I wanted to write up a simple walk-through of the Circular Economy, without all of the jargon and sound bites that often come with it. I’m aware the very term ‘Circular Economy’ is likely to go over many heads but I truly believe it’s the solution to many of the global sustainability challenges we’re facing and by the looks of things, so do many world leaders and CEOs. We’re learning more about its potential each and every day and like any new economic system, it could fall back into insignificance. However, I just don’t think it will! I’ve studied the CE for a while now, in a critical way and the downfalls are mainly suggestive of a system in its toddler stage, rather than a lack of potential.
So what is a ‘Circular Economy’? To understand this, we must first look at the type of economy we were living in pre-Covid-19 and will continue to live in, unless necessary, widespread changes are made. It was known as the ‘Linear Economy’, characterised by the straight line process of materials flows; from extracting from the ground, to production/manufacturing, to the customer, and finally to the bin. Described by some as the ‘Cradle to Grave’ model. Figure 1. illustrates this movement beautifully. It’s a one way ticket to landfill.
Even just looking at the Linear Model screams inefficient and wasteful but we’ve been living in the decade of convenience, rapid economic growth and boy does this model push those agendas. They’re at the core.
A Circular Model is known as a ‘closed-loop’, as any circle is. It is a regenerative economic model aimed at minimising waste and maximising resources. Before products reach their end of life, they are re-entered back into the production process to be re-manufactured. This could be to create to same product as it was or an entirely new offering. As millennials would say, Landfill has been cancelled (I regretted that as soon as I’d written it) and referring back to the previous phrase used to describe the LE, the CE is described as a ‘Cradle to Cradle’ system.
So why haven’t we always been doing this, I hear you ask? Well you can’t just re-enter any old product back into the system as soon as it’s been used by the customer. Products and packaging have been designed for years now around being as light as possible to reduce delivery costs and for shorter life spans. In other words, built to be thrown away. That means that many of the materials used would not be suitable for re-manufacturing or even recycling.
To move towards a circular economy, the production process within any company, must go through a pretty significant overhaul. For example, changes at the design process must be made around increasing the lifespan of the product and allowing it to be collected and regenerated or at the least be recycled and sold to another company to use.
“One persons waste is another persons treasure.”
That leads me onto a key element of a CE and that is ‘Collaboration’. Yes, even with direct competitors. During the next decade it will become inevitable that companies will cooperate and communicate to allow a materials flow between them. Even to share the same machinery. It makes more sense financially but also for the planet as well.
“And this is about a better economy because it has better economic outcomes, better social outcomes, better environmental outcomes. It’s about creating wealth rather than just extracting wealth, and it’s an economy that makes sense because it can run forward into the long term” // Andrew Morlet, CEO of the Ellen MacArthur Foundation.
As a Sustainability Consultant, I’ll be the first to mention the importance of economics. Honestly, you’re fooling yourself if you can convince a board of directors that their company should be more environmentally friendly despite the impact on their profits. The ‘Linear Economic Model’ that we’ve been gorging on during the past two decades allowed for constant economic growth but we’ve well and truly exhausted it. In fact that’s an understatement, as the global economy is in roughly $257 Trillion of debt and global leaders have announced a climate emergency.
In order to successfully introduce a new economic model, it needs to cover the triple bottom line. Economic, Environmental and Social Sustainability. I began with ‘Economic’ as for any model to succeed, it is essential that economic growth can continue alongside the regeneration of planetary health. The reason the Circular Economy is such an exciting prospect is because it allows the economy to grow and then some. New revenue opportunities will present themselves as companies find ways to monetise their waste; overheads will fall as resources are shared and recycled. Most importantly, research has shown that it has the ability to decouple economic growth and human development from resource extraction and waste generation.
There have been critics however, of moving towards the CE. Many believe it is too good to be true and that the very law of thermodynamics suggests that any human development or population growth must inevitably result in greater use of energy. This would mean that the decoupling mentioned before would not be possible. However, should that energy come from a renewable source it would in fact be considered circular. Another reason to be positive is that the US economy has not increased their usage of electricity throughout the past decade, yet their development and population have seen continued growth.
Of course other obstacles exist, mostly involving lack of system infrastructure and slow progress from policy makers. However, these obstacles, as I mentioned earlier are less to do with the lack of potential of this model and more due to its infancy. Policy develops and systems follow suit.
We’re currently sat firmly in the middle of the greatest crisis to public health in generations. Covid-19 has torn though the global population and caused complete shut-down of economies. It’s highlighting the huge downfalls of the broken system we live in. The very regenerative nature of a Circular Economy means a much greater level of resilience. Whether that be resilience to a global pandemic, climate change related disasters or even world wars; less reliance on supply chains and far more resourceful business models can only be a positive change to the way we live and work.
The World Economic Forum released a report in 2018 displaying many emerging circular models, particularly in cities. Additionally, the European Commission have just adopted a new Circular Economy Action Plan — one of the main building blocks of the European Green Deal, Europe’s new agenda for sustainable growth. With measures along the entire life cycle of products, the new Action Plan aims to make the European economy fit for a green future, strengthen competitiveness while protecting the environment and giving new rights to consumers. Of course my country the UK are no longer members of the EU but I’d hope the rest of the world, including us, will be right behind them on this.
So, what next? How do we get there? For any system to be functional, it needs the correct infrastructure in place. Yes, it’s important that the policy makers play their part but who ever got anything done waiting around. Businesses have to innovate, start small and use trials, improve the models & become more circular. We have to make mistakes and use them as a learning process, as opposed to giving up on the system before it’s been given the chance to thrive. The opportunities for start-ups are incredible and the more policy is designed around a CE, the more subsidies and funding will become available, so there really hasn’t been a better time to dip your toe in the water, whether you’re an existing business or one in the pipeline.
The truth is, collaboration has to be at the core of this movement. No single influencer will be able to make the transition, it relies on a systemic cooperation. Between governments, between companies, individuals and non-profits. With all of this in place, we will have an economic system that serves not only ourselves but those who’ve been marginalised also, other species on the brink of extinction, the state of our oceans, our atmosphere, our forests. The cherry on top is that the system will also serve our thirst for continued economic growth and prosperity; maybe not as rapid but certainly more long-term and resilient.