A project to transform not just the fundamentals of our economic system, but also the psychological outlook of the world’s population on the products we consume may seem overtly ideological and indeed quixotic. However, this is the daunting task which is perceived as an exciting opportunity by those that champion the concept of the ‘Circular Economy’. Intrigue in this concept has caught the imaginations of figures as diverse as Brad Pitt, Ellen MacArthur and the CEOs of Marks & Spencer and Phillips.
The figures for consumption in various industries and states around the world provide context for the necessity of a new industrial economic system. In 2014 the electronics industry produced 41.8 million metric tonnes of waste and only a third of EU nations’ industrial solid waste was recovered by recycling. The current industrial economic model in much of the world since the industrial revolution has been that of the linear economy, where natural resources have value added to them by being transformed into products. At the point of sale, the liability for waste passes from the manufacturer to the buyer. Generally the goods last for a few years at the most before being disposed of into landfill sites. Clearly, this is immensely wasteful and inefficient; 80% of all purchased products are discarded within six months*. This is not to mention it is also catastrophic for the environment, especially as the majority of the resources we extract such as rare earth metals are finite.
Enter the closed loop system. The concept behind this particular industrial economic system known as the circular economy is that no waste or pollution is produced at any point of the process. The two major factors that make this system unique is a total shift from fossil fuels to renewable energy and using waste outputs from industrial processes as inputs for others. This approach is a large scale biomimetic strategy inspired by the existing ecology of our own planet: the sun provides nutrients for the plants, which nourish smaller insects and herbivores that are in turn eaten by carnivores. When the carnivores at the top of the food chain die, the nutrients in their bodies are returned to the soil and feed the plants, the cycle beginning again. These biological fundamentals it is thought could be applied to our industrial practices.
The circular economy does not have a central Charles Darwin or Isaac Newton-like figure allied with its conception. The idea of a circular economic industrial system rose to prominence in the late 1970s, advocated initially by a handful of businesses and think tanks. Walter Stahel and Genevieve Reday drew up a report for the European Commission in 1976 on the impacts of an economy in loops on job creation, competitiveness and waste production. Stahel in fact came up with the catchy ‘cradle to cradle’ description of the circular economy to counter those that thought the idea was too extreme and that responsibility for products from ‘cradle to grave’ would be a sufficient compromise.
“In 2014 the electronics industry produced 41.8 million metric tonnes of waste”
The system itself appears to have an elegant simplicity to it. Materials that make up a particular product are termed ‘biological’ or ‘technical’ nutrients. Biological nutrients are non-toxic parts that can be easily converted to compost. The technical nutrients – manmade chemical materials, are produced specifically to easily be reused. All products produced in the circular economy would be designed using a mixture of both types of ‘nutrients’.
Some examples of the circular economy in action are already familiar to us. H&M since 2013 has operated a global in-store clothing programme. Essentially, old clothes handed in are resold as 2nd hand (40-60%), reused in other products such as cleaning cloths (5-10%) or broken down into textile fibres which can be used in damping and insulating materials in the auto industry. Vodafone offers a ‘new phone every year’ contract, where the phones handed in are, in collaboration partners in China and Hong Kong, sold in secondary markets.
The Vodafone example above is particularly interesting as it gives an insight into one of the major pillars of the circular economy, ‘access over ownership’. More obvious examples are that which currently exist in the shared economy such as Airbnb and Netflix. This in theory could be applied to home consumer products such as washing machines, which could be leased instead of sold. This would save both the business and the consumer money as broken parts could be replaced cheaply by the company and the costs recuperated by recycling the materials for other uses. Elucidating the potential for this business model, Sarah Tulej of Forum for the Future was quoted in The Guardian: “It’s not just about guarding against risk – big companies (such as Walmart) are realising that service innovation is a strong differentiator in the market place”.
The challenges that face this movement are clear: intransigent, powerful fossil fuel companies, natural cultural resistance and in particular, contemporary obsession with new, designer label products. This is without mentioning the formidable task of creating products devised of entirely recyclable parts. However, solutions are coming. The Ellen MacArthur Foundation released a report that predicts a tipping point will be seen at around 2025, where savings of 20% for most businesses will be achievable, and thus, can’t be ignored. Even the world’s largest polluter, China, is currently running some of the most innovative circular economy initiatives in the world, enshrining circular targets in their ‘five year plan’ in 2006.
The potential transformative power of the circular economy is exciting for all stakeholders, from consumers, to environmentalists, to businesses and beyond. No doubt those interested will use their power as consumers and vote with their feet, demanding this more ethical approach to consumption.
*This figure is disputed and a conservative estimate, with potentially 99% of all products being discarded within this time frame.