What is the Circular Economy and what are its benefits?

The Circular Economy is an economical model that redefines the approach to production, consumption and resource management. It makes this by trying to deconstruct the linear economic model. In fact, since the economic boom on, the model has been the linear one, based on four main cornerstones: take, make, consume and throw away.

The reason why, at a certain point, the Commission has decided to change the course or, at least, to make a commitment to do this, is clear. Indeed, in less than 100 years the environment and temperature have been changing radically, causing the changes that we know very well. Among the causes, there is the economic boom as well, that has led to consider the industrial waste as rubbish to dispose, without a real recovery plan.

Now there is awareness of the problem, both at the personal level and at the entrepreneurial and state level. This is why the Circular Economy was born and it is important to adopt it.

What is the Circular Economy?

As mentioned above, the Circular Economy is an economic model that promotes circular production and consumption cycles, therefore aimed at minimizing waste production. It is also a system that promotes sustainability as a lifestyle, encouraging personal reflection and the adoption of less impactful habits through contemporary and user-friendly information channels.

What are then the key-words of the Circular Economy? Reduction, reuse, recycle, repair, as well as sharing and leasing can be an example as they are part of a circular business context called “product as a service”.

Reduction

In the production sector, it aims to a reduction in the use of raw materials for the creation of new goods in favour of recovered/recycled materials.

In the personal sector, it wants to encourage consumers to more responsible and sustainable purchasing habits, avoiding unnecessary consumer behaviour.

Reuse

Anti-waste practice that encourages the re-use of goods and the adoption of sustainable choices in relation to the type of product purchased.

In example: use reusable shopping bags (fabric, recycled plastic, etc.) instead of disposable bags; use reusable and washable containers for home organization and food storage; prefer the purchase of second-hand or vintage items to fast-fashion items less durable and, consequently, very polluting.

Recycling

The goal of recycling is to enhance waste, transforming it into secondary raw material to be used for the production of various types of products. This system is present all over the world with recycling plants ad hoc for the type of waste material, but still requires the collaboration of the final consumer.

With its choices, this latter is in fact able to improve upstream the collection and selection process by buying products that are easy to recycle, paying more attention to labels, informing on how separate collection works in your country, finding out how  industrial recycling processes work.

Not only reduce, reuse and recycling.

If these first three keywords are well known and used, the term “product as a service” does not enjoy the same popularity. In short, it is a circular business model based on the concept of the non-propriety of the goods used. Among the examples, we can include the practice of leasing in the automotive market -but not only- where the usufruct is exclusive and certified, but the ownership of the property remains in the hands of the automotive company/ dealer.

Another example is the rental, a practice that is more flexible than leasing. It provides for the shared use of a certain asset on the basis of agreed specifications. Car-sharing and bike-sharing are types of non-exclusive rental that allow the user, via a dedicated app to download on their smartphone, to pick up the vehicle at a certain point in the city and leave it in any suitable area (car and bicycle parking, etc.). Obviously, this type of service is designed almost exclusively for the city, with several active rental companies and an often electric fleet. However, the rental world is very wide and encompasses various product categories, from tools, equipment for making repairs, household work to toys and sport equipment.

The focus of the Circular Economy is, however, the reduction of waste and its conversion into useful and valuable materials. To share a few numbers, in the United States, the amount of waste produced each year is around 268 million tons (reference to household waste) with an average of 20 kg of waste produced per person per day. In the European Union alone, more than 2.2 billion tonnes of waste are generated each year. Waste that is only minimally recycled and recovered.

Waste is gaining increasing attention in world politics, mainly because of the worsening environmental situation that it contributes to feed. That is why the EU, like other countries around the world, is updating its plans for the environment, climate and waste management.

The principles of Circular Economy

The Circular Economy, unlike what you might think, is a model that changes and updates every step of the production and consumption process. It focuses not only on enhancing the final waste of the process, but also on creating a resilient and sustainable economic system that goes beyond recycling, looking at the complete regeneration and reuse of materials.

So we talk about sustainable design, which involves the design of products that are durable, but also easily repairable, removable and recyclable. The idea behind, in fact, is to minimize waste from the beginning of the production process, thinking about the complete life cycle of the product. While, the concept of reuse and recycling in the Circular Economy sees waste materials as valuable resources. This means reintegrating materials and products into the business cycle for as long as possible, through practices such as recycling, repair and reconditioning. Finally, the regeneration principle aims to restore natural ecosystems and reduce the environmental impact of human activities. This is a holistic approach that considers the long-term effects on the environment and society.

Benefits of the Circular Economy

The Circular Economy is a model that leads to many advantages:

Pollution reduction and environmental protection: by applying the circular model to our economy it is possible to reduce the use of natural resources, thus reducing the destructive phenomena that see many areas of the world as protagonists. At the same time, greenhouse gas emissions would also see a decrease, precisely thanks to the transition to more sustainable production processes.

Self-management and conservation of resources: finding new usable materials in waste (secondary raw materials produced by recycling processes) allows companies to optimize their processes and avoids importing raw materials from outside, totally or just part of them.

Economic growth and employment: moving towards the Circular Economy also means increasing competitiveness, stimulating innovation and economic growth and increasing jobs. We are talking about 700,000 more jobs in the European Union by 2030. It is estimated that more than 30 million new jobs will be created worldwide by 2030.

There are therefore many advantages, both industrial and societal. In fact, it is always good to remember that the Circular Economy also brings benefits to the consumer, as it provides products with a sustainable design, therefore more durable and innovative, able to improve several aspects of his life, including the economic one.

Tips for applying the Circular Economy in a business

The drive for the adoption of sustainable processes in companies is visible on several levels and in many different sectors. However, to integrate the Circular Economy in the company, it is necessary to develop an innovative and collaborative approach to the market.

There are many strategies that can be adopted, from sustainable design to the enhancement of waste. Here are some ideas to be applied to the production process:

Production Process Analysis

Examine existing processes to identify where they are efficient, and where it is possible to increase reuse and recycling. This must include product life cycle and durability analysis to identify opportunities for waste reduction.

Sustainable Design

Design products with their end of life in mind. This means considering the ease of disassembly, reparability and the use of recyclable materials.

Partnerships and Collaborations

Establish relationships with suppliers, customers and other companies to create a circular supply chain. This may include sharing resources, reuse of other companies’ waste materials, or involvement in community recycling initiatives.

Recycling Innovation

Invest in advanced recycling technologies to turn waste into resources. For example, the use of technologies for the recycling of packaged food waste with the aim of enhancing plastic and organic components (here is the example of the Grupo Resiter). In addition, there can be technologies for the valorisation of complex wastes such as pulper reject coming from the paper recycling process (such as Lucart did).

Certifications and Environmental Standards

Obtaining environmental certifications can not only improve the corporate image but also guide the company towards more sustainable practices.

Feedback and Continuous Improvement

Regularly assess the impact of practices and make continuous improvements. Feedback from stakeholders can be valuable to further refine strategies.

To conclude

The Circular Economy represents a fundamental paradigm shift for a more sustainable future. However, it is not only an ecological imperative, but can also lead to significant economic benefits, such as reducing landfill or energy costs.

Through the promotion of a more efficient use of resources, waste reduction and the encouragement of sustainable production practices, it contributes significantly to the realisation of a green economy, in line with the objectives of the European Green Deal and supported by organizations such as the Ellen MacArthur Foundation.