The circular economy calls for a fundamental rethink

Sensemaking / The circular economy calls for a fundamental rethink

The losers of the linear economy could find opportunities in a new, all-encompassing paradigm, says Lucy Purdy.

By Lucy Purdy / 11 Mar 2015

Since the dawn of industrialisation, society has kept busy with making, selling and disposing of stuff. But the linear economy is running out of road. Now the circular economy, a model which revolutionizes both consumption and business, is gaining momentum.

This new economy is killing off old paradigms: the passive consumer; status-enhanced by ownership; the very idea of waste. Now, our ‘disposables’ are being recast as opportunities, sparking new models, markets and value systems.

As Rodrigo Bautista, who works in sustainable design and innovation at Forum for the Future, explains, the circular economy calls for a fundamental rethink of raw materials. “Easy-to-access reserves are now close to exhaustion while exploration and material extraction costs rise. Making ‘new’ is already unpredictable and expensive”, he observes, pointing to resource scarcity, rising pollution levels, rapid urbanisation and digitisation among the trends driving a more sophisticated approach to material flow.

Proposed models for the circular economy include integrated loops, asset recovery and regeneration, and revenue streams which protect value up and down chains. But such sweeping transformations will not be painless. Winners and losers will emerge as power dynamics shift, causing resistance and attempts to maintain the status quo.

Take Zambia for example, where copper contributes about 70% to the nation’s export earnings. The supply chain is becoming ever more strained, and prices are steadily rising. As the quality of the ore declines, more energy and water is needed in processing, generating more waste and impacting ever more on the landscape.

“150 years ago, copper ore was 7% copper; today it’s 0.6% copper,” says Dustin Benton, Head of Energy and Resources at Green Alliance. “As a result, even with better technology, it’s a lot more expensive to mine today. Circuit boards are about 12% copper. If we want to rebalance the economy and keep making things, policymakers would be wise to think about how we capture the millions of circuit boards we discard each year.”

With this in mind, what options does Zambia have? It could pilot new behaviour: mining companies could experiment with leasing or renting copper, requiring companies to return it to them in its original quality. This fundamental reshaping of the ‘technical metabolism’ is particularly relevant to copper, for which the recycling rate is among the highest of all engineering metals.

Products made by companies further down the chain will have to be more easily disassembled to enable recovery. And consumers? Suppliers of refrigerators which contain copper tubing for example, could lease them too, keeping responsibility for maintenance and repair. After all, do we really desire to own refrigerators, or just rely upon using them?

Taken to its logical conclusion, this kind of shift would ripple out through supply chains: manufacturers would stop seeing themselves as sellers and become instead deliverers of results, performance and satisfaction. Ostensible ‘losers’ in the new circular paradigm – such as those countries whose economies are currently dependent on raw materials – arguably also face the greatest opportunity for transformation. They are only losers if they remain within the current model.

Imagine what would happen if Australia, whose major goods exports include iron ores and concentrates, coal, natural gas and gold, radically shifted its approach, jumping wholeheartedly into the circular economy. As ecologist John D Liu points out, any society which values the products and services derived from functional ecosystems over and above the ecosystems themselves, is bound for collapse. This logic has informed permaculture design thinking, since the late 1970s when the movement began – in Australia. Biomimicry takes a similar approach.

What we need is “principled innovation”, says William McDonough, chairman of McDonough Innovation and co-founder of the Cradle to Cradle Products Innovation Institute.

“Cradle to Cradle and other circular strategies create regenerative growth because they are built on principled innovation. They are values-based frameworks, purpose-oriented and attentive to social and ecological concerns, and they yield profitable, restorative products and services because they are modeled on the structures and cycles of living systems. They have nature’s principles in their DNA.”

Tweaking what we already have to become more efficient actually perpetuates the idea that we can continue uncontrolled cycles of consumption. But circular economy thinking goes beyond that. Widespread adoption of circular practices could trigger a deeper trend, prompting us to repair our relationship with natural resources, and move away from consumerism.

“An economy can’t be totally circular as long as demand is growing”, Benton clarifies. “We still need to lower overall consumption if we want to live in a sustainable world.”

So can brands also be circular? Yes, and in becoming so they have the opportunity to develop long-term relationships with consumers. Take Urban Cordial, an artisan drinks start-up in London which offers customers a discount when they return the company’s glass bottles. In a circular economy paradigm, throwing away a company’s packaging could become tantamount to ‘trashing’ the brand.

Ramon Arratia, Sustainability Director at Interface, which designs and sells carpet tiles, proposes an ‘open loop’ system, in which circular stakeholders scavenge waste materials from outside their supply chains.

Such projects still seem radical, despite making overwhelmingly good sense for the planet and for business. Management expert Margaret Wheatley explains how our reliance on overly mechanistic models stands in the way of effective and innovative leadership. We have become used to rigidity, she says, stuck in habitual cycles of wastage and illusory value.

Forum for the Future has been exploring how businesses can collaborate as part of value networks [see ‘Value, unchained’]: wide webs of relationships which include the flow of intangible concepts such as trust and knowledge. These connections help propel brands toward sustainability.

As Giles Hutchins, author of The Nature of Business and Illusion of Separation, reminds us: “The oak tree shares nutrients with the holly sapling. Nutrient-rich areas share with nutrient-poor. Separation doesn’t exist in nature.”

Circular thinking cannot be an add-on, a separate something. A business cannot be sustainable in an unsustainable system. The circular economy must go to the heart: it must become everything.

Lucy Purdy is a freelance journalist writing about our all-powerful connection with the natural world.

Image Credit: Auntie P / Flickr 

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