The Circular Economy – And Three Companies Doing It Right

the circular economy

Take, make, dispose – that’s the dominant model of today. But it’s a finite one, and at some point the resources will run out. Businesses are already beginning feel the toll with productivity being effected by diminishing raw materials and environmental damage. The circular economy provides an alternative. It’s an inherently restorative and regenerative system in which what comes out of it feeds back into it; the same way the natural environment sustains itself.

How Is It Different To The Old Adage Of Reduce, Reuse, Recycle?

The language of the circular economy began in 1990 by environmental economists Pearce and Turner, who called attention to the fact that there was no inherent tendency for recycling in the current system. The idea is that it contains and builds upon all approaches of sustainability, and acts as an umbrella term that provides us with a comprehensive way of thinking. When we begin to look at our waste as capital, the goods of today become the resources of tomorrow. It’s more than simply recycling, and encompasses everything from biomimicry, cradle to cradle, to regenerative design and more. Recycling is in fact seen as inferior amongst circular economy theorists, as it results in “a reduction in quality and feeds back into the process as a crude feedstock”.

The Characteristics

According to the Ellen Macarthur Foundation, the organisation leading the charge in the circular economy, there are five key characteristics to consider:

1. Designing out waste – which means designing materials to fit within a cycle
2. Building resilience through diversity – valuing the modular, versatile, and adaptive
3. Working towards energy from renewable sources
4. Thinking in systems – unlike machines, real world systems are interdependent and rely on feedback, and need to be flexible and adaptive
5. Thinking in cascades – like in the natural world, where material is broken down in stages and the maximum energy is extracted

The Economic Argument
The economic argument for the circular economy is just as strong as the environmental one. Efficiency is integral to business thinking, with manufacturers forever asking how things can be made better, and at a lower cost. If you can source your materials from someone else’s waste, there’s a high chance that you can source them for cheaper.

circular economy

Waste Streams

The pairing of existing material waste streams with companies who can utilise them is key, and this can happen inside or outside of a company’s own supply chain. There are already indications of this taking off, with huge players like mining companies starting to capitalise on the financial opportunities by mining streams of waste, such as in the form of recycled battery components, rather than mining deeper holes in the earth.

The Sharing Economy

The growing trend of the sharing economy could continue to create a new form of consumer economy in which experiences and access to items are more desirable than ownership. In the U.S. alone there’s a $26 billion sharing economy. This is in line
with the circular way of thinking where products are leased from a manufacturer, rather than owned indefinitely by the customer. It also keeps things in the power of the ‘inner circle’, maximising use and minimising waste, and ensuring that products cycle for as long as possible.

A Growing Market

For retailers and distributors it means a closer relationship with the customer, and more opportunities at different points in the product life-cycle in terms of repair, reuse, and refurbishment. And there is most definitely a growing market for sustainable design. Reports have shown that the majority of consumers believe brands should help solve social problems and improve quality of life, and that millennials prioritise environmental impacts in their buying decisions. Growing environmental awareness coupled with unprecedented access to information and social media means that consumers can have a powerful impact.

Initiatives like the Closed Loop Fund, a $100 million effort financed by companies including Walmart, PepsiCo, Coca-Cola, Goldman Sachs and Unilever are already helping by improving recycling infrastructure and material reuse. The Ellen MacArthur Foundation’s Circular Economy 100 membership group is a program assisting organisations at different points in their sustainable development to develop and realise their circular economy ambitions. It helps members learn, build capacity, network, and collaborate, and includes companies such as Apple, DHL, Michelin, and Ikea.

Already Going In Circles

‘The Circulars’ is an annual circular economy awards program, established by the World Economic Forum and the Forum of Young Global Leaders. The awards recognise notable contributions to the circular economy in the private sector, public sector and society.

This years joint winners in the Circular Economy Multinational category were Philips and Veolia. Philips, a Netherlands based diversified health and well-being company, contributes to a circular economy in two ways – by transitioning from selling products to providing solutions as services, and by designing and manufacturing high quality products for multiple life cycles. They’re also using their influence to direct standards, infrastructure and policy towards a circular economy.

Veolia, a global leader in optimised resource management, has developed circular models including remanufacturing from waste, lengthening of equipment life cycles, renewable supplies and wastewater recycling. Veolia manages the energy services of over 2,000 industrial facilities and recovers over 38 million tons of waste per year.

The Circular Economy Entrepreneur award went to LanzaTech, a clean-tech company based in the US. It’s goal is to change the way we think about carbon, by utilising waste carbon as a resource rather than viewing it as a liability. Their circular technology advancements have allowed them to work with companies across sectors and around the world recovering revenue from waste streams.

These companies are starting to demonstrate that by shifting our perspectives and redesigning our relationship with goods and services there is a way to sit more harmoniously within a bigger cycle.