THE CIRCULAR ECONOMY IS COMING. ARE YOU READY?

In May the Sustainable Business Network, in partnership with Auckland Tourism, Events and Economic Development (ATEED), released New Zealand’s first economic report on the circular economy. It showed that Auckland could be $8.8 billion better off in 2030 if it made this shift to a better way of working. But what is it? What is needed to make it a reality? And what’s your part in it?

The world we are living in mostly operates on what is called the linear economy. The line starts when we extract raw materials from our planet. It ends when we discard or destroy our rubbish somewhere. Employed at the scale it now is, on the materials we now have, this creates a few problems. We will eventually run out of the raw materials we can easily get out of the ground, and our rubbish ends up all over the place. 

One of the best examples is plastic. The raw material is crude oil. This is increasingly expensive for us to get out of the ground, especially as we account for the environmental damage of doing so. At the same time, we have ended up with plastic literally everywhere. 

This was demonstrated by a recent report by the Ellen MacArthur Foundation. This found that new plastics will consume 20 percent of all oil production within 35 years, up from an estimated five percent today. Plastics production has increased twentyfold since 1964. It reached 311 million tonnes in 2014. It is expected to double again in the next 20 years. 

It will almost quadruple by 2050. 

Despite the growing demand, just five percent of plastics are recycled effectively. Forty percent end up in landfill. A third are scattered across the globe, disrupting the fragile natural systems of life wherever they go. At the rate we are going the ocean will contain one tonne of plastic for every three tonnes of fish by 2025. By 2050 it will have more plastics by weight than fish.

Oops. 

A fully circular economy would eliminate these problems. The use of materials is optimised. At the end of a product’s life all materials are reutilised. 

Making this the norm requires us to redesign all of the current systems of extraction, production and disposal. We have to ensure natural and technical resources stay in discreet systems or ‘loops’. Natural materials must be composted or otherwise safely returned to the natural environment. In a circular economy we will design products that can be easily separated into their component parts. We will return those components to cycles of production and reuse. 

We won’t burn them, bury them, or litter our planet with them. 

This is not a new idea. The details have been in place in different forms since the late 1960s. In recent decades increasing resource and environmental pressures have caused them to be refined and more widely applied. This is now the model for huge areas of policy across the European Union. 

China passed a law for the promotion of the circular economy back in 2008. The principles are now embedded in the country’s national five year planning cycle.

And now it is coming in New Zealand. SBN, among other groups, has been working on the circular economy for four years. But the pace has quickened recently with the election of the new coalition government and a recent visit by Andrew Morlet, CEO of the Ellen MacArthur Foundation. You will find mentions of it all over the place, from the people who empty your bins to the folks that supply your printer. 

Total reset

So what does this shift look like on the ground in the coming years? 

James Griffin leads SBN’s work on the circular economy. 

“The first thing to say is that this is not just about waste or pollution,” he says. “This is about redesigning every aspect of our entire economic system. Aspects of the new system are already emerging. In the sharing economy we are beginning to swap out ownership for use of things like cars. By increasing product stewardship companies are taking responsibility for the end of life of the products they produce and starting to design products for a circular economy. 

“Many companies are beginning to phase out single use plastics. The global growth of renewable energy is reducing the need for fossil fuel extraction. And ever-increasing uses are being found for things that were considered worthless waste a few years ago.” 

But the major challenge is bringing these things together so that they start to work as a whole system. For example, the environmental and resource benefits of car sharing are limited if the cars still run on fossil fuels and get scrapped at the end of their life. (A recent study in New York suggested that the rise of app-based ride schemes is actually exacerbating New York City’s traffic problems.) But what if we create cost-effective fully recyclable electric vehicles? 

Similarly it doesn’t do a whole lot of good creating coffee cups that are commercially recyclable if there are very few facilities to process them and the average punter throws them in the wrong bin anyway. 

All of these are not reasons to give up, they are reasons to step up. 

Business benefits

So what’s in it for your business? 

Well, new business and new value can be generated from material previously seen as waste. Repair and remanufacturing services have the potential to generate increased revenue as goods are kept in service for longer. Products that have been designed to have longer lifecycles can disrupt existing markets. Companies can go from products to services, keeping ownership of what was previously sold on to customers to dispose of. 

Many businesses in New Zealand are already doing this with some success. 

Fuji Xerox runs a product stewardship scheme accredited by the Ministry for the Environment. Products are designed for recovery, reuse and to be recycled at end of life. 

Reflecting their zero-waste-to-landfill philosophy, the company undertakes to recover all Fuji Xerox-branded end-of-life equipment and toner cartridges from customers. 

Reusable equipment is given a second life as reconditioned ‘eco machines’ and as quality spare parts. At end of life all equipment collected from customers is recycled, achieving a recycling rate of over 99.5 percent year-on-year. 

Ethique produces solid beauty bars as a compostable, plastic-free alternative for personal health care. The ingredients are sustainable and biodegradable. The packaging is uncoated, recycled, compostable cardboard boxes.

Auckland District Health Board is taking a leading role in reducing medical waste. It is redirecting non-hazardous plastic waste from landfill to recycling.

Clearsite Demolition deconstructs – rather than demolishes – houses. It salvages timber, historical features, and fixtures and fittings that can be reused, repurposed or recycled. This reduces the quantity of demolition waste.

EcoStock takes more than 10 large truckloads a day of pre-consumer food waste and turns it into high-grade food products for animal feed.

The list goes on. 

Action points

So how can your business get in on the action? Here are seven steps to consider: 

1. Think and operate in systems. Businesses need good systems inside of them. They need to plug into good systems in the wider world. This can be challenging. Systems are changing rapidly. There is a marked difference between many old or existing linear systems and new circular ones. It will take careful positioning and design to ensure your business can benefit from this transition. It also means you have to work with all the connections around you. 

2. Reset procurement. What you buy sends signals through your supply chain. It can help to support more circular systems as they develop. 

3. Make circularity desirable. Thirty years of hot pink funny-shaped three wheel electric cars did nothing. Then Tesla came along. We need to gather momentum outside of the enthusiasts. So we must make products and services fit for the circular economy that outperform the linear competition in every way. 

4. Fund the transition. If you are in a position to invest, invest in the circular economy. 

5. Share knowledge and develop skills capability. We’re all in this together, so the solutions must be shared. We need more collaboration and less competition. 

6. Use data. Guesswork is linked to previous experience. It will tend towards old system solutions. Learn to read and trust the data to identify areas for innovation. 

7. Influence the rules to enable the transition. Moving the entire economy will require changing regulations and laws. Many of them incentivise the wrong behaviours. You can assist by being politically active.   

Andy Kenworthy is a writer and communications strategist specialising in global wellbeing. He is the communications and campaigns co-ordinator for the Sustainable Business Network.
www.sustainable.org.nz