The Circular Economy – same old, same old or the Holy Grail?

 

We have many problems in the world: one of them is the problem of scarce resources and electronic waste which arises from the way our modern economy currently operates. This approach is ‘linear’ in design where products are made, used by consumers and disposed of without a great deal of thought to environmental sustainability. The linear economy is powered by increasingly expensive fossil fuels, relies on continual economic growth and generates waste. 

 

An alternative approach to a linear economy is a circular economy. This is an industrial system which benefits society and nature; it aims to reuse products and the materials they are made of to realise their maximum value, as in a natural ecosystem. It is an industrial system that is intentionally regenerative in its design. 

 

The circular economy replaces the ‘end-of-life’ concept with restoration and moves towards the use of renewable energy. It reduces the use of toxic chemicals, which impair reuse, and aims to eliminate waste through the considered design of products and systems. In order to achieve this transition some experts see that a change of the entire operating system is essential.

 

The Ellen MacArthur Foundation has undertaken significant research into the circular economy summarised in the diagram below. 

 

They found that circular economy thinking and methodology is now being used in a variety of business applications. For example, recycling toner cartridges (HP), selling of light rather than light fittings (Philips) and motor vehicle take-back schemes (Renault). The lessons learnt in these environments are being considered for other applications such as the design, reuse, repair, repurposing, refurbishment and recycling of mobile phones. 

 

A report from the Ellen MacArthur Foundation, McKinsey and SUN estimates that a circular economy could allow Europe to grow resource productivity by up to 3% annually, creating a net benefit of £1.27tn by 2030. The report also suggests that a circular economy would increase the average disposable income for EU households by £2,110.

 

On 2nd December 2015, the European Commission published their Circular Economy Package. It certainly takes the agenda forward but, in the opinion of a number of industry watchers and experts, it is not going to have the impact that had been hoped for. 

 

Yet, it would seem that the business opportunities are there for the taking. The EC package suggests that, in the electronics sector, re-use, re-manufacturing and repair can play a big part in using scarce resources more efficiently. For example, the cost of remanufacturing mobile phones could be halved if it were easier to take them apart. If 95% of mobile phones were collected, this could generate savings on manufacturing material costs of more than €1 billion.

 

To assist the transition towards a circular economy, particularly amongst the local SME community, an event is being organised in Brighton. Growth International and the School of Business, Management and Economics at the University of Sussex have come together to run a circular economy workshop on Thursday 19th January at 4pm. 

 

It is recognised that SMEs have a key role to play in the circular economy. However, the opportunities and challenges they face in the transition to CE are under explored. The workshop brings together academics, businesses and policy makers with four specific aims: