Jean Olemou / September 18th, 2020
The following is adapted from a keynote presentation made at The Roshem Regeneration Summit on September 14th, 2020 by Jean Olemou, Co-Founder and Principal at GreenDev, a Toronto based impact-investing firm focused on advancing the circular economy transition in frontier and emerging markets
The Status Quo is Broken – Addressing the Limitations of Shareholder Capitalism
Over the last nine months, the COVID-19 pandemic has shed light on the limitations of shareholder capitalism. All the challenges we thought were a long time away have shockingly accelerated and shown up on our very doorstep. Our dominant linear economic model has exposed its flaws – the current approach of Take-Make-Dispose cannot sustain itself and is rife with vulnerabilities.
Our linear economic system is built on optimizing production and supply chains with limited margins for errors. It is efficient at scale, but as this pandemic has revealed, it is quite fragile.
For example, take the medical equipment manufacturing sector. It has a distributed value chain where different parts of the same piece of equipment may be built by manufacturers situated worldwide. A small disruption can derail the entire value chain, as we have seen during this COVID19 crisis when it comes to medical ventilators.
We’ve seen the same issues in the food system. The fact that centres of production are located far away from customers means the entire value chain is deeply reliant on transportation networks and open borders.
The dominant linear economic model has concentrated power in the hands of shareholders. However, this pandemic has highlighted how crucial it is to consider everyone’s needs as our security – economically and socially – is interconnected. Therefore, companies should no longer prioritize shareholders’ interests alone but give adequate consideration for the needs of workers, communities and countries. That means we can no longer think about generating shareholder returns by cutting costs indiscriminately like workers’ wages. If those workers don’t have essential protections or adequate pay, it puts our entire economy at risk. Without decent working conditions, workers may be hampered in their ability to produce critical products to protect the public against the virus.
As the above examples highlight, we need a system reset – one where we prioritize environmental and social progress alongside economic growth.
This is where the power of a circular economy approach comes in.
How can the circular economy make us resilient to future crises and build back better?
This pandemic poses important questions for how we will pivot our business practices to address new priorities such as immediate economic recovery, increasing resilience, reducing our dependence on global supply chain systems, addressing economic inequality and taking action on the existential threat of climate change. Investment in circular business models that generate positive environmental and social impacts alongside commercial returns can be the silver bullet for these wide-ranging goals.
On the one hand, the circular economy supports immediate economic recovery through job creation, business development, and innovation. On the other hand, a circular economy approach will allow us to address challenges like climate change by reducing greenhouse gas emissions and limiting natural resources exploitation.
People are starting to realize that the circular economy holds the key.
On June 13th, more than 50 leaders – CEOs of some of the world’s biggest companies, policymakers, philanthropists, academics, and other influential individuals stated, “it is time to step up, not step back.” They reaffirmed their commitment to build an inclusive and resilient economy through a circular and regenerative economy approach.
Advancing a circular economy will allow us to build back better through 3 main avenues:
- Rethinking product design
- Thinking globally and acting locally
- Engaging in intersectoral collaboration
Rethinking Product Design
During this health crisis, we have seen how the current approach to building medical equipment makes it difficult to dismantle, refurbish, remanufacture or repair since the value chain is distributed. If you are in a country where they don’t make a specific part, the current crisis has severely delayed your ability to build equipment because of border closures and reduced economic activity. We need to move towards the ability to repurpose existing production facilities to pivot from producing one product to another – like what we have started to see from the automotive industry during the pandemic. Investing in design strategies that enable the repurposing of materials will allow us to fulfill the second principle of a circular approach – keeping products in the system for reuse. By reusing products, we are reducing the demand for new materials and the negative externalities related to their production
Thinking Globally and Acting Locally
Going back to an earlier example on the food supply chain – we see how important it is to be self-reliant and how a decentralized agriculture sector can ensure food security locally. COVID19 has brought on border closures, which has constrained seasonal agriculture workers’ ability to travel to many countries. Without these workers, nations have lost their crop yield, and this has affected local food security. This crisis has put into sharp relief the need for a more adaptive and resilient model for food supply chains.
Let’s be clear – international trade and the benefits of globalization are still necessary. However, building local capacity at the regional and municipal levels will allow our societies to function and withstand disruptions on the horizon, such as climate change and future pandemics.
Engaging in Intersectoral Collaboration
It doesn’t matter if you are the largest government or the biggest company on the planet – this pandemic has completely up-ended business as usual. Collaboration across sectors is more critical than ever to move the needle on the issues that matter most to us to build back better. The most effective to create impact is to have all stakeholders in the value chain work together. That means partnerships between public institutions, the private sector, non-governmental organizations and social movements. By strengthening relationships across diverse sectors, we can achieve long-term resilience that is only possible when we share resources, leverage everyone’s unique expertise and coordinate efforts to avoid duplication and unintended consequences.
Actively engaging all stakeholders can help us go the distance and maximize benefits for all. That’s the way we achieve change at scale and build back better for everyone.
Jean Olemou is Co-Founder and Principal of GreenDev, an impact investment management firm dedicated to investing in the circular economy transition throughout the Global South, especially in Africa. GreenDev is especially focused on opportunities that commercialize innovation, circular business models and sustainable infrastructure in the waste management value chain.
Prior to GreenDev, Jean worked in consulting and investment banking for global organizations in the energy and infrastructure sector, covering all the stages of investing: sourcing, diligence, structuring, and execution.
Having lived and worked throughout Africa, Europe, and the Americas, he has observed how compounding economic and social challenges hold communities, cities, and nations back. As a result, Jean has focused his attentions to aligning investment with positive social and environmental impacts in emerging and frontier markets. He has worked primarily with buy-side and sell-side investors, including developers, infrastructure and pension funds, independent power producers, strategic investors, and government agencies. Through his international work on strategic investments in sustainable infrastructure and energy assets, Jean translates challenging circumstances into opportunities to foster economic and social inclusion.
Jean was featured by the 100 Magazine as a 2020 Top Canadian Professionals. He was named as a Global Talent and invited to attend the United Nations Sustainable Development Goals innovation lab (UNLEASH 2019) in Shenzhen, China. Jean is a sought-after expert advisor, public speaker and has a track record of contributing to thought leadership such as recent article ‘Post COVID-19 – The Circular Economy Critical to Building a New Normal.’ Jean was recently interviewed at the Global Landscape Forum in Luxembourg in November 2019 on “Rebooting recycling” and recently provided expert review of a UN Organization report on the future of circular economy globally.