Building the Circular Economy
More than half of the global population live and work in cities, which the UN projects to grow to 68% in the coming decades. Thus, the efficiency with which buildings are built, maintained, and recycled can have a powerful impact on both our environmental footprint, our healthy living and working in those facilities, and the overall cost of living.
A circular economy is a systemic approach to economic development designed to benefit businesses, society, and the environment. In contrast to the ‘take-make-waste’ linear model that is currently in use, a circular economy is regenerative by design and aims to gradually differentiate growth from the consumption of finite resources.
A circular economy’s economic activity builds and rebuilds overall system health. The concept recognizes the importance of the economy needing to work effectively at all scales – for big and small businesses, organizations and individuals, and globally and locally. It is based on three principles; designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.
The first principle, designing out waste and pollution, is centered around the question of, “What if waste and pollution were never created in the first place?” A circular economy reveals and does away with the negative impacts of economic activity that causes damage to both human health and the environment. This includes the release of greenhouse gasses and hazardous substances, the pollution of air, land, and water, as well as structural waste such as traffic congestion.
The second principle, keeping products and materials in use, is centered around the question, “What if we could build an economy that uses things, rather than uses them up?” A circular economy favors activities that preserve value in the form of energy, labor, and materials. This means designing for durability, reuse, remanufacturing and recycling to keep products, components, and materials circulating in the economy. Circular systems make effective use of bio-based materials by encouraging many different uses for them as they cycle between the economy and the environment.
The third and final principle, regenerating natural systems, is focused on the question, “What if we could not only protect but actively improve the environment?” A circular economy avoids the use of non-renewable resources and preserves renewable ones, for instance by returning valuable nutrients to the soil to support regeneration, or using renewable energy as opposed to relying on fossil fuels.
One major question that arises surrounding the topic of the circular economy is, “Can a material safely re-enter the natural world?” The two different halves of the diagram above represent two fundamentally distinct flows of material: biological and technical. Biological materials - represented in green - are materials that can safely re-enter the natural world, once they have gone through one or more cycles of use, where they will biodegrade over time, returning the embedded nutrients to the environment. Technical materials - represented in blue - cannot re-enter the environment. These materials, such as metals, plastics, and synthetic chemicals, must continuously cycle through the system so that their value can be captured and recaptured.
This raises questions about the necessity of owning the products that we do. It is access to the service a product provides that is important, rather than the product itself that a circular economy helps us to better understand. Understanding this shift in mindset lays the groundwork to many of the practicalities of shifting our economy from linear to circular.
The circular economy has been gaining traction with business and government leaders alike. Their interest is captured by the opportunity to gradually decouple economic growth from virgin resource inputs, encourage innovation, increase growth, and create more robust employment. If we transition to a circular economy, the impact will be felt across society.
The potential benefits of shifting to a circular economy extend into the environment. By designing out waste and pollution, keeping products and materials in use, and regenerating rather than degrading natural systems, the circular economy represents a powerful contribution to achieving global climate targets.
Businesses would benefit significantly by shifting their operations in line with the principles of the circular economy. These benefits include the creation of new profit opportunities, reduced costs due to lower virgin-material requirements, and stronger relationships with customers.
The circular economy will not only benefit businesses, the environment, and the economy at large, but also the individual. Ranging from increased disposable income to improved living conditions and associated health impacts, the benefits for individuals of a system based on the principles of circularity are significant.
Shifting from linear to circular requires systemic solutions, there is no simple fix. Business models, product and service design, legislation, accounting practices, urban planning, farming practices, materials extraction, manufacturing, and more, all currently have undesirable qualities from a circular perspective. Yet, we cannot change just one element of the existing system and expect the change we need. Systems change is difficult to achieve and great ideas often don’t come to fruition because of failures in managing the complexities involved. What we should do, is learn to understand complex systems - like an economy - and how they operate because understanding is the first step towards creating better solutions.
Our economy is currently locked into a system that favors the linear model of production and consumption. However, this lock-in is weakening under the pressure of several powerful disruptive trends. We must take advantage of this favorable alignment of economic, technological, and social factors in order to accelerate the transition to a circular economy. Circularity is making inroads into the linear economy and has moved beyond the proof of concept; the challenge we face now is to mainstream the circular economy and bring it to scale.
On June 23rd, ESGX will host "Building the Circular Economy" to discuss
1. What and where is the most valuable waste in the urban environment and how can you mine it?
2. How can you stimulate business activity to make the most of these opportunities, including SMEs in traditional industries?
3. What are the challenges to be overcome by businesses and what are the commercial benefits?
4. Why is this attractive to investors?
Register here for the free event.