An Introduction to the Circular Economy: Opportunities for Businesses to Create New Value

Global ‘consumption’ continues to grow, fuelled by a huge upsurge in people with income to spend – ‘consumers’. Families around the world are earning enough money to improve their standards of living. This is a fantastic business opportunity – but we live in a world with finite resources: metals, minerals, fossil fuels, and available land, water and clean air. Demand is outstripping supply.

Increasingly, we are recognising that our current ‘linear’ systems – take some materials, make a product, use it and then throw it away – are not fit for purpose. The circular economy unlocks this problem, by ‘decoupling’ resources from consumption. Switched-on businesses are re-thinking product design, material choices, business models and supply chains.

‘... The goods of today become the resources of tomorrow at yesterday's prices...'[i]

Business leaders are focusing on resource efficiency and ‘doing less bad’ – instead of rethinking their products and services to reduce risks, improve resiliency and ‘do more good’. Early biofuels used specially grown crops – competing for land with food and fibre crops. Newer biofuels use waste from food or fibres – gaining more value from the same crop without needing extra land.

Dell, IKEA, Patagonia, Renault and others are doing some amazing things, but my concern is for the vast majority of organizations. The perception that the circular economy needs big-budget R&D, or is just a few initiatives for ‘sustainability PR’, almost creates excuses for inaction.

One of the barriers I frequently come across is the need to focus on cost and resource efficiency; but the lack of luxury of investing in new products or processes. Hundreds of organizations are starting to include recovery, reuse, repair, remanufacturing and recycled materials to create new value. It is often easier to do something exciting, disruptive and compelling in industries that have been in steady-state mode for too long.

This spurred me on to pull together a wide range of insights and examples in my book, A Circular Economy Handbook for Business and Supply Chain, to spark ideas and publicise the wealth of opportunities to use circular approaches to create new value and reach new markets. From Ananas Anam and learning from Piñatex™ as they use traditional methods in the Philippines to make luxurious cloth from pineapple leaves, to iFixit, a wiki-based site that teaches people how to fix almost anything; the book arms readers with a host of examples, covering a range of industry sectors. Examining material choice, product and process design with supporting business models, there is a wealth of information to invigorate your journey towards circular, ‘future-proofed’ products and services.

[i] Walter R. Stahel, Nature magazine Vol 531 p437, http://www.nature.com/news/the-circular-economy-1.19594 [accessed 07/04/2016]