Circular Economy 101:
Waste Not, Get More

Across the globe, about 50 percent of CO2 emissions are tied to materials — goods that often produce a significant amount of physical and financial waste.

By John Hoekstra | Published 6 years ago | About a 4 minute read

Image: Erland Ekseth/Unsplash

Across the globe, about 50 percent of CO2 emissions are tied to materials — goods that often produce a significant amount of physical and financial waste. The United Nations estimates that the 41.8 million tonnes (Mt) of electronic waste generated in 2014, for example, included 16 Mt of copper and 300 tonnes of gold, plus other precious metals such as palladium. This material had a combined value of $52 billion.

And the amount of e-waste is only growing; it is expected to reach 50 Mt in 2018.

The momentum gathering around the development of a circular economy, in which materials and products are viewed through a ‘cradle to cradle’ lens, could, however, help stem the tide of valuable resources ending up landfill. Not only does circular thinking reduce the consumption of resources such as raw materials, water and energy, but it also encourages industries to design with the entire lifecycle of a product in mind. One company’s waste is another’s raw material.

Why Do We Need a Circular Economy?

The transition to a circular economy not only contributes to climate action, waste reduction and the preservation or renewal of natural resources, but can have significant economic benefits as well. The established risks of a linear approach to design, manufacturing and disposal are numerous:

Environmental crisis: Long-term linear development has led to the depletion of natural resources, biodiversity loss, land degradation, air and ocean pollution, and climate change, which in turns impacts the health and wellbeing of all species.

Economic loss and waste: The cost of materials used in the consumer goods industry tops $3.2 trillion every year — and 80 percent of those goods end up in a landfill or incinerator. Put another way, that’s $2.7 trillion of value wasted.

Supply risks: Linear systems increase exposure of companies and countries to limited or disruptive supply and volatility of supply prices, concerns further impacted by climate change.

Aging or static business models: Consumers are embracing models that enable them to access the services that products provide rather than the traditional ownership model. Airbnb and Uber have seen great success with the rise of the sharing economy.

Regulatory and reputation risks: The European Union and other regions are enacting various policies to put a price on waste and emissions, and urge industries to get on board with large-scale, systemic recycling.

Environmental justice: Some communities bear the burden of the linear economy more than others. E-waste from developed nations, for example, is commonly shipped to developing regions of Asia and Africa where it results in environmental degradation and human health impacts.

How Do We Get There?

Leading companies around the world are starting to accelerate the transition to a circular economy. Below are a few of the frequent entry points that organizations should consider:

Eco-design: Design and optimize products to minimize their impact throughout the product’s lifecycle: raw materials, manufacturing, use, service, repair, recycling and, finally, disposal. The practice of reusing and pooling resources — reselling or donating instead of throwing away — is growing among consumers and is further bolstered by greater durability of products. A well-known example is Patagonia, a retailer that has grown its business on repair and refurbish principles, encouraging customers to reuse its outdoor gear instead of replacing it.

Renewable supply: The energy required to power a regenerative economy should include an array of renewable resources, decreasing fossil-fuel dependence, and increasing business security and resilience. Case in point: The new headquarters for electronics giant Apple includes a mix of solar, fuel cell and microgrid technology to meet the energy needs of the entire campus.

Engagement: Above all, the best-laid plans mean nothing if they are not set into motion. Engaging employees and customers in this movement to circular services is critical in changing behaviors.

As the world gets more connected and producers and consumers become closely linked, it’s time for the economy to take the shape of the planet. Adopting circular principles isn’t just an environmental play, though that is of critical importance. It also makes fiscal sense for individual business and furthers global markets as a whole.