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The Circular Economy

Could rethinking design transform the world?

From textiles and plastic, to electrical waste: the world is drowning in rubbish. However, business executives are becoming more aware that the natural resources needed to create products are not infinite. The traditional “linear” economic business model — create, sell, discard — is increasingly becoming precarious in a world challenged by the depletion of natural resources, exposing companies to the risks of supply chain disruption and growing price volatility of scarce materials like copper and lithium.
Background
In nature, nothing is wasted: all material is reused in a never-ending life cycle. However, in our current ‘linear’ economic system, after goods have served their purpose, they usually end up adding to the sprawling mountains of toxic trash because we tend to throw an awful lot of things away. They end up in landfill or are incinerated. This is not good as they are damaging our environment and climate. But many products could be designed to be reused or recycled or become the raw materials for other products.
Over the past decade—and potentially beyond—more and more individuals are not only aware of the effects of waste, but also of the possibilities to produce more reusable products. According to the World Economic Forum, the safe use of natural resources could result in an added economic yield of around US$4.5 trillion within the next decade.
Introduction
Over time, one approach to sustainable development has gained traction among economists, policymakers and business people around the world. It’s called the circular economy. Although there are many conceptions of the circular economy, they all describe a new way of creating value, and ultimately prosperity, through extending product lifespan and relocating waste from the end of the supply chain to the beginning – in effect, using resources more efficiently by using them more than once.
The circular economy is a vision for the global economy in which waste is eliminated, resources are reused, and nature is regenerated. By repurposing materials instead of throwing them away, the circular economy can reduce greenhouse gas emissions, waste and pollution.
What is a circular economy?
The Japanese concept of mottainai expresses that it is a shame for something to go to waste without having made use of its potential in full — something that happens with regularity in a linear economy. Circular being the keyword in the term, describes a process that results in a complete cycle. In domestic settings, this could be recycling and ensuring compostable food is disposed of properly. In business, this refers to the same idea, but can also refer to the way products are designed and produced.
In many sectors, we have seen displays of circular designs and production processes, as well as efforts to reduce production waste or convert to more ‘circular’ packaging materials. Examples of this include the latest vehicle design from BMW, which incorporates more sustainable materials and reusable components—reusing components will usually require some form of process to complete the cycle.
We also witness a circular economy in the food sector as multiple business start-ups, are encouraging plant-based consumption that is expected to produce less single-use waste.
Overall, the circular economy is a new way of creating value, and ultimately prosperity. It works by extending product lifespan through improved design and servicing, and relocating waste from the end of the supply chain to the beginning – in effect, using resources more efficiently by using them over and over, not only once.
Definitions
1. World Economic Forum
“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 models. ”
2. Ellen McArthur Foundation
“Looking beyond the current take-make-dispose extractive industrial model, a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital. It is based on three principles: design out waste and pollution; keep products and materials in use; regenerate natural systems.”
3. Blomsma and Brennan
“The circular economy articulates (more clearly) the capacity to extend the productive life of resources as a means to create value and reduce value destruction.”
4. A simple definition
In the linear economy, raw natural resources are taken, transformed into products and get disposed of. On the opposite, a circular economy model aims to close the gap between the production and the natural ecosystems’ cycles – on which humans ultimately depend upon.
This means, on the one hand, eliminating waste – composting biodegradable waste or, if it’s a transformed and non-biodegradable waste, reusing, remanufacturing and finally recycling it. On the other hand, it also means cutting off the use of chemical substances (a way to help regenerate natural systems) and betting on renewable energy.
Who invented it?
There was no single creator of the idea of a circular economy. The term is largely a 21st-century construct, but the principles behind it were first talked about in the mid-twentieth century. Kenneth Boulding’s The Economics of the Coming Spaceship Earth (1966), Herman Daly’s notion of a ‘steady-state economy’ from 1974, and Cradle to Cradle: Remaking the Way We Make Things (2002) by Michael Braungart and Bill McDonough are seminal publications on the topic.
Core principles
The 4 principles of the circular economy are as under:
1. Waste = food
This principle stands for the continuous cycling of materials and products. A material or product that is no longer used, shouldn’t become ‘waste’, but instead should be part of a new cycle of use. In nature, one species’s waste is always another species’s food. For instance, birds eat berries. Bird droppings containing a berries seed and acting as a fertiliser, enable these to grow into plants. We should use the same principle in recycling, making a former waste into materials for new products (plastic, glass, paper).
2. Resilience through diversity
Resilient means being able to face change while continuing to develop. Greater biodiversity contributes to the general health of the system. Systems with many different components prove to be more resilient. A jungle or a forest ecosystem may serve as examples of this principle in nature. In a man-made system, it may be a farm producing different foods where the production processes are interconnected.
3. Energy from renewable resources
Solar energy, wind power and tidal power are the major sources of renewable energy which should be used more. In a natural system, a plant uses sunlight to grow. In a man-made world, we also should make use of renewable energy instead of oil and gas.
4. Think in systems
This principle is about numerous actors working together to create effective flows of materials and information. In nature, this is the way the food chain operates. If one species goes extinct, it can affect many other species, because they are interdependent in complex ways. In the man-made system, the changes we make may lead to unexpected and oftentimes unpredictable effects.
All in all, the circular economy is guided by the natural system which seems to have been efficiently working for thousands of years. The 4 above-described principles are simple but require a deep understanding of all the parties — governments, companies, individuals. We should work altogether to make the circular economy a reality.
Advantages
1. A circular economy offers a wide range of social, economic and environmental benefits.
2. By maximising the lifetime of our products and materials, and designing out waste, circularity reduces both our demand for raw materials and the environmental impact associated with obtaining them.
3. And using recycled raw materials will, in most cases, use less energy when manufacturing products, therefore, reducing carbon emissions.
4. The circular economy, if done right, both shrinks harmful activities such as carbon emissions, air pollution, and toxicity exposure, and increases positive actions such as habitat restoration, renewable energy and cleaning the air.
5. The circular economy also offers social benefits particularly in low-income economies, because integrating informal waste-pickers into formal waste collection provides job security and fair wages.
6. Circularity also promises to deliver substantial economic benefits. Scaling up reuse, repair, re-manufacturing and recycling creates millions of jobs and stimulates innovation. Capturing and reusing critical materials such as rare earth metals helps make the economy more resilient to global supply chain shocks and ensures the world has the materials to create the renewable energy infrastructure it needs.
Disadvantages
1. Some industries potentially lose out in the transition to a circular economy, as any business producing cheap goods with built-in, planned obsolescence would suffer. There are millions of jobs connected with this linear, high-waste economy – many in low-income countries – and so any switch to a circular economy could not happen overnight.
2. A good example is those people working in factories which produce ‘fast fashion’ – cheap, ready-made clothes – who are very vulnerable to sudden changes in consumption.
3. It is important that discussions of the circular economy focus on the concept of a just transition, where the impact on people is built into careful, cooperative planning. Those who depend on traditional industries must not be adversely affected by the change, or existing inequalities aggravated.
Moving from a linear to a circular economy
The transition to a circular economy requires cultural change as well as new models of business and trade. Technology does not provide all the solutions, altering consumer behaviour is also vital.
Consumers in developed nations have to adjust to a world in which products are no longer seen as disposable fashion or prestige items to be constantly replaced with newer models.
Repair and reuse must be a far larger and high-prized part of the economy and society, as does sharing. The waste from printers, washing machines, and cars is considerable.
Digital technology should make this shift easily achievable but it requires a change of mindset by most in the developed world.
The future
The Covid-19 pandemic provides a unique opportunity for the massive investment required to transition towards a more circular economy.
But the vast majority of Covid-19 recovery funding has not been earmarked to incentivise more circular solutions. According to a report by the Global Recovery Observatory, only 2.5 percent of funding has ‘positive green characteristics’ such as reducing greenhouse gas emissions.
It is urgent and necessary the world ties the development of the circular economy to the United Nations (UN) Sustainable Development Goals (SDGs) and links funding to circular outcomes. By focusing equally on environmental and social goals, the circular economy can contribute to reducing inequalities, improving wellbeing, and environmental quality.
The world is still thinking only of today and failing to plan for tomorrow. A circular world can seem complex or difficult to achieve in a world of competing interests. But whatever the challenges, they are far simpler to deal with than the environmental catastrophe being delivered by our current economic model.