What circular economy is, why it matters and where we are now
Never has humankind faced a challenge quite like the climate crisis. Not only is it a global problem but to tackle it, we will need to rethink the way the entire world economy works – and do so as fast as possible.
Just a few months ago, Amsterdam-based not-for-profit Circle Economy published a brand new report on what the score is between humans and climate change. Spoiler alert: we’re not winning. On a more positive note, circular economy, the Dutch company’s flagship idea, might just be our most powerful weapon against global warming.
How can a company rise to the challenge of being profitable and environmentally responsible at the same time? This is the question we, as the founders of a zero-waste event management company, have asked ourselves – and others – over and over again. Here’s what we’ve found.
Quick recap: humanity is on the path to self-destruction. As laid out in Lee McIntyre’s Post-Truth, the fake science machine is at full steam playing down the gravity of the issue, even though anyone who has ever read anything on climate change can see that we have a ticking time bomb at hand. Consider this: in 1947, the Marshall Plan aiding European economic recovery cost the United States some 103 billion dollars in today’s money. According to McKinsey’s latest study on the economic impact of global warming, the expected damage just from increased hurricane activity in North America will be ten times as much. It might be a case of apples and oranges, but you get the point.
And that’s just the tip of the iceberg. Less quantifiable but just as severe will be the societal impacts of climate change. To make things worse, political leaders don’t exactly seem to have a clear vision for what to do about it.
Time is of the essence, too. According to the UN, we have ten years left to figure out how to replace everything that uses gas, coal or oil, to reform agriculture so we can feed the world’s ever-growing population and to ditch plastic altogether, among other things. Oh, and we have to do all this in a polarised, pandemic-ridden world in the midst of the China–United States trade war.
On the bright side, leading companies, governments, NGOs and scientists across the globe agree, on paper at least, that even though the effects of global warming differ from region to region, the solution requires a concerted global effort.
To usher the world economy into the right direction, however, we need a model that allows us to create a new agenda so we can achieve the climate goals set by the UN. Especially because so far only the COVID-19 lockdowns could lower the presence of greenhouse gases to UN-recommended levels.
This is where circular economy comes – or should come – into the picture, a concept that keeps appearing in the news as it is being embraced by more and more innovation-oriented organisations, cities and governments.
Circular economy goes against the mindset of the “take-make-waste” model that has been deeply ingrained in our economy ever since the industrial revolution. Granted, linear economy, fuelled by fossil energy sources, has unlocked never-before-seen progress over the past decade. But not a sustainable one – not for businesses, not for the environment and not for us either.
What we need now is a change of mindset. We must rethink how we manage non-renewable resources, how we manufacture and use products and what we do with them afterwards. Only then can we create a world order that is as much about making a profit as it is about respecting the boundaries of our planet.
Instead of turning non-renewable raw materials into short life-cycle, disposable products that end up in a dump or at a processing site, the circular model views products as raw materials or components of another product in the future.
The environmental and economic benefits of the model were first shown in a 2013 study, published jointly by the foundation of legendary solo sailor Ellen MacArthur and management consulting firm McKinsey. Here’s a diagram from the study to demonstrate how circular economy works and how it can help us transform the world as we know it.
Waste and pollution are not created by accident. They are the result of “who cares” decisions during the design process. If we change our mindset when creating new products and processes so waste production is regarded as an error, we can make sure that whatever comes out of the design process will have nothing but positive effects.
If, for example, we only plan on using compostable materials for production or ensure that the finished product can be disassembled and recycled after use, our ecological footprint can be reduced significantly. Why does this matter? According to the European Commission, more than 80% of all product-related environmental impacts can be influenced during the design phase. Meaning that designers who develop products considering the product’s afterlife from the first sketch can make a world of difference.
By now, it’s quite clear that we must stop wasting our planet’s resources. So it’s time we moved on to designing and using products that don’t automatically go into the rubbish bin as soon as they break down. We must commit to using easy-to-repair, easy-to-recycle goods and materials that can be reborn as a part of a new product at the end of their traditional life cycle.
After decades of harming our environment, it’s time we joined forces to rebuild it. Nature is a giant, delicate cycle where everything serves as a nutrient for something else. In the same way, the fallen fruit on the ground fertilizes the forest soil, humans can embed their processes into the cycle of nature. Take Japanese rice farmers as an example, who use ducks to protect their paddy fields from their biggest enemy, golden apple snails. Side note: a steady snail diet also makes duck meat more delicious.
The good news is that we see more and more inspiring stories like this. L’Oréal has recently announced that they remain committed to their 50-million-euro biodiversity and circular economy plan, while global tyre producer Michelin Group has acquired a stake in Swedish tyre recycling company Enviro. The bad news is that they’re still the exception rather than the rule. We have a long, long way to go. Circle Economy, the Dutch company mentioned earlier, and who HighVibes had a chance to meet in person at this year’s Green Event and Innovation conference, has found that metrics are key to setting common goals and have calculated for the third time just how long the journey ahead of us is.
According to the latest Circularity Gap Report, only 8.6% of the global economy is circular currently. In other words, 91.4% of the 100 billion-plus tons of minerals, ores, fossil fuels and biomass extracted globally last year will not be recycled. In fact, due to increased raw material extraction, continuous stock build-up and lower levels of end-of-use processing and recycling, this number has only deteriorated in the past years.
But all is not lost. Here are a few reasons why it’s not too late to change our ways.
When we think of people born after the mid-1990s, we’re quick to think of a generation that’s glued to mobile screens, goes to protests instead of classes and spends hours a day on TikTok (whatever that is). But here’s the thing: they’re also the most eco-conscious generation that has ever walked the planet. A new study has found that Gen Zers are willing to even pay a 10% price premium for sustainable items. Add the Extincion Rebellion and Fridays for Future movements into the mix and well, long story short, you’d better not try to sell them fast fashion. The youngest of adults are all against unsustainable business practices – and not afraid to voice their opinion.
The coronavirus outbreak has not exactly helped climate change initiatives, but it might have opened up a few more eyes to the necessity of change. Mind you, not because people have suddenly realised how dangerous bacteria and viruses can be, especially those preserved in permafrost for centuries which are now reviving as the climate warms. Or because they’ve read about the 100-billion-dollar damage that a single hurricane has caused. But after they’ve spent a good three months within four walls instead of sipping Pimm’s at Regent’s Park, the fact that something is seriously awry finally dawned even on the most ignorant of them.
Over the past months, millions all over the world have experienced nature at its most forceful and realised why a healthier planet is in the best of interest of each and every one of us. Once the pandemic has passed and we start looking for answers for how we can avoid the next one, let’s not forget to start the discussion with the issue of climate protection.
Coronavirus and loud teenagers aside, profit remains the no. 1 priority for many business leaders, who still translate words like sustainability or CSR – or public relations for that matter – as unavoidable losses.
Circular economy, however, might just turn the tide. Several studies have proved that it can drive significant growth in global GDP, while climate change foreshadows an impending economic disaster. Turning linear products and processes into circular ones will accelerate innovation, recycling can help businesses save on raw materials, while reuse and quality-focused manufacturing processes can create new workplaces.
For now, the only proof we have of this is our own experience. But that’s enough for us to believe that we made the right choice when we decided to build a circular event management company. Drop us a line to find out why.