Europe feels a long way away from the vibrant and teeming Yokohama waterfront on the edge of Tokyo Bay. Since the 1970s, the story of the world’s economy has been dominated by vibrant and dynamic East Asia, from Japan and South Korea through to the earth-shaking rise of China.

Europe, by contrast, can seem far less vital, a land of fading glories and interesting ruins far from the action.

But does this ignore Europe’s coming great competitive advantage as we begin to build a post-carbon economy? This was a question in the air in Yokohama at the World Circular Economy Forum, co-hosted by the Finnish Innovation Fund Sitra this fall.

East Asia’s extraordinary growth has been remarkable and transformative, lifting many millions out of poverty and thrusting the world into the digital age. The world faces a different set of existential challenges, as human-made climate change threatens lives, ecosystems and entire cultures. We face an urgent need to rework our economies so that we put less carbon into the atmosphere and simply produce less stuff. We need a circular economy that reuses, reworks, recycles and rethinks.

We face an urgent need to rework our economies so that we put less carbon into the atmosphere and simply produce less stuff. There is an inevitability about this. First, this is because the climate challenge is urgent and compelling. The world is starting to turn away from economies and companies built on carbon and waste. Second, because resources are increasingly scarce: their availability or security cannot be taken for granted, whether it is water or cocoa, rare earth metals or wheat. Third, because the challenge of dealing with waste affects lives and our planet, whether it is plastic in the ocean or toxins leaching into water supplies.

Good business

The fourth and most intriguing reason, however, is that it is good business. Achieving the Sustainable Development Goals opens up an economic prize estimated at more than $11 trillion. Companies that can do more with less have a massive competitive advantage over those that have to scrabble around for expensive resources — and pay for their own pollution.

Companies that can do more with less have a massive competitive advantage over those that have to scrabble around for expensive resources — and pay for their own pollution. It is no surprise that Finland — and Europe — are at the forefront of this. The rise and fall of Finnish mobile phone pioneer Nokia provides ample evidence of the need to understand and adapt to the way the world is changing. Europe is extremely dependent on imports, relying heavily on global supply chains that may not be so reliable in the future. Its companies are vulnerable to both physical scarcities and shifts in fundamentals such as exchange rates.

This urgent, common-sense case for a more circular economy is being heard in Europe at both government and business level. In Finland, companies such as L&T, Neste and Fortum are embracing circular thinking, mirrored elsewhere in Europe by giants such as Philips.

Through projects such as the Platform for Accelerating the Circular Economy, private and public sectors are working together, searching for the innovations, business models and ideas that will underpin post-carbon economies and companies.

This is where real economic growth opportunities lie in the 21st century, and why Europe has such an important and vibrant economic role to play in a post-carbon world of new vulnerabilities and even scarcer resources. The view from Yokohama currently may be dominated by East Asian growth rates, but Europe shows every sign of being a pace-setter in the more circular economic world of the future.