Circular Economy and Sustainable Business Models

Circular Economy and Sustainable Business Models

• Circular economy models aim to decouple economic growth from the use of scarce resources, creating a more sustainable approach.
• The current linear economy, often described as "take-make-waste," is unsustainable.
• The linear economy emphasizes a "cradle-to-grave" approach, where raw materials are extracted, products are created and consumed, and then discarded, resulting in environmental waste as finite resources are exhausted and waste produced.

Principles of Circular Economy

• Design out waste: Products are designed to minimize waste and be easily reused, repaired, or recycled.
• Keep materials and products in use: Products are designed for longevity and reuse, with an emphasis on repair and remanufacturing. Focus on extending product lifecycles.
• Regenerate natural systems: Focus on restoring and protecting natural resources. Supporting closed-loop systems where biological materials return to nature or materials can be recycled into new products.

Circular Economy vs. Linear Economy

• Linear economy: Focuses on resource extraction through production and consumption with eventual disposal leading to waste.
• Circular economy: Aims for a closed-loop system where resources are used repeatedly in a continuous cycle with waste minimized. Minimizing new material requirements and enhancing resource productivity. Focuses waste being part of the system.

Different Resource Hierarchies

• Waste Management Hierarchy: Starting with waste reduction followed by reuse, recycling, composting, then energy recovery, and finally waste treatment/disposal.
• Circular Economy Hierarchy: Prioritizes refuse reduction, reuse, repair, refurbishment, remanufacturing, repurposing, recycling, and finally energy recovery as preferred solutions over disposal.

Circular Advantage

• Circular economy principles foster resilience to rising commodity prices and supply disruptions.
• This approach helps organizations reduce their environmental impact.
• Businesses are more resilient to resource scarcity and commodity price volatility.
• Access to new value propositions arises through extending the value chain beyond design, manufacturing, and sale. Circular schemes can create added value through product usage (maintenance, enhancement, etc) plus a take-back scheme.
• Circular models enhance customer value and convenience.

Circular Economy = Innovation

• Circular economy models drive innovation by creating a paradigm shift demanding new materials, processes, and business models.
• Eco-design and creation of new materials are prioritized.
• Businesses adapt to integrate among different industries.
• Companies enhance eco-efficiency.
• New business models are created.

Resources and Renewables

• Circular systems include both biological and technical cycles.
• Biological cycles deal with renewable resources.
• Technical cycles deal with finite materials.
• Flows of materials and resources are central to business planning and operations.
• Raw materials to manufacture products, production of resources (farming, collection, etc), extraction of feedstocks, etc all have pathways within the circular economy model.
• The circular economy model aims to make better use of materials, minimize waste, and use resources optimally while also regenerate natural systems and minimize impact through using fewer resources with lower negative externalities.