Embracing Circular Economy: Key Principles and Practicable Steps

In the landscape of modern business, the circular economy emerges as a transformative force, reshaping traditional notions of production and consumption. Unlike the linear economic model characterized by a take-make-consume-throw away pattern, the circular economy advocates for a holistic approach to resource management. It emphasizes the importance of sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products, thereby extending their lifespan and minimizing waste.

By keeping materials within the economic loop, the circular economy seeks to reduce the strain on natural resources and mitigate the adverse effects of waste and pollution. This approach, rooted in the concept of "cradle to cradle," recognizes the interconnection of economic activity and ecological health. Moreover, the circular economy presents a myriad of opportunities for innovation and job creation, from designing products for longevity to pioneering new sectors focused on secondary material production and remanufacturing. According to the International Labour Organization (ILO), if activities such as the ones above-mentioned would be implemented, millions of jobs globally would be created by 2030!

This shift from the usual isn't just about changing thoughts; it's a real commitment to protecting the environment and strengthening the world economy. 

Achieving a circular economy might seem complex, but it's definitely achievable. While it takes time and effort, there are simple steps that companies can take right now to make a big difference in their own economy and contribute to a more sustainable world. These actions depend greatly on the type of industry yet, there are a few that can be adopted by the majority of the sectors from textiles to food, including construction and electronics. 

Practicable Steps

Design for Disassembly

The first action is Design for Disassembly. Such practice consists of designing products that can be easily disassembled and each product’s component ought to be as replaceable and recyclable as possible. Design for disassembly (DfD) is a key part of circularity practices, aiming to keep resources valuable by making products easy to take apart for further use. It's all about picking the right materials and using fewer types of materials to simplify dismantle (e.g. paint and nails). Additionally, implementing a material passport provides crucial information on what products are made of and how to take them apart, recycle them, or send them back to the manufacturer. By embracing DfD principles, industries adopt a less wasteful approach, allowing for the repurposing or sale of materials and contributing to a more sustainable future.

Longevity and Durability

Other important pillars of the circular economy approach are designing for longevity and durability, including repair practices to extend product’s lifespans and minimizing waste generation. Selling durable products and offering maintenance and repair services to customers is vital these days. Repair initiatives encompass a variety of strategies, including in-house repair services, repair tours, third-party repair services, and do-it-yourself (DIY) kits. In the electronics industry, repairing is equally or even more important. Rapid technological advancements have benefited sectors like health and education. However, this growth has also resulted in a significant increase in e-waste, driven by short product lifespans and limited repair options. Therefore, designing durable products and allow repairment is an important step to mitigate overexploitation of natural resources, water and air pollution, among many other environmental problems that lead to climate change.

Product-as-a-Service

Another term often employed is Product-as-a-Service (PaaS). This term refers to business models where (physical) products are property and responsibility of the retail/sales company while the customer only pays for its access and additional services in return for a fee. In this model, when responsibly circular, the provider must offer high-quality and durable products that can be easily repaired, upgraded or returned at their end-of-life.  PaaS models introduce innovative solutions, yet they come with their own set of complexities, particularly regarding cash flow. Revenue streams are delayed due to recurring service fees rather than immediate product purchases. Additionally, establishing ongoing relationships with customers requires careful assessment of their creditworthiness and clear terms outlined in service contracts. 

Yet, PaaS models possess significant advantages in counter these challenges. They shift accountability from customers to service providers, encouraging greater efficiency in resource utilization and extending product lifespans, thereby boosting revenue. Strong service contracts and additional services such as maintenance and repair contribute to customer retention/loyalty, fostering stable, long-term revenue streams. Moreover, PaaS providers benefit from more predictable inventory costs and can utilize user data for product development and environmental impact assessment, ultimately making a positive contribution to the environment through optimized asset usage and material prioritization.

Planned Obsolescence

Another important action is to totally ban planned obsolescence, which is when a product is designed to specifically have a short lifespan so the consumer can buy it again. This intentional shortening of product lifespan, also called built-in obsolescence may appear in many ways in the consumer’s life, such as software updates in the electronics industry, or low-quality materials in the fashion sector. It represents increased costs for consumers notwithstanding the gigantic amounts of waste generation that could be avoided. 

Extended Producer Responsibility

Circular economy also entails the Extended Producer Responsibility (EPR) principle. This principle is defined as an environmental policy where the producer’s accountability extends beyond the point of sale and encompasses the entire lifecycle of the product. This approach involves shifting responsibility upstream to the producer, encouraging them to consider environmental factors during product design.

The strategy aims to boost recycling rates and minimize waste production and leakage by shifting the financial burden of end-of-life (EoL) management from the public to the producers and consumers of specific products.

The Bottom Line

In conclusion, the principles of the circular economy offer a promising pathway toward a more sustainable and resilient global economy. By challenging the linear take-make-consume-dispose model, the circular economy encourages businesses to adopt practices that prioritize resource efficiency, waste reduction, and environmental responsibility.

Key actions such as Design for Disassembly, Designing for Longevity and Durability, embracing Product-as-a-Service models, and banning planned obsolescence are critical steps in this transition. These actions not only minimize waste and resource depletion but also foster innovation, create new economic opportunities, and strengthen customer relationships.

In addition to the outlined principles, it's essential to recognize that there are many other equally vital components crucial for the success of a circular economy. For instance, reducing and innovating packaging materials plays a significant role in minimizing waste and environmental impact throughout the product life cycle.

Furthermore, it's imperative to acknowledge that environmental and social sustainability are inherently intertwined. Achieving a circular economy necessitates not only changes in resource management and production practices but also addressing the social implications of these shifts. This includes considerations such as fair labor practices, equitable access to resources and opportunities, and fostering inclusive economic growth. Indeed, environmental and social sustainability are two sides of the same coin, and both must be addressed comprehensively to realize the vision of a truly circular economy.

At Vivid Earth, we understand the urgency of adopting circular economy strategies to mitigate environmental impact and drive positive change. This approach is just one facet of the comprehensive services we offer to businesses looking to enhance their sustainability practices. For inquiries on how we can assist your business in implementing circular economy strategies and other sustainability initiatives, please reach out to us at info@vividearth.one or fill out the form below: 

References:

ILO. (2023, May). Mapping practices, initiatives and policies around the circular economy and emerging services in the retail sector. https://www.ilo.org/sector/Resources/publications/WCMS_880978/lang--en/index.htm

European Parliament. (2023, May 23). Circular Economy: Definition, importance and benefits. https://www.europarl.europa.eu/topics/en/article/20151201STO05603/circular-economy-definition-importance-and-benefits

Bell, M. G. H. (2021). City logistics and the urban environment. In Urban Form and Accessibility (pp. 359–378). https://doi.org/10.1016/c2019-0-00532-8

United Nations Environment Programme (2023). Sustainable production and consumption: Design for disassembly as a circular economy tool - Foresight Brief 031. https://wedocs.unep.org/20.500.11822/43586.

Circle Economy. (2023). The circularity gap report 2023 (pp. 1-64, Rep.). Amsterdam: Circle Economy. Available at: https://www.circularity-gap.world/2023?mc_cid=ec1fe29a80&mc_eid=e5689c01db#circular-solutions

Circle Economy. (2019, October 1). Product-as-a-Service Question Kit. https://assets-global.website-files.com/5d26d80e8836af2d12ed1269/5e4d0b66eb0887cb4ffa5e7c_PaaS-Question-Kit.pdf

European Economic and Social Committee. (2016). EESC study on planned obsolescence. https://www.eesc.europa.eu/sites/default/files/resources/docs/factsheet-en.pdf

OECD. (2023). Extended Producer Responsibility. https://www.oecd.org/environment/extended-producer-responsibility.htm

OECD. (2023a). New Aspects of EPR: Extending producer responsibility to additional product groups and challenges throughout the product lifecycle. In OECD Environment Working Papers. https://doi.org/10.1787/cfdc1bdc-en