

Sadly, he died in 2011 before that could be achieved, but the mission continues. And other businesses are waking up to this imperative.

Changing attitudes

Now, back to Ellen MacArthur in her Foundation's headquarters in what is said to be Henry VIII's former gunpowder store in Cowes on the Isle of Wight. She is a persuasive woman.

Inspired by living alone on her yacht for more than two months, she found herself nagged by the question: how can our world continue to function with the economic model we've been living with for two centuries?

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image captionEllen MacArthur is not a woman for giving up on her plans

Back on land, she asked questions of experts, commissioned weighty research from the consultants McKinsey, and eventually launched the Foundation around the idea of the circular economy.

It is a concept much larger than just recycling, she insists. It's about maintaining the value of everything we use for as long as possible. Inspired by the way there is no waste in nature, it looks for other uses for the by-products discarded during conventional production.

And, as number-crunching by the brain boxes at McKinsey showed, there are huge economic advantages to industry if this is adopted - potentially hundreds of billions of pounds or euros or dollars a year.

The circular economy sounds high-minded but remote from everyday business life. But that is beginning to change. It is now the sort of thing business leaders talk about at the World Economic Forum at Davos, which took place this week.

The significant thing about the foundation is the way Ellen MacArthur has persuaded a clutch of big companies to join her campaign, including Cisco, BT, Renault and Philips.

Another very prominent supporter of the circular economy is Unilever, with a vast global reach for its household goods. Unilever's Dutch chief executive, Paul Polman, says the company has long been concerned about industry's reliance on diminishing supplies of raw materials.

image copyrightGetty Images
image captionBusinesses and consumers are waking up to the need for recycling

"We need a way of decoupling our growth from environmental impact," is how he put it to me. That's why Unilever is backing Ellen MacArthur, and finding ways of putting the circular economy principles to work, factory by factory, product by product.

For the companies lining up behind the foundation, it is - I think - more than just public relations.

They have done the maths. They see the consequences of a growing global consumer society, and they realise that tackling looming raw material shortages (as well as energy and water) requires some energetic rethinking of the way things have been done in business up to now.

But change on this scale is hard to do, especially when big companies have investors breathing down their necks about the quarterly results. Investor attitudes will have to change, too.

Ellen MacArthur and Paul Polman talk to Peter Day about the circular economy in the radio programme Global Business on the BBC World Service. This is already available to listen to via podcast. It will also be broadcast again on Sunday, 25 January at 01:32 GMT and 10:32 GMT.

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