The Circular Economy

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The circular economy is a concept that is still largely unknown under this term and as it’s been something I’ve been trying to work within , mainly because I aspire to work under those principles when I own my own company one day, I will help spread it. As such I will explain what it is, why it is needed and how it will be put into practice.

What?
The name people usually know the circular economy under the term coined by Michael Braungart and William McDonough “Cradle to Cradle”. But since 2002 it has developed to become a more holistic economic principle, although still based heavily on their ideas. The big addition the name change gives is a lot more seriousness and an official feel.

Currently, our economy is driven towards production, consumption and waste, a linear economy on a cradle to grave principle. Materials and products are developed for use and disposal, mostly not looking at how they could have another life after their use. Recycling does exist, but more as an afterthought rather than one designed as such. By that I mean that the books made of recycled paper that are so ‘environmentally friendly’ usually are more detrimental to the reader’s health than a new paper copy of the same, because the paper used for it wasn’t made to be used again. There is a lot that recycling can do, and it’s many times better than the alternative, but it’s an end of cycle thinking.

In a circular economy system products are designed to be taken apart for easy reuse, remanufacture or recycling. Recycling in this situation is the last case scenario, as it’s usually associated with downgrading (using a material for a product of lower quality than the one it served before) rather than upgrading. With reuse or remanufacture a technical material/product can be maintained and used for much longer without losing usability.

By ‘technical’ material I mean non-organic, as organic matter has a completely different cycle, because it is used for composting and as well as in anaerobic digestion, taking potential energy out of it before putting it back into the earth as material the biosphere can use.

Keeping these cycles separate after the point of consumption is important in order to imagine that all the waste that you currently recycle would be ‘tarnished’ if compost was added to it, not being fit for recycling anymore. The same goes for any compost with plastic in it. They are simply incompatible as one is nutrients and the other materials.

Why?

The way that I personally understood the importance of the circular economy best is through rare earths. Rare earth elements are also called Lanthanides, which are those 15 elements that appear in that first line under the periodic table with a connected back up to the table. The ones you always ignored in high school chemistry. They are also extremely widely used nowadays, as all of you with a smartphone or a laptop use services they provide every day.

Rare earths are also at over 90% in China, meaning they dominate all those markets, but instead of getting into markets, they are also rare (as indicated by their names). When an iPhone reaches the end of its use nowadays it’s thrown away, sometimes through the retailer, sometimes not, but many times these rare earths end up in landfill or in an e-waste dump anyway. Seen as they are rare and we need them, and unlike oil we can actually use them more than once, why are we throwing them away? I like my laptop, and I know it will die and I’ll have to buy another, but if those metals run out it will be difficult to continue producing laptops without them (they are that good).

They are rare, expensive, recoverable materials that are being thrown away. However, if they were designed to be easily taken out of the phone they served, they could be repurposed for a different phone after maintenance without a difference in the power of the product.

The circular economy can solve that problem and so many more. There are always materials that aren’t worth the cost of recovery, and as such landfill wouldn’t be eradicated, but it could be minimised.

And yet, things that have this good connotation to them must certainly be very expensive, right? Not really. It’s just more expensive to implement these changes rather than staying with the status quo.

How?

So it’s necessary to have a transition to a circular economic system, a utopic future where all materials used are designed into products and systems from which they can easily be extracted for reuse, remanufacture or even recycle. A place where materials are cycled in such a way that companies can cut costs, increase services and work at profits through customer retention instead of repeat sale.

Sounds great, doesn’t it? And really, it is.

Renault trust this system so much that they have a car model that is completely remanufactured from an old model with the same exact warranty and at a slightly lower price. This is because it is remanufactured and not new.

It saves costs in production and buying the raw material. It also means that instead of selling a product straight, a company can provide a printer on contract that they maintain whenever it needs to be used without losing the customer, generating steady profit without needing to produce excessive printers.

I’ve mentioned the word design a few times in this article and that’s an important key. Not only do designers need to know how to design for reuse and remanufacture to be possible, and for recycling to work properly as well, but also companies need to have the wherewithal to ask the designers to design in such a way and have a plan of product recovery sound enough to accommodate that.

The circular economy won’t be easy to apply to the existing company systems, as it will need big logistical shifts, an investment into strategy, planning and cultural shifts. But nowhere does it say that it needs all to be done at once. Any drastic change to an organisation should be done systematically, with constant reviews about the mistakes in the rollout and the gains in efficiency. As such in Renault, it was applied to one factory in Choisy-le-Roi and then rolled out to the network that handles the remanufacturing of the car.

The process won’t only have to be proved systematically in all markets, it will need to be shown as feasible in different countries, different parts of the supply chain, in different parts of the economy and in different size companies. When it gains traction it will start receiving criticism as a system, and that’s where the work that the Ellen MacArthur Foundation becomes critical. They have focussed on showing how feasible the system is, on convincing companies to adopt in small doses the practices and recruiting research through top universities to be done in the area. They are the ones who made the Circular Economy package something coherent, implementable and mainstreamable, working with McKinsey to show how financially viable it is. They are giving the Circular Economy a good name associated to Renault, M&S and Ikea before people can start tearing it down.

Personally, I think that the circular economy also represents the end of Corporate Social Responsibility, as it incentivises good practices throughout the value chain, making ‘doing good’ an integral part of the business process instead of a last minute add on. Not only will products be done the right way, but companies will also do the right thing.

Benjamin Tirone Nunes.

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