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Circular economy has always been about maintaining the value of stocks, be it natural, human, cultural, financial or manufactured capital, with a long-term perspective. A circular economy has evolved through three distinct phases, which today co-exist in parallel: a bioeconomy of natural materials ruled by Nature’s circularity, an anthropogenic phase (Anthropocene: to define a new geological epoch, a signal must be found that occurs globally and will be incorporated into deposits in the future geological record. The 35 scientists on the Working Group on the Anthropocene (WGA) decided at the beginning of 2020 that the Anthropocene started with the nuclear bomb in Hiroshima on 6 August 1945. The radioactive elements from nuclear bomb tests, which were blown into the stratosphere before settling down to Earth, provided this ‘golden spike’ signal. https://quaternary.stratigraphy.org/working-groups/anthropocene/) characterised by synthetic (man-made) materials and objects and a phase of ‘invisible’ resources and immaterial constraints. This chapter will focus on how the anthropogenic phase and the ‘invisible’ resources and immaterial constraints can integrate into a mature circular industrial economy.

The present Circular Economy Package (EC CE Package) as proposed by the European Commission in December 2015, symbolised by its diagram below, turns the linear industrial economy into a circle and adds a phase ‘from waste to resources’ after waste management. It is built on a ‘historic view’ of protecting the environment and efficient waste management, of continuous flow processes and of seeing the future mostly as building on the past. The EC CE Package considers both natural capital (water, bioeconomy) and manufactured capital.

This chapter distinguishes four types of ‘circularity’, which exist in parallel in many parts of the world: (1) Circularity has been inherent in nature—water, CO2, matter and energy—and early humanity—reuse, barter and cascading. Sustainable consumption of natural capital—food, land and water—and the protection of the global commons is a necessity to conserve the carrying capacity of nature. (2) The early circular economy was driven by scarcity and poverty and based on the reuse and repurposing of objects and the skills of do-it-yourself and local craftsmen repairing individual objects—infrastructure, buildings and mobile goods—to maintain their value. (3) The circular industrial economy (CIE) focuses on managing stocks of natural, human, cultural and manufactured objects in a society of abundance. It started in the mid-twentieth century through research on the impact of extending the service life of objects on waste, jobs and energy and material resource. This research into an industrialisation of reuse, repair and remanufacturing showed the potential of the CIE as an alternative to the linear industrial economy. (4) The Performance Economy (PE) integrates the principles of the CIE and in addition retains the ownership of objects and as a consequence internalises the costs of liability, risks and waste. The PE sells the performance or function of objects by, for example, renting or leasing instead of selling them. Liability and control are redefined between owners and users (stewardship). Its fields of activities are broader and more competitive than those of the CIE because it embraces systems solutions and exploits prevention and sufficiency, in addition to efficiency and strategies.

A new relationship with our goods and materials would save resources and energy and create local jobs, explains Walter R. Stahel.

The present industrial economy, which has developed over the past 200 years in today's industrialised countries, is based on the optimisation of the production process in order to reduce unit costs and thus overcome the scarcity of goods of all kinds, from food to shelter to durable goods, which was the norm 200 years ago. A service economy is fundamentally different from the industrial economy in that its main objective is to maintain or increase total wealth and welfare over long periods of time. The holistic vision of a sustainable society was already at the base of the movement that coined the English term 'sustainability' in the early 1970s: the Woodlands Conferences in Houston, TX, and the related Mitchell Prize Competition. The consumer-turned-user gains a high flexibility in the utilisation of goods as well as guaranteed satisfaction at a guaranteed cost per unit of service.

Over the last few years, the political discussion on global change has become focused on the Intergovernmental Panel on Climate Change (IPCC) reports and anthropogenic CO2 emissions, as well as on scientific data of climate change, and on new rules and regulation. This paper puts CO2 emissions into the wider context of sustainability. This broadens the view and changes the focus to issues of global ethics and the necessity for industrial countries to drastically reduce their resource consumption. Insurance companies can influence global climate change (GCC) directly through their investment and underwriting strategies, but also in daily operations. An overview and examples are given in the paper. The biggest impact insurance might have is in helping to speed up the adaptation to GCC, for instance by making available its pool of knowledge in prevention measures through risk engineering services. By promoting a stricter application of the concept of “insurability of risks”, politicians could exploit the link between insurance, technological innovation and sustainable development to develop numerous opportunities within the market economy. A rapid adaptation to the challenges of GCC will give industrialised countries a competitiveness pull, or enable less developed countries to leapfrog industrialised countries. But the key to a new vision of the future may be the development of a holistic view of nature, man and climate, and science and technology as a source of innovative ideas and solutions.

The performance economy is a concept which goes beyond most interpretations of a “circular economy”: the focus is on the maintenance and exploitation of stock (mainly manufactured capital) rather than linear or circular flows of materials or energy. The performance economy represents a full shift to servicisation, with revenue obtained from providing services rather than selling goods. While the form of industrial economy which has dominated the industrialised countries since the industrial revolution is arguably appropriate to overcome scarcities in a developing economy, the performance model is applicable in economies close to saturation, when the quantities of new goods entering use are similar to the quantities of goods being scrapped at the end of life.

From an economic point of view, the industrial economy is efficient to overcome situations of a scarcity of goods. From a technological point of view, the resource efficiency of the manufacturing processes of the industrial economy has been permanently improved during the last 200 years. In addition, cleaner processes have been developed. However, from an ecologic point of view, an increasing world population with increasing consumption has produced a “global footprint” which approaches the carrying capacity of the planet. A circular economy and its high-value spin-offs—a lake economy and a performance or functional service economy—can fulfil customers' needs with considerably less resource consumption, less environmental impairment in production an, d considerably less end-of-life product waste, especially in situations of affluence, when a considerable stock of physical goods and infrastructures exists. Also, in situations of a scarcity of natural resources, both energy and materials, often cha...

Both the public and the private sectors have responsibilities for managing the risks associated with new technologies. This article is about the interplay between three key concepts: the insurability of risk; innovation; and the broader framework of sustainable development. It is based on the recent EU INTEREST project which addressed the role the insurance sector and insurance-based mechanisms might play in relation to innovation which promotes, or challenges, sustainable development. The project cast light on three issues: opportunities for promoting sustainable development through innovation by adjusting or sharing the responsibilities of private sector actors, regulators and policymakers; promoting sustainable development innovation by using risk management mechanisms from insurance in other domains or by the insurance sector using a wider set of tools to manage novel risks; and policy options for the complementary use of insurance-related and other risk management mechanisms.The article begins by considering, at a general level, the interplay between insurability, innovation and sustainability, before moving on to consider five specific contemporary case studies: the development of GM crops; the risks associated with xenotransplantation; nuclear power; the tapping of freshwater submarine springs in the Mediterranean area; and the management of flood risks. The paper then draws out broader conclusions about the use of risk management mechanisms to promote sustainable development innovation. It concludes by considering implications for policymakers and insurers. The Geneva Papers on Risk and Insurance (2003) 28, 394–412. doi:10.1111/1468-0440.00233

This is one of the key questions studied in the INTEREST project, which is presented in one of the contributions to this edition of The Geneva Papers. 1 The concept of the "insurability of risks" can be defined as the "natural borderline" between the market economy and nation states: risks that can be insured need not be legislated; uninsurable risks, however, have to be dealt with by nation states. But insurability can also be regarded as the link between technological innovation and sustainable development, as shown in Figure 1

There are clear indications that the present “old” industrial economy needs a serious adjustment to become compatible with the aims of a sustainable society. The main issues involved are the time factor, resource productivity and socio-cultural ecology.-the time factor: sustainability is a long-term societal vision concerned with the stewardship of natural resources and assets in order to safeguard the opportunities and choices of future generations. The industrial economy is often limited to a short-term optimization of throughput in monetary terms. Changing course towards a more sustainable society means to introduce the indeterministic time factor into economic thinking, which again implies an indeterministic vision of economics and the capability to deal with uncertainty.-resource productivity: in the present industrial economy, micro- and macro-economic success is directly coupled with resource flows (flows of matter and energy), due to its linear structure. The per capita resource consumption of this system cannot be generalized to the less developed countries without a world system collapse. In order to become sustainable, industrial economies must operate at a much higher level of resource productivity, i.e. be able to produce the same utilization value out of a greatly reduced resource throughput1. This change of course can be achieved by decoupling economic success and resource throughput - one way to do this is to change to a service economy, in which the measure of success refers to the performance of assets (stocks) instead of flows, and to stock utilization (Giarini and Stahel, 1989/93).- social and cultural ecology: the industrial economy has been largely technology-focused, using monetarized values as its main yardstick. A sustainable society is result-focused and based on social and cultural values (non-monetary assets), as well as economic values. Changing course towards a more sustainable society means to take into account social and cultural factors as peers to economic ones. The role of money still needs to be better understood and accepted, but the creation of wealth will increasingly depend on nonmonetarized assets and activities.This adaptation corresponds to a fundamental change, or paradigm shift, as the objectives of a service economy are quite different from those of an industrial economy: to maintain or increase total wealth and welfare, i.e. the monetary and non-monetary assets of society, over long periods of time. Its focal point is the optimization of utilization, i.e. of the performance and the results achieved with goods, rather than the goods themselves. The central notion of economic value in the service economy is the value of utilization over time, in contrast to the momentary value of exchange at the POS (point of sale) in the industrial economy (the added value system is only a subsystem of a larger economic concept). Similarly, quality in the service economy is defined as long-term optimization of system functioning, not as a momentary quality at the POS.For this paradigm shift towards a sustainable society, new tools are needed to control liabilities and simultaneously speed up innovation in commercial and technical areas, and to provide benchmarks for assessing new solutions. Insurance is maybe the only quick way to provide free-market safety nets for real innovation, and the concept of insurability is probably the most efficient free market assessment tool to chose between different options. This means that insurance and insurability could play a key role in the transition towards sustainability. But as a higher resource productivity also induces reduced costs (the “double dividend” of reduced resource procurement costs and reduced waste costs), insurance could even be the hidden joker to achieve a higher and greener economic competitiveness.Today, only few people in insurance, politics or the economy are aware of these links and opportunities, which this paper will try to show.

The present economy is not sustainable with regard to its per capita material consumption in the industrialized countries. A dematerialization of the economy of industrialized countries can only be achieved by a change in course, from an industrial economy where success is measured in throughput and its exchange value, to a service economy where success is measured in wealth (stock) and its usage value. Wealth management, new corporate and industrial design strategies and different economic policies can lead to a higher sustainability as well as an increased international competitiveness due to a substantially higher resource productivity. The term ‘service economy’ refers not to the tertiary sector, but to an economy where the majority of value is created by services and the majority of jobs are in service activities.

The vision of sustainability can be compared with the problem of crossing a shallow river in which stepping stones are hidden. The service economy is the junction where sustainable production and sustainable consumption meet, for sufficiency solutions are of interest only to economic actors in a service economy, where they enable an income without resource consumption. The key differences between the commercial strategies of selling performance and selling products, which are the differences between the industrial economy and a service economy, are summarized. A new industrial policy can best promote sustainability by removing obstacles that hinder sustainability and by creating incentives that foster innovation towards more sustainable solutions. Sufficiency and prevention solutions are the most efficient strategies to achieve a higher sustainability and ‘wealth without resource consumption’. Systems and systemic solutions are the most effective among the efficiency strategies, as they enable a reduction of volume and speed of the resource flows.

The dominating concept of sustainable development encompasses three dimensions of welfare — economic, environmental and social. It has its origin in forestry management and is of a static nature.

Expert managing of the performance of physical assets over time in the Lake and the Loop Economy, in the best cases, can achieve a triple-win objective with regard to sustainability: delivering a major contribution towards a low-carbon economy, substituting renewable resources (labour) for non-renewable ones (material and energy) and increasing the resource productivity of jobs (a higher man-hour-per weight ratio).

The industrial economy creates wealth through the optimization of production processes and related material flows up to the point of sale; more growth means a higher resource throughput; a decoupling of growth and resource consumption is not possible. The shift to a more sustainable economy, to create wealth with substantially reduced flows of materials and energy, needs new business models. This chapter shows new business models to achieve the EU Lisbon objectives for 2010 — more growth and more jobs — while simultaneously reducing the resource consumption of industrialized countries. The new business models are grouped under the name of the performance economy, there common denominator is that they enable entrepreneurs to achieve a higher competitiveness with greatly reduced resource consumption and without an externalization of the costs of waste and of risk. The change from an industrial to a performance economy is full of opportunities but also obstacles. This chapter summarizes some of the major issues involved in such a shift; many others depend on the economic sector concerned and the national framework conditions in place. It also proposes two new metrics to measure the path towards the sustainability of corporations and to give sustainable investors a reliable guide for historic analysis and future projections.