‘The circular economy’ describes human value systems which minimise waste by repurposing by-products and discards. The unwanted outputs of one value chain become the feedstock of another, or are fed back into the original system, creating loops. While the idea of the circular economy is not new, it has been moving rapidly towards the mainstream in the last few years.
A number of factors are pushing commerce and sectors to think beyond waste as something with no value, presenting only the problem of safe disposal, and to reframe it as a resource, generating both efficiencies and opportunities.
One factor is resource shortages, prompting new quests for secure supplies. Another is increasing demand for supply chain transparency; this, in turn, is driving awareness among business and consumers of the sheer amount of waste generated by systems of linear consumption. Global waste production has risen tenfold over the last century, the journal Nature reports, straining landfill sites and polluting the oceans. 1
Already, examples of the circular economy in action are credited with increasing rates of employment, capital productivity and competitive advantage through better resource efficiency and resilience against volatile resource prices. Meanwhile, social and technical innovations in reuse, recycling, upcycling and new applications for biodegradable materials are helping to minimise waste.
Last updated: 22 September 2015
RENAISSANCE OF AN AGE-OLD CONCEPT
- Circularity is not a new concept. In Guangzhou, China, farmers have perfected the Dike-Pond System over the past 2000 years. It integrates intensive agriculture with the polyculture of carps and other freshwater fish, on a geographic and economic scale unrivalled elsewhere in the world. The water and land synergies create food and bioenergy for a waste-free ecosystem. 1
- The idea of a transition from linear to circular economies today has largely been driven by the Ellen MacArthur Foundation. The Foundation collaborates with Global Partners (such as Cisco, Kingfisher, Philips, Renault, Unilever), and its CE100 network (businesses, governments and cities), to develop circular business initiatives and build capacity. It is also reaching out to educational institutions to promote learning on the circular economic. 2
- According to the Ellen MacArthur Foundation, if companies focused on building up circular supply chains, over US$1 trillion a year could be generated for the global economy by 2025, and 100,000 new jobs created for the next five years. Currently, only 20% of material goods are recovered, primarily to be reused or decomposed. 3
- Apparel companies such as Puma, Marks and Spencer, Levi Strauss & Co, H&M and Patagonia have set up clothing ‘bring-back’ schemes and are improving their recycling infrastructure. 1
- Bionic Yarn is a New York City-based startup that makes fabric from recycled ocean plastic. Collaborating with designer clothing company G-Star RAW, it is developing a range of denim products that, all told, are woven with some nine tonnes of ocean plastic inside. 2 Similarly, Levi’s 2013 Waste
Newlife Paints, based in West Sussex, professionally reprocesses waste water-based paint diverted from landfill or incineration. 3
- Bio-bean is a London start-up that turns old coffee grounds into an energy source. It collects them via waste management contractors from freeze-dried coffee factories, high-street chains and kiosks in transport hubs to turn into biomass pellets, which are sold to heat offices and homes.4
- Philips, the Netherlands-based electronics and healthcare giant, now leases both lighting and healthcare equipment to its customers rather than selling these products outright. When a customer is done with the equipment or needs an upgrade, Philips takes back the old product, refurbishes it, and sends it on to another customer. The company, now as a service provider, is beginning to redesign its products to fit this new business model. 5
- International Synergies' National Industrial Symbiosis Programme (NISP) in the UK is the world's first national industrial symbiosis programme. Through its 15,000-strong industry member network, NISP identifies mutually profitable transactions between companies so that underused or undervalued resources (including energy, waste, water and logistics) are brought into productive use. Due to the success of NISP there has been an increasing appetite for industrial symbiosis worldwide. 1
- Cross-sector collaboration is a major enabler for a circular economy. Launched in May 2014, the business-led Closed Loop Fund aims to provide low interest loans to U.S. municipalities to advance projects that improve recycling infrastructure from a $100 million fund. Initial investors include Walmart, The Coca-Cola Company, PepsiCo, Procter & Gamble, Unilever, Johnson & Johnson and Goldman Sachs. 2
- The high-density nature of living in cities complements the circular economy. Singapore is incorporating circular ideas into city planning. Its Punggol Eco-Town is a “living laboratory” for sustainable public housing. The development reuses water from the sinks to flush the toilets, promotes waste recycling to residents, and is leasing solar panels from a private company, which maintains the technology and sells back the power to recoup its costs. 3
- Detroit city in the US has set up the Reuse Opportunity Collaboratory in an effort to bring entrepreneurs, business and industry together to create closed-loop systems in which one organisation’s waste becomes another’s raw materials. 4
Cost savings and material efficiencies will continue to support the emergence of circular economies.
Barriers to scale include the need for regulatory change, new technology, cross-industry collaboration and changes in consumer behaviour.
The ideal circular economy goes beyond recycling: it requires a company to rethink its relationships with suppliers and end-users too, accessing new skills and developing new incentives, so that value is retained and regenerated as materials are re-circulated. This could disrupt some sectors, and may incite resistance.