The 'Linear Risks' essay demonstrates the real business threats linear economic business practices are creating. These include risks associated with the use of scarce and non-renewable resources; prioritisation and sales of products produced with virgin resources; the failure to collaborate; and failing to innovate or adapt. These are all factors that will negatively impact the ability of organisations to continue business as usual.
More and more companies are confronted with ‘Linear Risks’ like price volatility, supply chain failures as well as fines or lawsuits due to changing legislation. This linear approach does not only cause serious business threats, it also hinders our ability to achieve the Sustainable Development Goals, the Paris Agreement, or close the global circular economy gap of 91% . As these risks are grounded in the linear setup of our economy, we see a need to start a deeper dialogue with the financial and business community on the potential implications with a view to explore solutions.
This essay, co-authored by Circle Economy, PGGM, KPMG, WBCSD, and EBRD, aims to raise awareness and create a constructive dialogue with the financial and business community to better understand and model ‘Linear Risks’ - the exposure to the effects of linear business practices which will negatively impact an organisation’s ability to continue as a going concern. Businesses face these risks if they utilise scarce and non-renewable resources, prioritise sales of new products, fail to collaborate, and fail to innovate or adapt. If unresolved, these could have serious effects on the financial industry and our global economy.
“The good news is that the circular economy can provide a solution to mitigate these ‘Linear Risks’. The circular economy is an emerging economic concept that provides new business models and strategies to continuously reuse materials and resources to their fullest potential and is aimed at achieving development while operating within the boundaries of our planet.” – Arnoud Walrecht, senior manager KPMG Sustainability
We call upon all relevant stakeholders to effectively address ‘Linear Risks’. We suggest four distinct follow up measures:
Building on this essay, we intend to spark further research to develop specific ‘Linear Risks’ metrics and tools that make it easier for investors to account for them in their analysis. And eventually, we hope that ‘Linear Risks’ will become an integral part of decision-making in the financial and business community.
Join Circle Economy, PGGM, World Business Council for Sustainable Development and KPMG at the ‘Linear Risks’ Webinar, where you will hear from the experts and you can join the discussion.
Tune in on 28 June 2018 at 3 pm CET
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