The benefits of a circular economy
Similar to sustainability, the circular economy is currently a hot topic in today’s business world. The term may sound complicated, but the circular economy is really based on three simple principles: designing out waste and pollution, keeping products and materials in use and regenerating natural systems. Let us further explain to you how it works and how you could benefit from it.
PUBLISHED: 28 July 2022
WRITTEN BY: Gijs de Mol
Table of contents
What is the definition of a circular economy?
The essence of the circular economy is that we must regenerate our materials and prevent waste from being produced in the first place. In contrast, in our current economy we take materials from the Earth, make products from them and eventually throw them away as waste – this process is linear and depletes the Earth’s natural resources. According to the Ellen MacArthur Foundation, which can be seen as one of the leading foundations in the circular economy transition, we should instead switch to a new, circular paradigm. This means that instead of our current take, make, waste mindset, we should rethink the way we use and design products, expand the lifespan of products by various forms of reuse (e.g. repair, refurbishment and remanufacturing) and find a useful application of materials after products have served their purpose through recycling and energy recovery.
How can you benefit from the circular economy?
The application of the circular economy for companies can be normalised into five circular business models. Waste to Wealth, published by Palgrave Macmillan, presents research from Accenture Strategy, revealing that these models have the potential to unlock $4.5 trillion in new market value by 2030, which could grow to as much as $25 trillion by 2050. Let us elaborate on them these models one by one.
1. Circular supply chains
When a company needs materials and resources that are scarce or polluting, they can either pay more or look for alternatives. When implementing the circular supply chain model, companies seek to source fully renewable, recyclable and biodegradable materials that can be used in successive life cycles to reduce costs and increase predictability and control.
2. Recovery and recycling
The recovery and recycling model creates an urgency to repurpose parts and materials previously considered waste. This allows companies to take advantage of discarded products that would otherwise end up in landfills to recover and reuse valuable materials, energy and components. So you literally make money out of waste!
3. Product life extension
4. Sharing platforms
5. Products as a Service
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