Why every organisation should be thinking about the circular economy  

August 9, 2023 Written by

Tags: environment sustainability

Imagine a world where every product is repaired, recycled or refurbished at the end of its use. Where we rarely, if ever, send things to landfills or waste incineration. Where, if we can’t extend the life of a product, we have ways to reclaim and re-use the materials it’s made from. This is a circular economy. 

The circular economy is a model of production and consumption which involves sharing, reusing, repairing, refurbishing and recycling pre-existing materials and products as long as possible. It marks a vital shift from the current economic system of ‘take, make, throw away’. The efforts to reduce waste and our use of finite resources are more important than ever, given the climate crisis we are grappling with.  

No industry will be left untouched by the move towards a circular economy. It’s set to impact every institution in our economy and every product we can conceive of, from the phones in our pockets to the shoes on our feet, to the tires on our bikes and the buildings we live in.

Let’s dig into the actual need for a circular economy, and what businesses need to consider before joining in on the transformation.  

Do we really need a circular economy? 

In 2017, a report by the World Business Council for Sustainable Development (WBCSD) showed that just eight key material streams (steel, aluminum, plastic, cement, glass, wood, primary crops and cattle) were responsible for 20% of carbon emissions, 95% of water use, and 88% of land use. At the time, two thirds of these materials either provided shelter or were part of food production, while the remainder contributed to manufactured goods, mobility and transportation needs.   

Overconsumption in the linear economy is an issue that prevails predominantly in developed economies, but the challenges and issues related to the processing of materials at the end of their life are mostly outsourced to developing economies. Britain is one of the biggest producers of plastic in the world, second only to the US, however, it exports around two thirds of its plastic waste – mostly to poorer nations who have to dump and burn it, seriously harming their local environments. 

Since the 2017 report, the move towards reusing, repairing and recycling products has gained momentum. However, progress needs to pick up the pace. Leading think tank Circular Economy Initiative and Deloitte recently partnered on a Circular Economy Gap Report, which highlighted that more than 90% of materials are wasted, lost or unavailable for reuse over the years, due to being locked into long-lasting stock such as buildings and machinery. The report outlines four key systems to shift our economy towards a circular one, which relate back to those identified by the WBCSD:  

• Food systems (i.e., how food is grown)  
• Manufactured goods and consumables (i.e., how products are designed)  
• Built environment (i.e., what materials are used in a building)  
• Mobility and transportation (i.e., how transit systems are developed)  

Some trailblazers are guiding the path for the future, such as Recycleye and thelittleloop to name a few, but larger industry movers need to push ahead to facilitate a whole economic transition.  

5 things your business needs think about when joining the circular economy  

1. Sustainability and circularity are inextricably linked and inevitable 

The reality for all businesses is that they won’t escape the disruptive effect of the shift to a circular future. It’s about ‘when’ not ‘if’. Put simply, in a world of finite resources, anything other than a circular business model is unsustainable long-term. Companies executing their sustainability plans and working towards achieving net zero need to have the circular economy as a key priority on their agenda. 

2. Understanding the multiple sides of the circular model will help you get ahead of the shift  

Getting ahead of the curve will prove a crucial move. The pressure to shift away from existing business models is coming from all sides, from consumer demands to reduce greenwashing, to government pressure to report on carbon emissions and investor pressure to report more stringently on ESG (environment, social and governance) issues. The double materiality of a circular business model is essential to meet the external pressures and opportunities at large for any organisation.  

3. Being the first mover takes bravery but pays back in market advantage  

Building a brand that challenges the status quo of consumption in a linear economy is no easy feat. Trailblazing companies and startups solving community-level problems are leading the way in the growing circular economy and answering calls for better-designed products and services. Brave conversations and ongoing dialogue with consumers are vital for businesses to capture a market advantage.  

4. Don’t underestimate the role behaviour change plays in bringing your audiences with you 

While circular economy business models are already disrupting existing linear businesses, one of the big challenges they face is changing consumer behaviours. It’s well documented that a circular product needs to be priced competitively, and the product needs to be as good, if not better, than existing linear products. Perhaps most importantly, the audience’s journey has to be smooth, so develop a dialogue with them to understand the challenges or barriers they face when swapping from a legacy linear product to a circular product. Ensure that new approaches are intuitive and easier to engage with than legacy liner business models.  

5. The circular model has no on/off switch: it’s a gradual journey with your stakeholders  

Creating, testing and implementing a circular business model never ends. Consistent communication with your teams, customers, investors, suppliers, and other stakeholders is essential to ensure the model is working the best way it can. Bring all stakeholders along on your circular journey, as it moves forward from the innovation phase to mainstream adoption.  

The journey to the circular economy is long and full of opportunity. We will dive deeper into the various sectors adopting the circular model, and keep exploring what we can learn from recent innovations.