Welcome to the March edition of Future Thinking. This month we turn our attention to the second theme in our climate change series, Sustainable Consumption, including the circular economy & smart cities.
Global consumption is ever increasing with the rise of consumer capitalism and urbanisation. By 2030, the global middle class is expected to reach 5.3 billion people and changes in consumer behaviour and consumption patterns are expected to increase demand for food, water and energy by approximately 35%, 40% and 50% respectively by 2030. At the same time, finite natural resources are dwindling and without a change in behaviour our population in 2050 will need the resources of 3 planets to sustain.
So for us and our children, embracing a circular, sustainable economy and living within smart cities is a matter of survival. Resource productivity, efficiency and waste elimination will have enormous impact & externality benefits for investors able to deploy & scale physical, digital & biological solutions to recycling and upcycling.
Creating sustainable supply chains and new manufacturing methods, value chains will allow us to maintain productivity and create new opportunities in everything from FMCG to fashion.
Thank you for joining us on this journey.
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Explaining the Circular Economy and How Society Can Re-think Progress
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FPC's Focus on Tackling Climate Change
Future Planet, working in partnership with scientists and founders emerging from the world’s top universities, is seeking those companies best able to meet this challenge and address the $50 trillion market opportunity created by the challenge of climate change.
The very essence of capitalism is to make more from less and the essence of responsible capitalism is to reduce unnecessary consumption and waste. A sustainable approach to emissions, consumption and the environment is not only profitable but will reduce untold suffering for billions of humans and their fellow creatures.
Future Planet brings together the world’s leading thinkers in these spaces and identities companies in focus areas most likely to make a valuable difference. Please read on below to learn more about our particular areas of focus for Energy and Emissions.
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A. Smart Cities
Today 55% of the world’s population lives in urban areas, with this share expected to grow to 68% by 2050. Cities also account for 85% of global GDP generation and are huge collectors of materials and nutrients, accounting for 75% of natural resource consumption. Cities also produce 50% of global waste and 60-80% of greenhouse gas emissions.
A smart city is an urban area that uses different types of electronic methods and sensors to collect data. Insights gained from that data are used to manage assets, resources and services efficiently; in return, that data is used to improve the operations across the city. Indeed, with their high concentration of resources, capital, data, and talent spread over a relatively small geographic area, cities - and particularly 'Smart Cities' - are uniquely positioned to drive a global transition towards a circular economy.
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Watch FPC's Advisory Board Chairman, Lord Norman Foster, discussing the future of cities and the vital importance of sustainability - and the power of spreading knowledge
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B. Fashion
Globally, the USD 1.3 trillion clothing industry employs more than 300 million people along the value chain; the production of cotton alone accounts for almost 7% of all employment in some low-income countries.
Clothing represents more than 60% of the total textiles used and in the last 15 years, clothing production has approximately doubled, driven by a growing middle-class population across the globe and increased per capita sales in mature economies. At the same time, clothing use has declined by almost 40%. It is also estimated that the average American citizen will throw away 81 pounds of clothing this year. That amounts to 26 billion pounds of textiles and clothes ending up in landfills
These developments are mainly due to the ‘fast fashion’ phenomenon, with a quicker turnaround of new styles, increased number of collections offered per year, and often, lower prices.
At the end of last year, Vogue reported that the potential value of fashion’s circular economy could be as much as $5 trillion, according to a new report by a group of high-profile industry and academic specialists. Realising this opportunity requires new ways of thinking, business models and collaboration across the value chain.
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Watch the video above where three McKinsey & Company partners describe how the consumer experience in fashion might change in the coming decade—and how retailers should evolve
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C. Waste
Our relationship with waste, and particularly plastic, needs rethinking. Driven by rapid urbanisation, economic development and changing consumption and production patterns, the amount of single-use packaging is rapidly increasing worldwide.
McKinsey also estimates that more than 90% of companies’ environmental impact comes from their supply chains. Retail firms’ supply chains typically account for 11.5 times each company’s impact. For personal and household goods companies, that figure is 19 times, and for food and beverage companies, it is 24 times.
Across the board, a growing concern for sustainability is changing how companies do business. Whether motivated by consumer demand, moral virtue or business opportunity, traditional priorities such as product quality, operational efficiency and price now regularly compete for attention with concerns such as working conditions and environmental impact.
Governments, businesses, academia and civil society increasingly recognise that a switch towards a circular economy approach to waste is not only important - but vital - to tackle these challenges.
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Challenge Investing
Within our universe, we have a significant number of companies that are helping to profitably address these significant and vitally important global challenges. If you’d like to invest in some of the most promising growth companies based on top research then please don't hesitate to get in touch.
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