Is Circular the New Linear?
What will the economy of the future look like? Governments, businesses, and communities have openly recognised that it will be drastically different from today; we cannot continue to extract raw materials to make goods that are used once and then disposed. Strategies such as recycling, sustainability, supply chain visibility, and corporate social responsibility have gradually become commonplace, but in recent years a more complete concept has come to the attention of global innovators – the circular economy.
A circular economy is one that drastically limits the extraction of non-renewable raw materials as well as the disposal of waste products. The model draws its inspiration from the natural world; it represents a living system. In nature, waste from one organic process is transformed into energy for another. This is the same in a circular economy. Products and materials are strategically recovered and reused as many times as possible, for as long as possible.
Although a challenging change in mindset, the circular economy model represents a huge opportunity for governments, businesses, and communities; the World Economic forum estimates that by 2025 dedicated circular economy industries will be worth $26 billion in Australia, and $1 trillion worldwide.
Already some innovative work has been conducted in Victoria to embrace the concept. For example, Downer Group partnered with the City of Boroondara to trial 99% recycled asphalt, made from waste materials from Melbourne metropolitan areas. Rather than seeing the concept as a challenge, partnerships like this are creating opportunities to transform the business system and environment for the better.
Although some businesses are motivated to remodel their operations to fully embrace the model, there are four guiding principles of the circular economy that all businesses can employ:
Waste equals food – there is no such thing as waste in a living system, so there is no such thing as disposal in a circular model. Businesses can redesign products so they may be reused or disassembled at the end of their life, so they may be transformed into something else.
Build resilience through diversity – in nature, many species contribute to the health of a system and greater biodiversity supports a system at a time of shock. Companies can create greater value from diversity by sharing their core strengths among a number of products. By recycling and reusing elements of their products, businesses shield themselves from price or availability shocks in their supply chain.
Use energy from renewable resources – living systems are powered by renewable sources. Businesses need to build systems that will work in the long term, a key aspect of this sustainability has to be a reliance on renewable sources of energy.
Think in systems – nature works in countless systems that are all interconnected. When businesses think in systems they have the opportunity to see the connections between people, places and ideas to see how they can create opportunities to generate economic, environmental, and societal gains.
Although the circular economy model is a departure from our current ways of thinking, it enables genuine sustainability and enduring advantage. To be successful it requires overcoming siloed thinking; we need collaboration between government at all levels, industry, and consumers in order to create new ways to organise the economy, conduct business, design products, share goods, and recover resources.
So, what will the economy of the future look like? Circular.