The Circular economy: the shape of things to come?

Originally published on Lewes and Ouse Valley Eco-nomics website

Remember Ellen Macarthur? The solo long-distance yachtswoman who in 2005, circumnavigated the globe in a single handed non stop journey that broke the (then) world record of  71 days, 14 hours, 18 minutes 33 seconds?

Well Dame Ellen Macarthur, as she is now known, is charting a new journey no less epic in its ambition  and design – only this time she wants to take us all with her.

A year after retiring from sailing in 2009, she launched the Ellen MacArthur Foundation, a charity focused on providing a positive framework for sustainable innovation using insights from living systems to re-think the future. And in a very short space of time, the foundation has made its mark on the minds of top business  leaders and CEO’s, culminating in several events at the recent Davos meeting, to  promote a new paradigm:  the ‘circular economy’.

So what is the Circular Economy?

The new circular economy explores  ways to reuse products or their components and restore more of their precious material, energy and labour inputs. This is not about recycling  but re-manufacturing: products are designed for ease of re-use, disassembly and re-furbishment, without loss of value or quality.  As a result, vast amounts of materials  are reclaimed from production process  and from end-of-life products.

This is not a niche only practice   for funky techies but   a seismic shift in  re-thinking the design of production  processes of gobsmacking potential, if this report is to be believed with  “an annual net material cost savings opportunity of up to USD 380 billion in a transition scenario and of up to USD 630 billion in an advanced scenario, looking only at a subset of EU manufacturing sectors”. And it has moved beyond the ‘proof of concept’ stage; some businesses are actually doing this.

This circular  model  replaces the present linear model as the core of a future economy.

Our present linear  ‘take-make-dispose’  model  relies on large quantities of easily accessible resources and energy. Companies extract materials, apply energy and labour to manufacture a product, and sell it to an end consumer—who then discards it when it no longer serves its purpose.

That approach   has supported economic growth for the greater part of two centuries of expanded  industrialisation across the globe. But it is now dangerously out of kilter in today’s more fragile resource scarce world, with rising prices in natural resources since the year 2000 that have erased a century’s worth of  real price declines.

Here are some of the contours that define the new Circular Economy

  • Waste is designed out: todays goods are tomorrows resources, not tomorrows landfill.  Goods and products are designed for dis-assembly, re-use and  re-manufacture from the  very beginning. This replaces recycling as an afterthought, an end-of-pipe ‘well It’s had its day, what do we do with it now?’ . Moreover the production chain – itself responsible for  21 billion tonnes of materials that are not physically incorporated into the products  –  is redesigned to completely eliminate such waste (figure is with reference to OECD countries)
  • Product components derive from biological materials. These replace toxic glues and chemicals that characterise petroleum derived products. Instead products composed of biological ingredients are designed to be part of ‘restorative loops’ that return nutrients to the Biosphere
  • From  ‘Consumer’ to ‘User’: we no longer own our products, we rent them. Manufacturers and retailers retain ownership of the product and act as service providers – they sell the use of products, not their one-way consumption. What matters is performance not ownership
  • Renewable energy: not just wind and solar power but also human labour -which is unlimited. Until now, economic efficiency gains have resulted from the ease of extracting finite resources , especially fossil fuel energy, to reduce labour costs.  But that is an increasingly untenable approach given the magnitude of the resource crunch we now face.
  • From ‘ resource efficiency’ to ‘eco-effectiveness’ – or Naturegain: present efforts to reduce resources and fossil energy consumed per unit of manufacturing output  still fall into the existing linear economic model. It is not really doing anything new. It is just using less materials in the same take-make-dispose  model. By contrast ‘eco effectiveness’ is about product design to   form a supportive relationship with ecological systems in order to ensure naturegain – the enhancement of ecosystem services. It sees naturegain not as an option, but as something central to product design.

The biggest barriers – technical or cultural?

Perhaps one of the biggest issues which remains unaddressed in the report Towards the Circular Economy  is culture change. It is that, rather than technology that could be the biggest obstacle to change. How will consumers cope with no longer owning what they use? Ownership is central to our  lifestyle and how we compare ourselves to others in a status economy that defines identity by what you earn, buy and consume.

How will the new three  billion who are expected to join the ranks of a global middle class  by 2030, be persuaded not to emulate the lifestyles of  richer countries, or its damaging social inequalities, but to embrace instead a more flattened, egalitarian society based on a collaborative user based economy?Many will stubbornly resist so fundamental a lifestyle change.

What may lend wings to this paradigm shift is  an unlikely alliance between green groups and big corporations who, until now, have been at loggerheads over  the hollow rhetoric of   corporate social responsibility paraded in the face of damning evidence to the contrary – the continued exploitation of labour and natural resources.

That gulf has yet to be bridged but assuming it is, it would involve a collaborative market strategy, spearheaded by green groups whose social networks can mobilise millions of users around a new idea.  It is green groups who can  give credibility to such a marketing strategy in a way  that Big Corporations simply cannot – despite the huge sums of money they can afford to throw at such a campaign. But for that to happen there needs to be a real meeting of minds and a willingness on the part of corporations to ditch the greenwash and get real. Openness, transparency and  absolute clarity on everything from their supply chains to so called ‘tax efficient’ products are the pre-requisites of any such collaboration.  A Big Ask, but not beyond the bounds of possibility. What do people think?


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