The Stone Age didn’t come to an end because they ran out of stones. Similarly, we should be building an economy where we ‘use’ resources rather than ‘use them up’. The human species must change its profligate ways, and radically reduce the level of extraction required to fuel our needs and desires.
The economy is a part of society, and society is inextricably bound to the environment. In the living world there is no landfill; instead, materials simply flow. The waste of one species is food for another. Things grow, fade in time, and nutrients safely return to the soil. We, humans, however, generally ‘Take-Make-Dispose’.
With increasing consumer demand, we continue to eat into finite resources and waste more and more. It begs the question: how can we turn waste into capital?
The idea of the circular economy is move to ‘Make-Use-Return’, both in mindset and practice, and for this to become natural. A circular world economy would marry resourcefulness, design thinking for products built to last and be recyclable, retrieve raw materials, and alter current ownership models.
We have a waste problem. Globally, we generate about 1.3 billion tons of trash per year, leading to environmental atrocities like ocean plastic pollution. This may even become a source of future conflicts, as countries search for new places to stash their trash.
The UN International Resources Panel projects that our use of natural resources will double by 2050. A study by the OECD shows that the flow of materials through acquisition, transportation, processing, use and disposal accounts for about fifty per cent of greenhouse gas emissions.
About 2 billion people live in countries experiencing high water stress, while another 4 billion experience severe water scarcity for at least a month each year.https://t.co/FP7lmmhsjP@broadsheet_ie @think_or_swim @PaddyWoodworth @think_or_swim @HannahEDaly @BowesChay
— CassandraVoices (@VoicesCassandra) January 5, 2022
What is the Circular Economy?
The European Parliament offered the following definition in 2021:
The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.
This helpful definition should make us consider how we reduce waste to a minimum, and disassemble raw materials after a product reaches the end of its life cycle.
The World Economic Forum’s definition is more comprehensive:
A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business.
The challenge is to change our mindsets: how we think, behave, and consume collectively and individually.
Can the goods of today become the resources of tomorrow? This could involve, for example, changing the way we recycle valuable alloys, polymers and metals so that they maintain their quality and continue to be useful beyond the shelf life of an individual product. It would certainly make a lot of commercial sense.
We must move away from the ‘use and throw’ culture that operates today, consciously pivoting towards a more ‘return and renew’ approach, where products can be easily disassembled and regenerated.
The circular economy isn’t about one manufacturer changing one product, it is about all of the interconnected companies that form our infrastructure and economy coming together.
Therefore, across industries, the idea is to design products that can be disassembled systematically once the consumer has finished using them, re-manufacture and offer them out again.
The focus then moves to ‘cradle to cradle’ rather than ‘cradle to grave’ and the production cost should decrease drastically. For example, in the clothing industry, instead of garments lying as waste in a landfill, clothing companies could collect them and reuse them to make new products; potentially profiting out of the waste.
Everything is healthy food for something else. Everyday products from shoes to mattresses can be manufactured in a way that could be fully recyclable. For example, the fast-fashion brand H&M has made a commitment to use 100% sustainably sourced material.
The circular economy is an inevitability. It is not simply about fixing a particular problem, but redesigning an entire system to address the interconnected challenges of climate change, pollution and waste.
A successful branding campaign in one country may fall flat on its face elsewhere. Global companies must learn to cater to specific local audiences write Rick Mukhopadhyay. https://t.co/cyxqQAYQKo@sebvegt @broadsheet_ie #branding #glocalisation #brands #brandingcampaigns
— CassandraVoices (@VoicesCassandra) December 2, 2020
Sustainability vs Circular Economy
The concept of ‘sustainability’ is often used interchangeably with the Circular Economy. This is rather misleading. Although both of the concepts address issues around decarbonization, energy transition, and the waste minimization narrative – amongst other points that include local and ‘glocal’ actions and strategies – the two concepts remain quite distinct.
Sustainability, to a large extent, is a systems-level approach that encompasses environmental, social, and economic factors and assesses how they interact.
We can also include the concept of the Triple Bottom Line (i.e., people, planet, profit) in the context of business organisations, and how this can contribute to the cause of sustainability.
The concept of sustainability also helps us to evaluate the risks, trade-offs and externalities (positive or negative), from a life-cycle perspective, across the entire value chain. This is what leads to long-term system balance.
Fundamentally, however, sustainability is an umbrella term addressing a wide range of scenarios and issues, and not only focusing on conservation, choosing eco-friendly options, or switching to renewable energy.
Research by the MacArthur Foundation argues that sustainability does not have a singular focus on any individual part of the chain; rather the concept helps us to understand how the parts interrelate to enable effective overall outcomes.
In other words, ‘individual parts cannot be optimized without optimizing the whole’. Thus, an electric vehicle is not sustainable if we factor in the unquantified and unaccounted for social and environmental externalities that span the lifecycle of the lithium-ion battery that powers the vehicle, from mining, processing, smelting, trade, and transportation across the globally networked supply chain to the lack of recycling and reuse options for the battery at its end-of-life.
Although many companies have paid lip service to corporate social responsiblity, there are more encouraging signs of meaningful actions in recent times.https://t.co/R9Fv6nbUKz@broadsheet_ie @IlsaCarter1 @danieleidiniph1 @sebvegt #corporatesocialresponsibility #philanthropy
— CassandraVoices (@VoicesCassandra) July 27, 2021
The Circular Economy in Action
Certain industries have taken the lead in terms of rethinking and redesigning how they manufacture; choice of raw materials; and how they recollect products once consumers have stopped using them.
BSH sells home appliances-as-a-service promoted reuse, repair and extend product lifecycles. It now offers a full service, delivering, installing, repairing, moving, adjusting and picking up the appliances again at the end of the contract.
In the agriculture sector, there is growing availability of affordable bio-based solutions for recycling nutrients from agriculture. Using Hybrid Biofilter is a scalable solution that prevents nutrient leakage from fields, thereby improving local water quality. At their end-of-life, the biofilters can also be reused in several applications to release the captured nutrients back to their natural cycle.
Similarly, Nike launched the recycled-content version of the Converse Chuck Taylor All-Star series and introduced ‘exploratory footwear collection’ made from factor and post-consumer waste. At the Tokyo Olympics, the athletes representing US, France, and Brazil used Nike-sponsored uniforms made with 100 per cent recycled polyester.
Another closely related example would be Adidas, which has rolled out fully recyclable version of the Ultraboost running shoe collection made from a single material without glue. Similar initiatives are going on in Puma and Timberland.
Likewise, IKEA launched a buy back programme where customers can receive up to 50% of an item’s original price in the form of a store voucher. Also, unsold items are recycled or donated to local community projects.
Philips design products for hospitals, including medical equipment such as MRIs and CT Scanners. They are currently offering trade-ins on their old equipment for a discount on new systems. The company disassembles the collected equipment, refurbishing and upgrading them to sell these again.
This is a ‘win-win’ model since hospitals get financial returns from their older equipment, while also efficiently upgrading to the latest technology. This also addresses the e-waste recycling challenge that we face today.
H&M, the leading fast-fashion brand, now encourages customers to return used clothing to stores, who receive discount vouchers for future purchases at the store. The company classifies the collected used clothing into a) Rewear; b) Reuse; and c) Recycle categories, and they work across partners to continue with their sustainability measures.
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— CassandraVoices (@VoicesCassandra) September 30, 2020
Costs of the ‘Make, Use, Return’ Model
In 2015, the Ellen MacArthur Foundation demonstrated that a circular economy could boost Europe’s resource productivity by 3 per cent by 2030, generating cost savings of €600 billion a year.
The following are three sector specific examples:
(a) Clothing businesses have actively taken steps towards embracing circular economy practices. Some firms in the apparels industry have formed coalitions to promote nontoxic chemicals, improve cotton farming. Others are developing standards for garments that are reused or recycled. There is great scope in investing in the development of new fibres that lower the environmental impacts of production.
(b) Recovering the material value of bottles, from mixed recyclables or bottle-to-bottle recycling, could lead to a much higher pay out. Metals, meanwhile, are commonly extracted from tires in open backyard fires – at great cost to both human health and the environment. Aggregating tires for use as industrial fuel could increase their value almost tenfold, while crumbling them to make road-paving material yields even higher returns.
(c) Dell has incorporated recycled plastics into its products, using the world’s largest takeback program for used electronics. Their cloud service lines provide customers with computing capabilities, while eliminating the need for physical assets, reducing costs and carbon footprints. All these practices, as mentioned above, can help companies extract additional value from leakages or waste in the production process.
Boidurjo Rick Mukhopadhyay examines the energy-poverty-climate nexus that developing countries contend with during a Fourth Industrial Revolution. #fourthindustrialrevolution #ruraldevelopment #Sustainability https://t.co/fViIPtFWyq@broadsheet_ie
— CassandraVoices (@VoicesCassandra) February 3, 2021
Barriers to Circularity
A study by the World Resources Institute (WRI) identifies certain operational barriers in the functioning of the circular economy.
Creating a changed mindset is a major challenge. Thus, for example, we use twenty times as much plastic as we did just fifty years ago. This is despite a strong push from the market to use linen as the material for shopping bags.
Unfortunately, shoppers still choose single-use plastic bags and packages that often wind up at the bottom of the ocean. This requires a change in consumer attitude as well as a more stringent regulatory push on this matter.
Another related aspect to this is how we understand the ‘expiry date’ of a food product. Expiration dates are designed to protect the consumer, but it is not contingent on how a particular foodstuff is stored. Thus, the expiration date on eggs in India may be labelled for pantry storage, but these will last longer when refrigerated.
So, while an expiry date can mean that a food is inedible in certain circumstances, it may still be safe to eat while not necessarily meeting the manufacturer’s quality standards. This is currently being addressed in several markets.
Waste management and recycling infrastructure differ from country to country, which is another difficult factor to control. For example, studies project that there could be more plastics than fish in the ocean by 2050.
There are certain limitations in how plastics are sorted by chemical composition and cleaned of additives. Better technology can maintain quality and purity so that product manufacturers are willing to use recycled plastics.
Once there is some incentive, companies and users will be more inclined to act responsibly. This is an area where nations can work together during international conferences on partnerships and share research and development.
The global population is projected to reach 9.5 billion by 2050, with far fewer living in poverty than today. Emerging countries such as the BRICs (Brazil, Russia, India, China, South Africa) have an expanding middle class – with increasing purchasing power.
Clothing and apparel sector needs to lessen their environmental externalities by using non-toxic dyes and recycling cloth scraps.
As discussed earlier, the ‘rental and resale’ model has to succeed against fast fashion preferences which produce far more waste. Also, with increasing demand for electric cars, lithium-ion battery manufacturers must design products with a similar mixtures of chemicals, allowing more processed recycling possibilities.
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— CassandraVoices (@VoicesCassandra) August 26, 2020
From ‘Cradle to Cradle’
A Harvard study reviewing the manufacturing sector, in particular the clothing and furnishing sectors, provides an understanding of the different strategies that embed a functioning circularity.
First, the study suggests that companies should consider leasing products instead of selling them. This would retain the continuity or circularity.
Moreover, from a stakeholder perspective, this would mean that the companies remain responsible for the products, even after consumers are finished with them.
Xerox, for example, over the years have followed a model where they lease their printers and photocopiers to corporate clients rather than selling them. It entails after-sales and repair costs but is still more sustainable than replacing the devices after their life cycle ends.
Since time immemorial the robes used at graduation ceremonies have been rented rather than sold. Similarly, the company ‘Rent the Runway’ also leases designer clothes for one-off events’
The second example follows from the first: companies designing products that have a longer product life cycle. A longer life span means there are fewer repeat purchases and, at the same time, companies can leverage ‘durability’ as a competitive advantage over rivals.
This can also give them access to new markets and price their products higher given the premium nature of the offering.
For example, Bosch Power Tools extends the life of its used tools by remanufacturing them. This enables them to compete with cheaper products from competitors.
Thirdly, companies can embed the recycling aspect during the product development stages and planning process. The idea here is to maximise the recoverability of materials used in products.
For example, Adidas partners with Parley. The latter company makes textile thread using plastic waste from which Adidas manufactures its shoes and apparel. The end result is less plastic at the bottom of the ocean.
The pandemic has blurred the distinction between office and home. Research indicates surprising advantages, but also huge drawbacks that leaders should address.https://t.co/5JVQ4ggLyT#workfromhome #workfromhomejobs #NewNormal @broadsheet_ie @sebvegt
— CassandraVoices (@VoicesCassandra) April 6, 2021
Role of the State and Users
In a world where approximately 3781 litres of water is used in the manufacturing of single pair of jeans, some choices are controllable.
The question is do we want more plastic than fish in the world’s oceans? Are we going to allow nitrates and phosphates to leach from fertilised fields indefinitely?
We urgently require innovative public-private partnerships, where companies, investors, governments and academia offer the intellectual, financial, and operational assets to solve big problems
We also require a mindset shift to dream of ‘prosperity in a world of finite resources’, and where over a third of all food is wasted, even as the Amazon is deforested to produce more.
We have to move to a situation where we are ‘users’ of services, rather than ‘consumers’; to pay-for-use (like we do in the Gig and Sharing economy) rather than ‘owning’ a service.
The choice is as much individual as it is collective, as the Dalai Lama once put it: ‘if you think you are too small to make a difference, try sleeping with a mosquito.’
Feature Image: Shade-grown coffee, a form of polyculture (an example of sustainable agriculture) in imitation of natural ecosystems. Trees provide resources for the coffee plants such as shade, nutrients, and soil structure; the farmers harvest coffee and timber.