How would you feel if you no longer bought a washing machine, or a car or a fridge and you leased them all from the manufacturer. In a circular economy, that’s how it would work. The idea is that if the manufacturer retains ownership of all the resources which go into the washing machine – or car or fridge – then the manufacturer will have an incentive to use them as efficiently as possible; to allocate all their resources to the highest return possible; to reuse all the resources and never throw any away. Never. So the washing machine would be built to last as long as possible, the manufacturer would repair it for as long as it still had an economic life, and then it would be disassembled and all the resources in it used to make something else, maybe another washing machine, maybe something totally different.
The circular economy involves the careful management of the flow of materials – biological materials and technical materials. The flow needs to be “circular”, a closed loop, so nothing is lost or wasted. The flow of biological materials – or nutrients – is designed so they re-enter the biosphere safely and build natural capital; and the use of technical nutrients – fossil fuel based raw materials – are designed to be circulated without entering the biosphere. All the while being used for their highest value use.
There’s a great diagram from the Ellen MacArthur Foundation that explains the circular economy and the difference between what they call the biological and technical materials.
Ten years ago Dame Ellen MacArthur had this vision while alone on a boat for 71 days sailing around the world: resources are finite. She was not an environmentalist. When she got back she spent a number of years exploring what to do and four years ago established the Ellen MacArthur Foundation. The Foundation works in education, business innovation and analysis to accelerate the transition to a circular economy.
Ellen MacArthur uses her notoriety to encourage big business to think about the future; to realise that the way the economy operates at the moment is not sustainable; that we need to change if there is to be a future for the world and for business.
Discussion about the circular economy emerged in the 1970s. There are five principles for the circular economy:
- Design out waste: Waste does not exist when the biological and technical components (or ‘materials’) of a product are designed by intention to fit within a biological or technical materials cycle, designed for disassembly and re-purposing. The emphasis on quality differentiates the circular economy from a recycling process, where recycling as commonly understood means recycled materials are used as a crude feedstock or raw material in the production of other generally lower value products.
- Build resilience through diversity: Modularity, versatility, and adaptivity are prized features that need to be prioritised in an uncertain and fast-evolving world.
- Work towards using energy from renewable sources: Systems should ultimately aim to run on renewable energy. The agricultural production system runs on current solar income but significant amounts of fossil fuels are used in fertilisers, farm machinery, processing and through the supply chain. More integrated food and farming systems would reduce the need for fossil-fuel based inputs and capture more of the energy value of by-products and manures.
- Think in ‘systems’: The ability to understand how parts influence one another within a whole, and the relationship of the whole to the parts, is crucial. Elements are considered in relation to their environmental and social contexts. Because more of the flows of materials, goods, and services are valued in a circular economy and because risk is reduced, the firm is compensated for less efficiency with lower costs.
- Think in cascades: For biological materials, the essence of value creation lies in the opportunity to extract additional value from products and materials by cascading them through other applications. For example, a holistic, cascade-based relationship with coffee would consider the entire fruit (the cherry) and the whole coffee-growing protocol. The entire shrub in its context also needs integrating: as a shade-loving plant, it may well be positioned adjacent to other trees. In addition, coffee production generates 12 million tonnes of agricultural waste per year. This waste could be used to replace hardwoods traditionally used as growth media to farm high-value tropical mushrooms, a market with double-digit growth (currently USD 17 billion globally). Coffee waste is in fact a superior medium, as it shortens the production period. The residue (after being used as a growth medium) can be reused as livestock feed, as it contains valuable enzymes, and can be returned to the soil in the form of animal manure at the end of the cascade.
The Ellen MacArthur Foundation has attracted high profile and large global partners – Cisco, Unilever, Kingfisher, Renault and Philips.
For example Unilever, an Anglo Dutch company with 240 factories in 67 countries, making things from marmite to washing powder, has an impressive commitment to sustainability and the circular economy.
Earlier this year Unilever reached its target of no non-hazardous waste going to landfill from all its factories throughout the world. All its resources were integrated into production systems which used all the raw materials and manufacturing byproducts to produce something, with nothing non-hazardous going to waste.
Another example is Aerofarms, based in a former nightclub in New Jersey USA, and now producing 700 tonnes of leafy greens per annum. AeroFarms does not use pesticides, uses 95% less water, and operates in a totally controlled environment. It grows over 230 different baby leafy greens, herbs and micro greens. LEDs provide the ‘sunlight’; organic seeds become leafy greens in 12-16 days instead of 30 days when grown in the ground; there are no herbicides, pesticides or fungicides so the plants don’t need washing. And because AeroFarms is on the East Coast there is less transport – 90% of the leafy greens in the USA come from the West Coast while the people – the market – live mostly on the East Coast.
Germany has laws specifically designed to eliminate waste ending up in landfill.
- The Closed Substance Cycle and Waste Management Act. It establishes a broad-based closed substance management system. Priority is given to the recycling of waste over waste disposal.
- The Packaging Ordinance. It transfers responsibility for taking back and recycling packaging waste to producers or distributors. It encourages producers and distributors to use packaging only where it is really indispensable.
- The End-Of-Life Vehicle Ordinance. It gives consumers the right to return their end-of-life vehicles free of charge. The manufacturers are obligated to observe legally prescribed recycling quotas and not to use certain substances and materials in production.
- The Battery Ordinance. It obligates consumers to return batteries to retailers or to local authority collection points. Manufacturers must recycle the returned batteries and dispose of non-recyclable batteries.
- The Waste Deposit Ordinance. It prohibits untreated biodegradable or waste rich in organic substances being placed in landfill. This prevents the accumulation of landfill gas – a key factor in protecting the climate.
The ethical dimension
Sustainability has many dimensions – the one planet concept is part, but a sustainable world has a broader ethical and social dimension. For example the recent controversy about two of Unilever’s 400 brands, Dove and Lynx, one which campaigned for women to be whoever they wanted to be and the other which used sexualised images of women to increase their sales, (mumbrella.com.au/will-the-real-unilever-please-stand-up-is-it-sexist-lynx-or-female-friendly-dove-98926) shows there is a long way to go. The Ethical Shopping Guide provides analysis of the policies and practices of different companies and covers many of the other factors we would take into account in making consumption decisions.
Two great resources on the circular economy:
- Cradle to Cradle Products Innovation Institute www.c2ccertified.org
- BBC World Business story on the circular economy in June which provides an introduction to the circular economy www.bbc.co.uk/programmes/p02tf7mh
Dinali did a blog on the circular economy about 12 months ago – sustainablecommunitiessa.org.au/2014/07/26/a-wasteless-world
Implications for SCSA
As SCSA we do a lot of work at the local level, but the circular economy is necessarily about large economies of scale in big business. The circular economy provides hope. If you explore some of the case studies on the EMF website, look up some of the partner company websites, subscribe to the EMF website, you might feel a little more optimistic about the future of the world and corporate responsibility. And you can ask local representatives of your favourite consumer goods what they are doing about the circular economy.