Circular Business Models Will Save The World

Disruption is a process that changes the way a linear supply chain works.

The changes in supply chains enabled by information technology and transparency of data, (for example Open Banking), has created new industries like Defi (distributed finance) platforms. It has changed the way banking is done and will continue to do so.?

For example, Revolut Bank, a Neo bank set up in 2015 is now more valuable than HSBC.

Traditional closed and protected markets are being opened by new business models and fierce competition founded on technological advances .?

So far, the drivers have been seen in old-world terms as savings on inputs increasing outputs. But, technological efficiencies can also contribute to environmental benefits. ?

Business and economic growth are no longer infinitely sustainable. So-called ‘Free’ goods are not free.?The environment is paying the cost of growth.?

There are finite limits to expansion in our physical world so expecting all businesses to keep growing is simply illogical.

The move towards circular rather than linear business models and supply chains creates greater efficiencies. This is a new type of growth - a growth of efficiency and it is proving attractive.?

The linear model is now under attack by circular models that are simply more efficient. Growth can be replaced by efficiency, which in the ‘closed model’, is also truly sustainable.

Society is now starting to organise itself for environmental efficiency. Reducing emissions caused by burning fossil fuels to produce energy, and the use of new ways to recycle waste products is now a priority. Many old business models such as supermarkets will have to adapt. Supermarkets control production and logistics prices in food and household goods. They drive prices down to make larger profits and pass on some savings to us. However, they buy from the cheapest sources and destroy local food supply chains driving farming businesses to compete for an ever-diminishing market. In doing so they ship goods from far away cheaper labour and land areas in Asia, South America and Africa. They produce nearly 30% of global emissions to bring us strawberries in February.

How would a circular economy be organised? Let's take the example of an African country with large debts and no oil. It has to pay a high cost for importing and transporting fuel to enable its industry to extract its rich mineral resources.

It will also have many waste products, which could be used as a fuel feedstock, plastic, used diesel oil, farm, animal, and human waste, perhaps coconuts from other production processes.

Currently, this waste is just piled in the street or burned to produce toxic gasses and carbon dioxide in an attempt to destroy it.?

By forming a closed circular economic model, you can use the waste materials to produce oil and gasses that can power the mining extraction and processing of raw materials. Building the recycling and extraction plants nearby further increases efficiencies.?

Investment in recycling waste to produce oil will be cheaper than buying it. But the model has a quadruple benefit.

The waste is taken out and dealt with productively and efficiently.

Toxic gases produced by burning waste materials such as plastic are eliminated and energy is produced where it is needed reducing the need to transport oil from port to factory.?

Lastly, the data can be organised to show what carbon savings can be made that can be fed into the cost savings to subsidise the project. The carbon market is showing a price of about $50 per carbon tonne saved. This is widely projected to increase to $180 per tonne by 2030.?

As the economy grows people benefit and they begin to understand the relationship between a truly sustainable economic model and the old colonial models that extracted all assets and profit from the colony and delivered them efficiently to the manufacturing economy or coloniser.

The carbon market and tax reductions for removing waste are other drivers which make new circular models more profitable than the traditional ones.

An industry like construction can make efficiencies in its material supply chain to harvest carbon credits. These savings together with new tokenisation technologies created by blockchain and cryptocurrencies could produce margin gains of as much as 30%. In an industry with a traditionally low margin, this is a game-changer.

You can appeal to a new market, reduce your marketing costs, increase your margins, and become a sustainable business. There are now clear indications that investors are beginning to understand this.

ESG investing is projected to be $53 trillion in 2025 by Bloomberg. Post-Covid consumers have now had a demonstration of climate change which has affected everyone's views of the world and the way we cIf you consume. The combination of investors' views, the carbon market, and new technology is creating the perfect storm.

Developing technologies allow waste products like tires, glass, wood, plastic, human waste, animal waste, industrial gas emissions to be recycled as power or new products. These processes are now achieving industrial scale and being refined. The rising price of fossil fuels and the incentives to convert to circular economies are making these new models attractive.?

The growth of efficiencies created by circular economies is sustainable and beneficial to all.?

The technology used to create new supply chain advantages creates a quick return on investment and a growth speed incomprehensible to old-style linear businesses.?

Converting gratuitous investment into sustainable investment was the goal agreed by The World Economic Forum many years ago.?This is now possible by using new technologies and circular business models.?