Why it pays to join the circular economy
We all know that the current linear economic model is not sustainable. Materials are extracted, manufactured into products and then discarded into landfill – it’s a system that wastes valuable resources, causes environmental damage and will make it near impossible to satisfy the demands of the 3 billion new consumers in developing nations, who are expected to join the middle class by 2030. The concept of the circular economy is about decoupling growth from resource consumption – and maximising the positive environmental, economic and social effects. It’s about designing products so that they are easier to reuse or recycle, like Timberland’s Earthkeeper shoes. It’s about making sure that every product ingredient is biodegradable or fully recyclable, like the chemicals company that has replaced fossil-fuel feedstocks in their production methods. It’s about maximising useful product life by repairing or remanufacturing, like Caterpillar’s parts-refurbishing programme. The circular economy is about new business models that have shifted from selling products to selling services, such as the tyre company that offers a per-km tyre-leasing service. It is about eliminating waste from production, and making sure any waste is recovered as a valuable resource, whether it’s heat, slurry, nutrients, organic material, metal, salt – whatever. It’s about engaging your customers throughout the life cycle of the product, instead of the few minutes during which they make a purchase; and, ultimately, it’s about gaining competitive advantage. The scale of the competitive advantage is startling. Against a backdrop of resource prices that have more than doubled over the past 10-12 years, erasing the commodity-price decline of the 20th century, our material-saving potential is expected to reach around $1 trillion per year by 2025. The opportunity presented by the circular economy in Europe and the US pales into insignificance compared with what is at stake in developing nations, […]