Circular Economy How Will it Impact Improvement Practices?

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The Circular Economy

Discussion Lead: Michael Bremer

The circular economy is an economic system aimed at eliminating waste and the continual use of resources. It contrasts with a traditional linear economy, which typically follows a 'take, make, dispose' model of production. In a circular economy, the lifecycle of products is extended through strategies like recycling, reusing, remanufacturing, and refurbishing. The ultimate goal is to create a closed-loop system, minimizing the use of resource inputs and reducing the creation of waste, pollution, and carbon emissions.

Key Principles of Circular Economy

1. Design Out Waste and Pollution:?Products are designed to be reused, repaired, or recycled, with minimal waste generated during production.
2. Keep Products and Materials in Use:?Maximizing the use and lifespan of products and materials through strategies like reuse, refurbishment, and recycling.
3. Regenerate Natural Systems:?Ensuring that economic activities support and enhance natural systems and resources rather than depleting them.
4. Learning Organization: Leadership creates an environment that respects a diversity of perspectives and encourages employees to find ways for the organization to improve in alignment with circular strategies.

Benefits of Circular Economy

• Environmental Benefits:?Reduces waste, pollution, and carbon emissions.
• Economic Benefits:?Creates new business opportunities, reduces costs by minimizing resource inputs, and fosters innovation.
• Social Benefits:?Promotes sustainable practices, creates jobs, improves community well-being and conserves natural resources.

Challenges and Considerations

• Transition Barriers:?Existing systems and infrastructures are often linear, making the transition to circular models challenging.
• Policy and Regulation:?Effective policies and regulations are needed to support circular economy practices.
• Consumer Behavior:?Shifting consumer attitudes and behaviors towards sustainable consumption is essential.

Questions:

1.???? How radically will the Circular Economy change the current business model of 'take, make, dispose' model of production??

2.???? What role will innovation play in advancing the circular economy?

3.???? How can governments encourage the adoption of circular economy practices?

4.???? How likely is it a substantial change to a circular economy will happen (why/why not)?

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Readings

What is being done to implement the Circular Economy?

Towards a Circular Economy: Business Rational for an Accelerated Transition ? (good overview of what this is all about)

Renew Program at Eileen Fisher (womens’ clothing) – this is a company that has moved in this direction

EU Circular Economy Action Plan ??The EU has an action plan with expected (hoped for) outcomes.? There is no guarantee the outlined actions will fully produce the desired results.? But it’s an interesting list.

Case Study Examples (just scan the titles, to see the variety of things being done)

U.S. National strategy for reducing food loss and waste

EPA Building a Circular Economy for All ? - sort of a PR piece by the EPA on the work being done

Background Information

Successes of Circular Economy Initiatives

Circular economy initiatives have seen various levels of success across different sectors and regions. Some notable achievements include:

1.???? Reduction in Waste & Increased Recycling: San Francisco & New York have made significant progress in waste reduction and recycling rates. San Francisco has achieved an 80% landfill diversion rate through robust recycling and composting programs?(US EPA ).

2.???? Corporate Engagement: Many large corporations are embracing circular economy principles. Companies like Patagonia, Apple, and IKEA have implemented take-back programs, product refurbishing, and material recycling efforts that have set industry standards for sustainability?(REMADE Institute ).

3.???? Innovation and Product Design: Innovations in product design have led to more sustainable products. For example, the Ellen MacArthur Foundation's partnership with various corporations has resulted in the development of products designed for longevity, repairability, and recyclability?(CircularCoLab ).

4.???? Policy and Legislation: The EU’s Circular Economy Action Plan has inspired similar policies in the U.S., focusing on reducing plastic waste, improving recycling systems, and promoting sustainable product designs. These policies have started to influence national and state-level regulations in the U.S. as well?(US EPA )?(GreenBiz ).

Major Roadblocks

Despite these successes, there are significant challenges that need to be addressed to fully realize the potential of the circular economy:

1.???? Infrastructure and Investment: Many areas lack the necessary recycling and waste management infrastructure to support circular practices. Significant investment is required to build and upgrade facilities that can handle the complexities of recycling and material recovery?(CircularCoLab ).

2.???? Consumer Behavior: Shifting consumer behavior towards more sustainable consumption and disposal habits remains a major challenge. Education and awareness campaigns are crucial to encouraging consumers to participate in circular economy practices like recycling, reusing, and repairing products?(US EPA ).

3.???? Regulatory and Policy Barriers: Inconsistent regulations and policies across different states and municipalities create hurdles for implementing uniform circular economy practices. Streamlining policies and creating supportive legislation at the national level can help overcome these barriers?(GreenBiz ).

4.???? Economic Incentives: The current economic system often favors linear production models due to cost advantages. Creating economic incentives for businesses to adopt circular practices, such as tax breaks, subsidies, and grants, can help promote a circular economy?(CircularCoLab ).

5.???? Technological Challenges: Developing technologies that can efficiently recycle complex materials or create new sustainable materials is still a work in progress. Continued research and development in this area are essential for advancing the circular economy?(US EPA ).

Addressing these roadblocks will require concerted efforts from governments, businesses, and consumers to create a supportive environment for the circular economy to thrive.

Excerpts from a McKinsey article regarding industries that will benefit the most; and some important ones to do:

There are significant opportunities for consumer goods organizations in a variety of sectors to shift their business models toward lucrative circular opportunities. The following are the?key drivers of potential growth ?across several segments:

• Fashion and luxury. The main driver of?circular fashion ?and luxury in 2030 will be an up to tenfold increase in recycled, sustainably produced products, which will contain a high share of sustainable fibers.
• Electronics. The €65 billion to €90 billion European market for circular electronics in 2030 will be driven primarily by refurbished products. The market for refurbished smartphones, laptops, and tablets is already growing fast; McKinsey expects increased circularity with respect to small, branded home appliances (major home appliances will be better suited to maintenance and repair).
• Home and living. The market for circular home and living, estimated to be worth up to €45 billion in 2030, will be driven by sustainably produced furniture, that is, made with wood certified by the Forest Stewardship Council, and home goods containing sustainable materials.
• Sports. The market for circular sporting goods in 2030 will be driven by recycled, sustainably produced apparel and footwear products, as well as sports equipment.
• Fast-moving consumer goods (FMCGs). The market for circular nonfood FMCGs will be shaped by ability to package goods in 100 percent recycled or biodegradable material.

Selling more circular products is one opportunity—but circularity is also about servicing products. The maintenance and repair service market, including services like fashion mending, battery replacement, and sports equipment servicing, is estimated to be worth up to €70 billion by 2030. This growth will be primarily driven by providers acting at scale. Other industries can incorporate these concepts:

• Plastics. Demand for circular plastics has led to outsize margins in recent years. But for circular plastics to meet global demand, investment is needed. For example, as much as?$100 billion of investment ?will be required for plastic packaging to achieve the goal of containing 20 to 30 percent recycled materials.
• Batteries. Global demand for lithium-ion batteries is expected to soar over the next decade, with batteries for mobility applications like?electric vehicles ?accounting for the majority of demand in 2030. For battery players to achieve the full potential of a circular value chain, they will need to?adopt circular business models .
• Cement and concrete. Demand for cement and concrete has nearly tripled over the past 20 years. The cement economy is a?major contributor ?to global emissions, and up to 40 percent of today’s solid waste is created through the construction and maintenance of the built environment. Circular technologies, including alternative fuels, carbon curing, recarbonation, and carbon capture and storage, could help decarbonize?about 80 percent ?of total concrete and cement emissions by 2050.

Optional reading material

Few Companies embracing the Circular Economy

12 Companies embracing the CE ?(4 startups and 8 established brands)

Towards the Circular Economy - Executive Summary pages 6 to 12

Overview of EU Action Plan ? The detailed action plan is above.? This link contains a broad number of readings.? It also lists their objectives:

Measures that will be introduced under the new action plan aim to

• make sustainable products the norm in the EU
• empower consumers and public buyers
• focus on the sectors that use most resources and where the potential for circularity is high such as: electronics and ICT, batteries and vehicles, packaging, plastics,?textiles , construction and buildings, food, water and nutrients
• ensure less waste
• make circularity work for people, regions and cities
• lead global efforts on circular economy