What happens to waste in a circular economy?
Waste is but a lack of imagination - much of what we throw away today has value and can be reused.
Jack Dempsey, Fund Manager at Schroders.
Paul Lamacraft, Head of Sustainability Private Equity at Schroders.
Samuel Thomas, Sustainable Investment Analyst at Schroders.
We believe investing in the circular economy offers a multi-decade structural growth opportunity. It enables investors to gain exposure to those companies that not only offer attractive growth and returns, but that also have long-lasting positive outcomes for both people and planet.
The circular economy is a change in economic system. It means moving away from “take-make-waste” practices, where we buy things, use them, and throw them away. Instead, a circular system is one where products and materials are kept in use and production follows a sustainable path that reduces consumption of raw materials.
The key aim of the circular economy is to decouple economic growth from virgin resource consumption. The simple reason being that the world is running out of resources.
We already use 1.7x the resources that the planet naturally regenerates each year and this figure is only going to grow as the global population expands. We are living way beyond our means.
Why waste is a valuable resource
Waste is generally defined as “material or resources that are discarded, unused, or considered to be of no value”.
However, waste is but a lack of imagination. There is very little ‘waste’ in the modern world that is of no value; it is more about having the right infrastructure, regulations and will to capture that value.
This gives us hope that we can improve current waste management practices. On a global level, we currently sit at a powerful intersection of forces – affordable and efficient technology, supportive regulations, and consumer and business demand – that will work to improve circularity, albeit at differing speeds at a regional level.
There are many sources of waste. In this piece we will focus on municipal solid waste given it’s the area of the waste industry with the best data and which often receives the most attention.
What is municipal solid waste (MSW)?
MSW is rubbish that comes from households or businesses (restaurants, hotels, offices). It typically consists of papers, plastics, discarded food, garden waste and other discarded items.
The world generates c.2 billion tonnes of MSW annually. This is the equivalent of 111 million rubbish trucks per day. As economies and incomes grow in emerging markets, this number is increasing rapidly.
By 2050, with a global population of c.10 billion, it is expected that the world will produce 3.4 billion tonnes of MSW annually (a 70% increase from today).
This, however, doesn’t tell the entire story, as averages often hide the underlying dynamics.
On one end of the spectrum, you have the North American region with c. 530kg per capita per annum and at the other you’ve got 168kg per capita in sub-Saharan Africa.
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