The circular economy - why it matters

The Paris conference on climate change was the first milestone in a long journey for government, businesses and communities around the world. To address environmental issues, new ways of doing business are needed. A circular economy is a credible solution to our future challenge.

What is a circular economy?

The Ellen McArthur Foundation gives the following definition:

“A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and material at their highest utility and value at all times, distinguishing between technical and biological cycles”. 

For many years, the linear economy assumed that all resources were unlimited and that the biosphere would absorb all our emissions. This assumption has been proved wrong and resource consents and environmental regulations have constrained industrial inputs/outputs. We are now in a transition phase where organisations are striving to manage efficiently their resources and emissions. The goal is to reach a circular economy, where techno sphere/biosphere interactions are limited to renewable resources.

Why does it matter?

Businesses are facing a resource constrained world, raw material will become scarcer and therefore their prices will go up as more energy is needed to extract them. However, existing and emerging markets still ask for better, faster, healthier products and services.

An economy based on a “take, make and dispose” model is not a sustainable business and new models have to be implemented to “create more from less”.

What are businesses doing?

Many businesses have set up systems to reduce energy and water consumption and to mitigate air pollution (such as CO2) and waste generation. But once they have the low hanging fruits, what do they do next?

The Plan/Do/Check/Act model, as powerful as it is, has limits and a new model is needed to achieve significant improvement.

To implement the circular economy, two key principles must be adopted:

-          Life cycle thinking: use a holistic approach across your entire organisation 

-          Collaborative innovation: engage your stakeholders

It's already in NZ!

Circular economy case studies already exist in New Zealand. Two are presented below, one using the Life Cycle approach (Resene) and the second using the Collaborative approach (GETBA).

Resene PaintWise is a product stewardship programme that takes waste paint and paint packaging and either recycles or safely disposes of them. Since its inception in 2004, PaintWise has helped recycle 400 tonnes of steel and 200t of plastic that are used to manufacture new paint packaging. Resene also recovered 500,000 litres of paint - 160,000 litres were given to community. Adopting a life cycle approach and enhancing “servitisation”, which means generating and selling services rather than just a product, was a game changer. This enabled Resene to avoid the environmental impacts of paint manufacture and also reduce costs.

Great East Tamaki Business Association Inc was granted a Waste Minimisation Fund to reduce the landfilled waste of its members. Several tools have been developed, such as a waste minimisation network to engage collaborators, exchanges on best practices and improving the current waste management system. In its feasibility study, GETBA estimated that 745 m3 per month of waste could be recycled and diverted from landfill.

Learn how your business can benefit from circular economy by joining the Sustainable Business Network Conference.

If you’d like to know more about circular economy and discover how Catalyst Ltd can help you implement it, please contact Ben or phone +64 (0)22 434 5535.

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