from WILD to CLIC™.

from WILD to CLIC™.

Today, we live in an economy that is characterised by value destruction. It is wildly unsustainable in the way people consume, produce, and organise their lives. We call this Wasteful, Idle, Lopsided and Dirty economy the WILD economy. At Lombard Odier, we believe the economy is already transitioning towards an economic model that is geared towards sustainability, social justice and responsible stewardship of the environment. The vision for that future is clear. It is an economy that is Circular, Lean, Inclusive and Clean and is radically different from where we are today. We call this the CLIC™ economy.

We believe our fiduciary duty is to help our clients mitigate the risks and capture the investment opportunities associated with this transition towards a CLIC™ economy.

 

1. Sustainability-landscape-graphic-V2.png

Source: LOIM. For illustrative purposes only

Our economy must transform to one that is circular, lean, inclusive and clean (CLIC™).

We believe the current global economic model has only scratched the surface of its potential. The transition to a circular economy, with the closing of societal gaps, investment in natural capital and the societal benefits of a cleaner economy should unlock trillions in untapped value. And the opportunities for sustainable growth are massive: unrecycled e-waste contains 17 times the amount of gold as raw gold ore; USD 4.5 trillion in assets currently sit idle and are ripe for exploitation through a more sharing-orientated economy; modest action on gender parity could add USD 12 trillion to the global economy by 2025; and renewable energy often costs less than traditional fossil fuels. 

 
Circular.
Our economy must be weaned off its dangerous dependence on the extraction of virgin raw materials that are used for a brief period of time before being discarded at the end of their all-too-short economic life. A circular economy emphasises the re-use, re-manufacture and recycling of products to extend their economic life.
 
Lean.
We must pass a point of ‘peak stuff’, following decades of economic growth where the accumulation of material assets has been a societal norm. A lean economy focuses on outcomes rather than goods. If the goal is the ability to travel in comfort and on-demand, that goal may be better achieved through on-demand services than by ownership of personal vehicles.
 
Inclusive.
While inequality can act as a hidden drag on growth, greater inclusivity can be a driver of innovation, performance and opportunity.
 
Clean.
The WILD economy costs trillions of dollars a year in health impacts, reduced productivity and missed opportunities. At USD 2.9 trillion per year, the potential returns generated by a clean economy exceeds the USD 800 billion increase in annual investment our analysis suggests is required to decarbonise our economy by more than 260%.
 

Today’s economy is wasteful, idle, lopsided and dirty (WILD).

Today, we extract nearly 265,000 times the weight of the Empire State Building in new resources every year according to our analysis; gender and racial gaps limit economic fulfilment; and fossil fuels’ impact on air pollution, health and natural capital act as a drag on growth. This economic model is based on the destruction of value and is perpetuated through underinvestment in natural, regenerative systems, the discarding of products and materials before they exhaust their economic life and the failure to account for the true social cost of high emitting industries. This model has run its course. 

 
Wasteful.
Every year, we extract around 97 billion tonnes of material from the planet, according to our analysis, equivalent to around half the weight of Mount Everest. Only 9% of this material is recycled, composted or treated for re-use, with the remaining 91% contributing to the unsustainable depletion of our natural resources, as well as threatening biodiversity and natural ecosystems.
 
Idle.
We accumulate goods far in excess of actual requirements – for example, cars sit idle an estimated 92% of the time. The idle economy contributes to value destruction, while the sharing economy could potentially monetise as much as USD 4.5 trillion by making better use of these idle and underutilised assets.
 
Lopsided.
Economic inequality is increasing in most of the major economies around the world. These inequalities exacerbate social tensions and lead to value destruction through missed opportunities and political instability.
 
Dirty.
Since the advent of the Industrial Revolution, fossil fuels have become deeply entwined in our economy. We are currently on track to exhaust our remaining carbon budget (limiting global warming to below 1.5°C this century) within seven years and radical reductions in the level of emissions will still be required to achieve the less ambitious 2°C goal of the Paris Agreement.

 

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