What is circular economy?

By Rufus Leonard
23 Jan 2020

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).

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).

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).

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.

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.

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: 

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


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