Circular Economy is logical, makes more environmental, economic and business sense

The ‘Circular Economy’ is a start-to-finish circular concept; hence it is not too difficult to imagine what the interpretation may indicate. It is an industrial economy, that rejects the traditional economic approach e.g. 'take-make-consume and dispose' pattern of growth, where degradation of environment by increased amount of waste are not an inevitable by-product. The Circular Economy concept is not new; it has been there for more than five decades. As Kenneth Ewart Boulding’s famous paper from 1966, the economics of the coming spaceship Earth, expressed the view that man will need to find his place in a cyclical ecological system which is capable of continuous reproduction of material. Basically, our society will need to follow a circular pattern so that the resources can be use for a longer period of time. 

To date, traditional industrial economy has created enormous waste and its adverse effects on the environment are well known. The fight for a sustainable future was not on the agenda after the industrial revolution as the society wanted to move forward by creating wealth, more consumption and comfortable livings. The world population has rapidly multiplied in the last 50 years than ever before. Therefore, there is an urgent need to look for more recyclable and alternative materials. And, that is why the recycling and material flow lies at the heart of the Circular Economy concept, which has now become part and parcel of our fight for a sustainable future. It is not only the end of life of a product which is important but the design phase is even more important, for example 80% of a product’s environmental impact is locked in at the design stage. We need to use the right materials from a very early stage in the product development cycle.

However, developing new products with the right materials at design stage is just one of the pieces of the puzzle. The other equally important piece is the effective use of existing resources. Let us take a more realistic view to understand the importance of effective use of existing resources. Imagine for a moment that all the precious metals such as Gold, Silver, Platinum, Palladium, Copper, Nickel, and Aluminium have run out. Now, ask yourself a simple question - 'why did we not think about these precious materials before, which are used to make the computer circuit boards might run out one day? In order to prevent it, we should at least have invented a method where these metals would eventually come back to the production process to be used up again?' That is exactly what the circular economy concept is proposing to take on – a closed loop recycling, a process where post-consumption waste is collected, recycled and used to make new products.

There is clearly a business case for circular economy as a mean to resource efficiency and cost savings, effectively more sustainable growth, competiveness, less impact on environment and climate. It is a perfect marriage between environmental protection and making profits. A McKinsey study in 2013 estimated for 2030 the financial benefit of resource efficiency will be at around $3 trillion per year; 70-85 percent of this potential would be in developing countries." Just imagine the massive boost to the GDP by adding trillions to the developing countries’ economies. This is to say that the developing countries have more advantages compared to the developed countries. This is because their economies are not locked in the markets that would only follow the traditional linear economic models. That is to say, it will be easier to break and re-shape the economic models of the developing countries. 

Despite the growing acceptance for the Circular Economy, there are still many barriers and common misperceptions that exist. One of the biggest misperception is that, if we encourage people to re-use or keep their products for longer; then it would discourage sales. Hence profits will go down; effectively there will be no interests from the business communities. On the contrary, I think Circular Economy concept will drive the innovation more than ever - creating new type of products, businesses, markets and consequently create more jobs in the new green industries. However, consumers are the key group who need to understand the green economic transformation and its benefits for the present and the future generations. In my view, this is one of the biggest challenges ahead whether the consumers are prepared to buy the products made from recyclable and alternative materials. 

Finally, Corporations have a bigger role to play moving towards a Circular Economy compared to smaller businesses. Corporations have necessary funding to kick-start the transition and they are in a position to persuade their supply chains and other stakeholders to change their business models. A collective approach would certainly need to drive of change in the fight for a sustainable future. The Circular Economy is definitely the way forward.