Can the circular economy lead to more prosperity and leave a smaller footprint?
Wednesday, June 08, 2016
Posted by: Anne Piacentino
Source: The Guardian
On 7 February 2005, Ellen MacArthur’s sailing prowess peaked as she broke the world record for the fastest solo circumnavigation of the Earth. After speeding through the sea for 71 days, surviving only on limited rations of food, water, medicine and fuel, she was suddenly struck by the reality of what it meant to live with finite resources.
“Never before in life had I translated that word ‘finite’ to anything outside of sailing until I stepped off that boat at the finish line,” MacArthur said during a 2015 TED Talk. “Suddenly I connected the dots. Our global economy is no different.”
Her realization resulted in the birth of the Ellen MacArthur Foundation, one of the leading voices in an ambitious movement to completely rid the world of garbage and industrial waste. It’s an environmental sustainability goal that has captured the attention of major corporations including Apple, Coca-Cola, Google and Unilever – and it’s known as the circular economy.
A grand vision
The concept of the circular economy may have as many definitions as it has advocates, with most adhering to the general vision outlined in Dr Michael Braungart and William McDonough’s 2002 manifesto, Cradle to Cradle. Its origins lie in the basic sustainability principles of waste reduction, reuse and recycling.
A circular economy would reinvigorate those principles by building them into the foundations of product design, materials acquisition, manufacturing and the way the global economy works.
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In practice, it would mean that every step in the life cycle of a manufactured product would help to ensure that the raw materials of that product could be fully recovered and recycled, or even upgraded, into new products. The ideal result would be both financial gain and zero waste.
The Ellen MacArthur Foundation maintains a directory of the top 100 companies that are actively pursuing the vision of the circular economy, helping to ensure that the needs of a growing global middle class can continue to be met not just sustainably but also profitably.
A recent report published by the foundation in partnership with McKinsey estimates that a shift toward a circular economy could result in $1.97tn in overall benefits by 2030 in Europe alone, compared with just half that amount under the present linear model.
Continuing education is a crucial next step to fulfill this promise. According to a UPS/Greenbiz survey (pdf) of 423 business leaders, 52% responded that they could easily define the term circular economy and provide examples, while 38% believed they knew what the term meant but were not entirely certain of what it encompassed.
Global logistics enable circularity
One of the MacArthur Foundation’s top 100 businesses, TerraCycle, has taken the direct route by building its business around a vision of economic circularity from the start.
In addition to its traditional recycling and composting projects, TerraCycle, founded in 2001, engages in a practice it calls “upcycling”, whereby trash isn’t entirely melted down but rather reused and remade into sellable new forms. One example: children’s backpacks that are clearly created out of used Capri Sun beverage packages.
At the core of TerraCycle’s business model is a longstanding partnership with UPS, which allows consumers to send waste to TerraCycle to be recycled and eliminates two common barriers: local access and the logistics of collection.
An efficient global logistics network is central to the circular economy becoming viable. Without international waste-recovery systems in place, there is little chance that enough used consumer goods would make their way back to their manufacturers or upcyclers. An important part of this equation is starting strong with a focus on “first mile” logistics such as smart packaging as well as load and route optimization
“Intelligent logistics networks are essential for cost-effective take-back systems,” says Ed Rogers, senior director of global sustainability at UPS. “The management and execution of evergreen supply chains is not a natural occurrence. It takes clever design, planning, collaboration and hard work to close the loop.”
A bigger difficulty than logistical complexities? Trying to convince large companies that the cost of remaking their business models will pay off for their shareholders.
TerraCycle founder and CEO Tom Szaky says he believes nothing will be persuasive enough to shift the economic system without widespread action by ordinary consumers, who can force big changes in business operations from the bottom up. The key factors for these people: cost savings and convenience.
“We consumers are voting for linear, disposable products every day by buying them,” he says. “And we need to change what we vote for by supporting not linear, disposable products but durable, circular products.”
Others remain convinced that businesses – and the governments that have the power to regulate them – can be persuaded that it’s in everyone’s best interest to make some big changes fast. According to Cradle to Cradle author Braungart, enterprising millennials within corporations’ ranks can spark such changes.
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For these younger adults, the appeal of circular economy models sometimes has more to do with improving their reputations as designers or engineers than with larger environmental concerns. That social pressure could be what’s needed to force a change in habits.
“Let’s talk about innovation, quality and beauty – that’s it,” Braungart says. “A product that becomes waste just has a quality problem. It’s not an ethical thing anymore. It’s only about innovation. And that idea is enough to inspire people to change.”
A successful circular economy in five steps
Keep these in mind when trying to implement circularity at your own company.
Source. In the existing linear economy, most products are made from raw materials that are mined or chemically created anew. In a circular economy, sourcing begins primarily with recycled, recovered or otherwise “used” materials.
Create. Following the principles described in Braungart and McDonough’s book, manufactured goods in a circular economy are designed from the start to be reusable, easily upgradable or recyclable with zero waste.
Transport. To support sustainability goals, global logistics networks would reduce unnecessary pollution by combining distribution and recovery channels, making every bulk product delivery point a pickup point at the same time.
Consume. Governments and businesses would educate consumers about circular economy principles and which products can be reused, recycled or upgraded. This would help consumers make easy decisions when they are done using a specific product and ensure that valuable materials don’t end up in landfills.
Recover. Waste take-back “first mile” logistics would ensure that used materials are returned to their manufacturers or taken to other facilities that can recycle them into viable materials ready to be sourced or repurposed.