Circular Economy: Reduce, Reuse and Recycle 

From waste to value – circular economic models go beyond the ‘take-make-dispose’ principle to ensure products are given a new lease of life, says Brendan Edgerton, Director of Circular Economy at the World Business Council for Sustainable Development (WBCSD).

What is a circular economy and where do we stand today?

The circular economy is a new economic model of production and consumption where we increasingly recover materials from our discarded products. The concept has exploded over the last couple of years gaining traction across sectors and geographies. But the truth is, the global economy is only 9% circular, which means that out of all the minerals, fossil fuels, metals and biomass we consume each year, very few are actually being recycled. At the same time, our global resource consumption has tripled between 1970 and 2015. As people get richer, they consume and discard more, rapidly adding to the global pile of garbage, so the global resource consumption is set to double again between 2015 and 2050.

What are the key challenges to achieving a circular economy and what are WBCSD’s priorities?

The concept of a circular economy is increasingly understood by businesses. In fact, what we are seeing is, every company has its own interpretation of what a circular economy is. Many businesses are keen to take action but aren’t sure where or how to start. At WBCSD, we are trying to help companies along this journey. Our CEO Guide to the Circular Economy was developed in cooperation with Accenture and signed by 14 CEOs from companies including Unilever, Danone and Tata. The guide aims to give business leaders the foundation they need to implement circular economy principles.

At WBCSD, we work with over 200 leading businesses that are very actively moving toward environmental sustainability, 40 of them participate in Factor 10, our flagship circular economy project. It’s a very powerful and diverse group of companies from across 15 different industries, which represent more than US$2trillion in annual turnover. Factor 10 aims to bring circularity into the heart of business leadership and practice. Ultimately, we want to bring about a global business environment where resources are used wisely, create the greatest possible value, and nothing is wasted.

It seems that the private sector has a key role to play. Are companies eager to adopt a circular economy business model?

We are indeed seeing the circular economy moving higher and higher up the business agenda. Companies around the world are changing the rules of the game through rethinking design and adopting new business models. The motivations vary, ranging from environmental to business reasons. Some companies have found that a circular economy business model may be achievable without major technical advances and they can capture significant benefits. It improves resource security and provides a competitive advantage by reducing costs. In addition, it has great reputational benefits as consumers are becoming more informed about the products they purchase and are showing increasing concern about the conditions under which products are manufactured and disposed. This means that the adoption of more circular policies will lead to stronger relationships with consumers, which creates steady revenue.

Businesses need to move from a system of waste to a system of reuse. How can this be achieved in practical terms?

Companies need to work with other stakeholders they haven’t traditionally interacted with for the transition towards a circular business model. For example, designers who work at products’ start of life need to collaborate with the waste and resource operators who work at products’ end of life. Such collaborations allow products to be designed in a way that they can be easily recovered and used to create something else, which is also known as cradle-to-cradle thinking. This concept was developed in the 1990s by Michael Braungart, William McDonough and the scientists of EPEA in Hamburg. Companies are already realising that the traditional ’take-make-dispose’ model needs to change — and the atmosphere today is much more cooperative than it ever has been.

A service-based business model is another strategy that can be employed. When selling products as services, businesses embrace the idea of themselves as service providers, which means leasing access to and not selling ownership of a service. The key is to create value for the consumer by giving them exactly what they are looking for. One example is Mitsubishi Elevators. The company’s customers pay a usage-based fee for the operation of a lift, which provides a real value to customers while also reducing waste. The customer in this case is looking for transportation, not necessarily the machine that provides that transportation.

Michelin is championing a similar model in the tyre manufacturing industry. Rather than charging customers for tyres, Michelin Solutions offers business customers an option to buy kilometres and charge them for the use of the tyres. As the owner of tyres, it is in Michelin’s interests to optimise tyre performance and quality, prevent breakdowns and achieve a long service life. 

What can governments do to enhance the circular economy?

As key policy players, governments can influence the uptake of circular economy solutions through national and international policies. They can provide incentives and policies that determine how products are made, sold and recovered, while also encouraging higher quality products. This would help address overconsumption,inefficient production and linear product design. The harmonisation of policies across jurisdictions regarding definitions and criteria is essential for ensuring resources are recovered and reintroduced back into the economy as much as possible— if such policies were in place,the private sector would be able to move towards the circular economy much quicker. In addition, governments themselves are massive purchasers, and if we get them to commit buying circular products or services, it would help to get those products to scale, making them more affordable to the general consumer.

Which countries are leading the circular economy shift?

Politicians around the world appear increasingly alert to the economic, ecological and human costs of waste — and the number of countries interested in this concept is increasing every year. The European Commission recently revised their Circular Economy Action Package, while France, Italy, Spain, Portugal, Finland, Slovenia and the Netherlands are just a few European countries that have issued circular economy plans and roadmaps.

In what ways can people support the circular economy?

Last year, together with professional services firm Navigant Consulting, we looked at global material flows across different industries. We have discovered that the food sector is responsible for 25% of the world’s greenhouse gas emissions and major portions of global water consumption and biodiversity loss. Food is lost and waste is created across the value chain, including the end consumer, which represents a huge financial loss and significant environmental impact. The circular economy eliminates the idea of waste, so to underpin a more effective and circular food system, business models, policies and behaviour must all change.

In addition, people need to rethink their highly resource dependant lifestyles. At WBCSD, we have a Sustainable Lifestyles programme that has been created with an ambition to inspire people to live a better life within the limits of the planet by 2050. One of the project’s recent outputs is the Good Life 2.0 Playbook. The ambition with this resource is to inspire customers to live a life that is both more rewarding as well as more sustainable.

As WBCSD goes forward, is there any specific target you want to achieve in the next 5 to 10 years?

I hope that more people will start responding to environmental issues at the scale that they call for. We are heading in the right direction but what we are doing right now is clearly not enough to create meaningful change. I would like to see the circular economy used as a tool more and more by both the public and the private sectors.Then I hope that they commit to measuring progress. We believe that the circular economy is a powerful tool for moving business and society towards achieving the Paris Agreements and SDGs. We simply must be bolder in our ambitions and actions.