Can we turn the circular economy from a good idea into a great reality?

Nature hates waste. In nature almost everything is reused and recycled. When animals die, they decay, become food for plants, which in turn feed new generations of animals. As Elton John once sang, it’s the Circle of Life.

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Industry, on the other hand, is very much more linear in form. We have developed a system focused on the efficiency of consumption – the take/make/waste model. And with it comes an environmental price.

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Every year we produce around 400 million tons of plastic waste . Currently, just 9% of all the world’s plastics get recycled . Most is either incinerated, thrown into landfill, or ends up in the sea. In fact, It’s estimated that by 2050 , the total volume of plastic in the oceans could outweigh the total volume of fish!

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Our steel , concrete, and carbon-based energy production industries are all based on extracting raw materials from the earth rather than reusing them. There’s a huge environmental cost to extracting these materials for industrial processes. Take copper: to get 2kg or less of copper out of the ground, 100kg of earth needs to be moved, refined, and disposed of.

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The ability to break this cycle is precisely where the power of circular thinking lies. More and more companies are looking at how they design their products so they can be disassembled and recycled at their end-of-life. We’re seeing supply chains becoming increasingly integrated, so potentially reusable materials aren't left on a landfill but find their way back to the beginning of a product's lifecycle.

I love the example being set by small consumer electronics companies like Fairphone and Framework , who are designing smartphones and laptops that users can repair and upgrade at home. At the other end of the scale, fashion giant Nike has developed ISPA?(Improvise Scavenge Protect Adapt), an entire design division dedicated to sustainable trainer design.

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These examples, though, remain few and far between. For many of the businesses I speak to, circularity remains a great theory, less something easily put into practice. But as the saying goes ‘where there’s a will, there’s a way’, we just need to show that way.

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So to start with let’s look at some key obstacles in the way of making the circular economy a reality.

What’s putting the brakes on the circular economy?

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It’s become clear from recent conversations with business leaders that while sustainability remains a high priority, recent global events and disruptions are getting in the way of progress. It’s harder to justify a green premium during a pandemic or in the middle of a cost-of-living crisis.

Then there’s the sheer complexity of reorienting a complex global business. Moving from a linear model to a circular one involves creating new roles and reskilling existing ones, developing new internal processes, and integrating different technologies. That’s a whole lot of ‘new’.

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The encouraging news is that more and more stakeholders want companies to change and adopt more sustainable business models. As I highlighted in my last piece, customers want it, investors want it, and employees want it. Of course, leaders want it as well – they’re just cautious about implementing what can feel like fundamental changes to their existing business model in the midst of uncertainty.

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There's also growing government support for change. The European Commission, for example, has promoted several projects. These include the Fit for 55 program , which aims to align EU policy with the target of 55% emissions reduction by 2030. They have also supported the circular electronics initiative , which lobbies for customers’ “right to repair” electronic goods, and for the improvement of electronic waste collection, among other measures.

The EU is also launching the Digital Product Passport , a digital record of an individual product’s complete lifecycle, which will help establish the traceability of components throughout the lifecycle.

And it’s not just in the EU. South Korea, through its Green New Deal , is planning to make available $17 million in subsidies to electric car buyers, and $33.5 million for hydrogen fuel-cell electric vehicles. Even more ambitious is the USA’s $800 billion Inflation Reduction Act , of which $369 billion has been earmarked for green energy and climate change mitigation initiatives.

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The momentum is real. The institutional support is growing. For companies that have the vision and capability, there has never been a better time to act.

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Embracing the challenge, building the solution

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What’s really encouraging is that major industry players are starting to really embrace circularity. One of the most inspiring examples of circularity in action I’ve come across is Renault. Under CEO Luca De Meo, the company is shifting its identity from just being an ‘automotive brand’ to being a ‘technology, services and energy brand’, a move described as ‘Renaulution’. It represents a massive step towards a circular model, and places a great emphasis on upgrading and maintaining vehicles that are already in use, alongside new sales.

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The cornerstone of this new model is the Re-factory, Europe's first plant dedicated to extending vehicles’ lifespans. In a move that has required a deep reorganization of its manufacturing operations, Re-factory will recondition more than 100,000 electric vehicles and convert diesel utility vehicles to 100% electric or biogas powered.

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Of course, reorienting your whole value chain after years of take and make linear thinking can seem like a daunting task. Where do you even start?

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The trick is to make the path clear for both you and your stakeholders. That means the first, critical, component of the transition to circularity is deepening your understanding of your existing value networks. Doing so enables you to plan, predict, and perfect potential changes.?

For me, this principle has been brought to life through our work with Bouygues Construction . This ambitious renovation of a sports complex in a Paris suburb used our 3DEXPERIENCE? platform to connect all the stakeholders across the value chain and share data, creating a single source of truth for the whole project.

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With proper visibility of the data in the ecosystem, Bouygues could take standard modeling a step further and create a virtual construction twin, which captures and models operational data in in real time, to test every stage of the project from purchasing materials through to the assembly of the building.

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Another powerful tool for exploring what a more circular future would look like is life cycle analysis (LCA). LCA approaches allow you to integrate operational and design data and explore, in granular, real-time detail, what’s happening at every stage of a product’s life. It means businesses can design more intelligently, take steps to tackle wasteful activities and make decisions that lead to more circularity .

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For example, if you are manufacturing glass bottles you might think you’re making a sustainable product – but these products might be less recyclable in actuality. LCA can shed light on crucial questions like: how is glass recycling supported in certain markets? What products can be recycled where? Are there any specific regulations I need to consider when I’m designing my logistics chains??

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Armed with this information companies can be proactive and adapt operations to make their processes truly circular. After all, 80% of the environmental impact of a project is decided at the design phase. LCA lets you understand how exactly that impact ripples out through your value chain.

Just in time, we’ve woken up to the strains that industries are putting on the natural limits of our planet. Circular economies provide us with a practical philosophy that lets us operate safely within those limits. And, excitingly, we have the digital tools to put that philosophy into practice.