5 insights into the circular economy
Categories: CSR, Sustainability
The circular economy naturally interests me as an environmental idealist. And as someone who’s prone to pessimism about the state and fate of our planet.
It always give me hope when I write about a client’s circular economy activities and innovation – from recycling and remanufacturing truck parts and plasterboard to pay per lux lighting systems. Keen to know more about other companies, the circular economy seminar at edie.Live 2016 made up my mind about attending the conference. And it opened my mind to a handful of things…
1. Opportunities exist in unexpected places
It was refreshing to learn about circular economy (CE) activity outside of manufacturing. This included Veolia’s transformation from waste contractor to CE partner. It’s doing some very interesting work with Diageo on creating energy and fertiliser from the by-products (not waste) of whisky distilling.
I was also surprised to hear how Whitbread, owner of Premier Inn, has dipped its toe in the CE waters, recycling old uniforms into building insulation. The seminar on fashion waste highlighted different initiatives and studies that close the loop on fabric recycling, too.
2. Effectiveness is more important than efficiency
WRAP’s stats on the environmental benefits of extending the life of products were eye-opening. Getting an extra nine months’ wear out of clothes apparently reduces CO2, water and waste by up to 30%. And given that textiles are the UK’s fifth biggest source of waste, it’s about time we started taking this as seriously as food waste. Or waste electrical and electronic equipment (WEEE).
But while the fashion industry may be guilty of marketing new colours rather than considerate consumption, Tech UK was at pains to point out that technology companies do not build obsolescence into their products. Most of our WEEE results from consumers’ desire to upgrade and dispose of old kit.
Besides, the problem isn’t so much the amount of WEEE, but the amount that gets co-mingled and shredded in the EU – 80%. A clear case of CATNAP – cheapest available technology to narrowly avoid prosecution. Compare this to Japan, where the law requires manufacturers, retailers and consumers of white goods to pay for end of life consumables to be collected and recycled. This provides the means to properly deconstruct products and segregate parts into high-value materials.
3. IoT is an essential CE enabler
All the speakers agreed on the need for more data to improve the opportunities and effectiveness of circular systems.
Today, approximately 10 billion products globally contain embedded technology. This Internet of Things (IoT) is already helping to extend useful life by remotely diagnosing the condition of products and maintaining them before they break down and need repairing or replacing.
Tech UK predicts that more than 25 billion products will be part of the IoT by 2020. The waste managers and CE proponents want to see more radio-frequency ID (RFID) tags in there to help manufacturers locate and return end of life products to extract maximum value.
Interestingly, Whitbread said it would use such data to improve its transfer of knowledge as well as materials.
4. Changing mindsets is the biggest issue
The experts also seemed to agree that changing human hearts and minds was a bigger challenge than solving technical and logistical difficulties. We live in a society where the full environmental and social costs are not included in the price paid for resources. This keeps the existing take-make-break linear economy artificially cheap.
And because a new item costs relatively little, and is so heavily marketed as something we must have, consumers don’t realise the benefit of keeping hold of something and looking after it to extend its life as long as possible.
Setting up a CE infrastructure comes at a price. But who’s willing to pay for it voluntarily? Maybe the rest of us need a Japanese law for sharing the responsibility and cost.
5. Success depends on new business models
There are different business models that contribute to a CE - as shown in Veolia's slide (above) - with sharing economies and products as services among the most popular.
We need to go beyond buying and owning stuff and get used to renting and returning goods to the businesses who make them. Where they can capture the most value out of them at end of life. We’re used to it for mobile phones, but that’s just the tip of the iceberg.
Big companies have been leasing business equipment and cars for years. Here at Ideal Worldsmiths, we’ve been leasing our business computers ever since the market opened up to SMEs. For change to happen on a massive scale, we need these options to be viable for the consumer market. I smiled when Radio Rentals and Rediffusion were mentioned, as we’d been having exactly the same conversation the other week.
I left the conference smiling inwardly, too. Pleased with our decision to change Ideal Worldsmiths’ business model: from a linear model of writing one-off pieces for clients to a circular model where we increasingly upskill in-house communicators to write as confidently for their business as we do. Where we sustainably transfer knowledge, rather than materials and goods. Always mindful that it will take time. As we were told: building a CE is not a race, but a slow process.