What is circular economy?

Drew, Junior Strategist,

We live in a society that uses take-make-dispose as an industrial model, negatively affecting our society in a number of ways. This linear model is highly wasteful and causes major environmental issues, while encouraging short-term consumption habits (Government Europa). With the ever-increasing global population, a worsening environmental situation and societal conflict, current problems will only become worse unless action is taken. This is recognised by governments, corporations and lobbyists all over the world, who all have the year 2030 flagged as a key target for widespread circular economy implementation (Dutch Government).

city scape

The circular economy has a number of key aspects which are important to understand, but the overall concept is to “preserve and enhance natural capital by controlling finite stocks and resources, to decouple economic activity from the consumption of these resources” (Ellen MacArthur Foundation). This isn’t to be confused with the re-use economy which is solely the recycling of products or materials — the circular economy is more involved than that; aiming to completely remove waste from the cycle (Dutch Government). A major positive of the circular economy is that it can be implemented at whatever level is most appropriate to individual brands, organisations or governments. It can be scaled from a single company designing modular products for easy reparation and maintenance, all the way to governments using industrial and territorial ecology, optimising the management of stocks and the flow of materials, energy and services (Active Sustainability).

Plastics

 What impact could it have?
The benefits of the circular economy are vast — Defra estimates that UK businesses could save £23 billion a year through low-cost or no-cost improvements in efficient use of resources (WRAP), and they can reduce carbon emissions by 70% by 2030 (The Guardian). For EU companies, using circular processes like prevention, eco-design and re-use, could save €600 billion (McKinsey) while reducing total annual greenhouse gas emissions by 2 to 4% (European Parliament).

Moving away from the linear system also minimises risks for companies because they would be less susceptible to higher resource prices and supply disruptions, as they are re-using materials, and in most cases, maintain ownership of them (World Economic Forum). The repair, maintenance, upgrading and re-use of materials and products could create more than 100,000 jobs in Sweden (The Guardian), while the whole of the EU could see 580,000 jobs created (European Parliament).

Emissions

What is already being done?

Companies can implement circular economy practices in a number of ways — through design, creating new business models or reversing usage cycles to name a few (Ellen MacArthur Foundation). There are businesses all over the world who are seeing growth and efficiency gains by using the circular economy. Companies like Ioniqa, are using waste as a resource for creating new products, utilising technology to create high-grade raw materials from PET (one of the most common plastics used for consumer packaging) waste. Bundles offer a completely unique, product-as-a-service model for washing machines, with customers paying a standard monthly fee or a pay-per-use — meaning the company sells washing cycles, rather than washing machines.

Washing

 The company benefits from this because they maintain ownership of the machines and the customer benefits because they don’t have to pay a large up-front sum and only pay for what they use. Adidas are part of one of the industries (Clothing), which creates the most landfill waste (1.5 million tonnes of landfill waste a year), sold millions of shoes made out of ocean plastic last year, with each pair re-using 11 plastic bottles. Splosh, a washing product company, designs out waste by selling re-fillable bottles for life and sachet refills, which, when combined with water, create your detergent. By doing this, they have up to 90% less waste than other products and that goes up to 97.5% if you return the pouches to the company for free.

Shopping

What can you do to take advantage?

The circular economy is particularly relevant for companies who have any manufacturing or production methods – but we can all play our part. However, there are certain practices that may be more relevant to your particular company, below is a brief list of potential things you can do: 

•       Re-use products and materials: you can facilitate this by designing with re-use in mind — choosing materials and constituent parts that can be easily re-used or recycled.
•       Reparation: finding products that are damaged and give them a new lease of life.
•       Modular design: designing products with parts that initially separate before being combined and can be deconstructed. So only faulty parts are replaced, rather than wasting materials, energy and money.
•       Recycle: make use of materials found in waste.
•       Valorisation: harnessing energy from waste that can’t be recycled.
•       Product-as-a-service/functionality economy: encouraging renting rather than purchase — with companies maintaining ownership of the products.
•       Energy from renewable sources: eliminating fossil fuels to produce, reuse or recycle products — the circular economy works best with green energy.

 If you want to find out more about the circular economy, visit the Ellen MacArthur Foundation, it’s a good place to start.

Bottles

It’s important for brands to think holistically and to ensure that they work with businesses to push forward, together. Therefore, the circular economy should be seen both as a business priority and as a brand-building opportunity. By using our Brand Experience Framework (the BXi), brands can differentiate themselves against their competitor set. And by thinking in these 5 facets, the advantage of the Circular Economy for brands can be understood, for example:

Think (about setting expectations and delivering on your brand purpose): by taking action and improving your environmental practices, your brand will be seen as standing for something and will be admired for doing so.

Connect (about inspiring connections): by connecting your brand and business practices to global issues, customers will feel a sense of pride in being part of something much bigger — a positive movement which will impact not just them, but the world over.

If you want to find out more about our BXi methodology, visit our BXi page and download the latest report.

Drew Castle

Drew

From RAW intern to junior strategist, Drew is putting his curious and detailed mind to work with the likes of Lloyds Register, Royal Mail and London Business School.