Living systems have been around our planet for billions of years with a notable phenomenon, that they never require a landfill. Human civilization, ever since the advent of industrial revolutions was forced by capitalist models of economic growth by sustaining consumerism warranted a linear economic model. A model that involves a sequential chain of value creation activities in the mode of take-make-dispose pattern. Traditional economic theory based on finite resources, scarcity and optimum choices requires a quantum re-think since it is no longer a sustainable model for long-term economic growth and prosperity, as natural resources are depleting at precipitating speeds, threatening economy and ecology.
A consumerist society that hinges on crank materialism engenders depletion of natural resources on an alarming scale. The vicious cycle of extraction, value creation and disposal perpetuate environmental degradation, climate change and loss of biodiversity that threatens the existence of our species. Nature offers the best solution to reverse this cataclysmic ride. Following natural systems, that exhibit a circular flow rather than a linear path for resource production to consumption and disposal, a switch to circular economy is the panacea for a sustainable planet.
A circular economy functions on three interdependent variables, namely
- Elimination of waste and pollution.
- Circulate products and materials that go into production of those products.
- Regenerate nature.
Waste management of pollutants is the end-of-the-pipe in a conventional economy where products are designed to be wasted in a landfill or an incinerator and in the worst case, ends up in world’s oceans. Circular economy starts with upstream redefinition of design parameters. Products are designed to be re-used, re-manufactured and biodegradable. A harrowing case is the indiscriminate use of plastics in daily life. After a single use, it loses 95% of its value and it’s non-biodegradable by design. By consciously eliminating plastic usage in daily lives in the form of grocery bags, packaging name-branded clothes to straws and sippers is the first step in creating a cultural milieu on anti-plastic campaign.
Incineration methods of plastic products disposal entail release of toxic gases adding to greenhouse emissions. In a circular economy, all plastic products are designed upstream to be 100% re-usable, recyclable and compostable. Innovative design solutions entail plastic packaging is free from hazardous chemicals and is fully decoupled from finite resources. It is imperative to keep the plastic out of the environment by recycling it within the economy. A disquieting statistic reveals that if rampant consumption of plastic remains unchecked by legislation or through circular economic initiatives, around 600 million tones will enter world oceans by 2040, an ecological disaster, jeopardizing marine life, both flora and fauna.
Circular economy could drastically revolutionize food consumption, aids in regeneration of soil and promote biodiversity. Industrial farming is the singular malefactor of greenhouse gas emissions, is wasteful and polluting and adversely impact natural systems. For every dollar spent on food, two dollars are expended as health, environmental and economic costs. Intensive agricultural practices currently degrade 39 million hectares of soil annually. Food products that hit supermarket shelves are designed – from breakfast cereals to pasta – that includes product concept, ingredients selection, supply chains and packaging. Designing food products with diverse animal and plant varieties increases the nutrient profile, expand flavors and build resilience. To cite an example, currently only a few species of potatoes are used as food, whereas more than 4500 varieties exist globally that are disease resistant and resilient to pests and climate variability.
Pastas made of peas than wheat are empirically proven to reduce greenhouse gas emissions, builds soil health by fixing nitrogen into the soil that could potentially eradicate the use of synthetic inputs. Sugar is made from three main crops globally- cane, beet and corn- which could be expanded to food byproducts like fruit juice pulp, cacao fruit and coffee cherry. Such diverse exploration and inclusion will generate new revenue streams for farmers and optimize the use of agricultural land. Agriculturists are also experimenting with intensive grazing techniques called Silvopasture to produce milk where cows graze among the trees, helps soil regeneration by trampling plant matter along with nutrients from their urine and dung. The livestock benefit from diverse diet and enables sequestering of carbon in the soil.
Circular economy envisages a technical cycle for manufactured products from metals and alloys through innovative design elements built-in to various consumer products. Products are designed and engineered to have prolonged use by significantly improving quality of inputs, ingrained modularity leading to reusability and by the end of the product life cycle, enables disassembly and remanufacturing. Novel business and revenue models could be explored where the customer doesn’t own products but could be leased from the manufacturer in the form of product-as-service. Improving quality reduces costs, for example a washing machine that is targeted at lower middle class costing 27 cents a wash could greatly diminish the unit costs to 12 cents a wash by enhancing quality. The customer could enter into a lease contract for a specified time and pay-per-wash and at the end of the tenure, the customer returns it which in turn could be leased to another customer as the machine has higher lifecycle due to its impeccable quality. The manufacturer earns 30% more revenues from the intended lifecycle of the product and costs the customer 50% less compared to opportunity costs of ownership against leasing.
Stellar enterprise level initiatives are underway across the world to kickstart the circular economy. The French carpooling company BlaBlaCar, realized the colossal waste of capacity per car per capita and its sharing services platform has 100 million members in 22 countries. It doubles vehicle occupancy and dramatically cuts CO2 footprint. RealReal, an US based luxury goods retailer pioneered a booming market that sells through omnichannel distribution of upmarket brands like Gucci and Burberry. The company has hitherto 24 million users and the market size are projected to grow to 70 billion euros by 2025 from 33 billion euros in 2021. Two Italian designers are launching their first bio-degradable burial pod, an egg shaped organic casket named Capsula Mundi (world’s capsule in Latin) with a sapling planted on the top that receives nutrients from the bodily remains with the mission to turn cemeteries into trees, prevent environmental litter and to create life out of death.
Circular economic models have the potential to revamp global financial systems. A sharp point of departure from the highly leveraged banking system to cope up with demand and consumption led economic growth, circular economic models create sustainable finance, slow moving capital required for less new production – since most products have longer life, are recycled and remanufactured – opens up tremendous possibilities for long-term value creation, lower risk of debt-default, higher economic growth and increase in risk-adjusted returns for stock markets. BlackRock, the world largest asset manager with US$ 10 trillion AUM (assets under management) and Intesa Sanpaolo, Italy’s largest bank by assets have embraced circular economy as a strategic shift to re-build a sustainable world.
Circular economy is a change in mindset from the conventional linear systems to holistic circular flow of goods and services in compliance to climate change goals pertinent to Paris Accord and adhering to ESG objectives. Circular economy will radically redefine human relationships with nature in the future. Conservation and preservation of nature and its resources is central to this new economic model, that will enable a paradigm shift in human behavior of greed and ambition. Creating an ecosystem, economies, societies and enterprises based on a circular economic model will perhaps be the greatest investment, humans have collectively done for its continuation as a species.
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