Circularity, and the demand for a true circular economy, is starting to gain traction. It has moved beyond being merely an attractive concept and into mainstream business planning for companies around the world. That demand is only set to increase as constraints around materials increase and the climate crisis continues to worsen.
Companies will greatly benefit by transitioning and shifting their operations over to the circular economic principles outlined in this book. We detail all the benefits of this transition in the next chapter, but we're convinced that companies embracing this approach can, in a nutshell, uncover new opportunities to increase profits, new ideas to slash operating costs, and new ways to reduce risks from a more sustainable supply chain.
These four clear and overwhelming trends demonstrate this growing demand for the circular economy:
Reuse is on the rise. Decades of pushing by environmentalists have led to a surge in popularity of reusable bags, bottles, and containers. Clothing resellers such as The Real Real (www.therealreal.com) and reusable packaging such as Loop (www.terracycle.com) have investors placing big bets on customers' interest in reusable goods.
Handmade is making waves. The maker and craft movements shown on sites like Etsy (www.etsy.com) and Uncommon Goods (www.uncommongoods.com) demonstrate the increasing popularity of handmade and salvaged materials.
Piles of plastic proliferate. Municipalities are up to their eyeballs in plastic waste and are finally taking steps to mandate its reduction. From plastic bag bans to plastic packaging elimination, they are regulating manufacturers in new ways to limit the amount of plastic waste and expand materials management.
Material metrics matter. Companies are starting to track the circular nature of their products and services using a suite of new tools and standards. The Ellen MacArthur Foundation (www.ellenmacarthurfoundation.org) launched Circulytics, a comprehensive set of measurement tools designed to give companies a clear set of circularity indicators to track and follow. The Global Reporting Initiative (GRI) released its GRI306 standard to measure waste reduction. Manufacturers are releasing publicly available versions of its lifecycle assessments (LCAs) and environmental product declarations (EPDs).
The interesting aspect of these four trends is that they all happened independently of each other, driven by people understanding the need to reduce (and eventually eliminate) waste. So just these trends show that people have an interest in reusable products, in platforms to sell and showcase reusable products, in new regulations designed to encourage reasonable products, and in metrics and indicators to quantify all of this.
Imagine that every time you order takeout food, rather than throw the containers in the trashcan, you simply hurl them into the corner of the room. Very quickly, you’d see a mound of pizza boxes; Chinese food containers and sandwich wrappers would start to overtake the room. Now, having a bigger room would buy you more time, but it wouldn't change the outcome: Eventually, you’d be overtaken by trash. This is where the world stands with landfills.
Look at these numbers:
Nine-tenths of all solid waste in the United States doesn’t get recycled.
The United States throws away $11.4 billion worth of recyclable containers and packaging every year.
Over 11 million tons of recyclable clothing, shoes, and textiles make their way into landfills every year.
Of the 62 million newspapers printed daily in the United States, 44 million are thrown away (roughly 500,000 trees worth).
Eighteen billion pounds of plastic trash winds up in the ocean every year.
We can no longer ignore the mound of pizza boxes in the corner. The world’s trash problem has become a survival problem. This problem, above all others, will likely be the biggest driver for transitioning into a circular economy.
Forces are pushing everyone in the direction of a circular economy, but it would be wrong to assume that this transition might happen all on its own. People still have a long way to go before they see a truly circular world. We have to mention two notable examples in this regard:
The fashion industry (which we cover in detail in Chapter 18) is one of the worst producers of waste. The push for fast fashion and for updating wardrobes every year produces clothing that is seen as a disposable item. In the past two decades, the average consumer has increased by 60 percent the number of garments they purchase — and they’re keeping them for only half as long as they did previously.
As economic growth improves the quality of life for people all over the world, it leads, ironically, to an increase in the amount of consumption per person. As global population grows, so too will our dependence on the linear economy and the need to transition faster to a circular one. A wealthier world is generally less inclined to reuse products, and more inclined to do the easy and convenient thing — toss them when they're no longer needed.
In this chapter, we help you explore some of the drivers — financial, health, compliance, and sustainability — that will carry us humans to this bright future of the circular economy.
The Drive to Make Money
The primary motive of any business is to make money. There’s nothing wrong with that; without the drive to make money, why would businesses open at all?
Because of this basic fact, one of the first drivers we discuss is how the circular economy increases profits. It turns out that eliminating waste from your supply chain by reusing materials or sourcing better materials can translate into significant cost savings.
According to a report by the Ellen MacArthur Foundation, a transition to the circular economy represents a potential net savings in material costs between $340 and $380 billion. The report goes on to state that a fully advanced transition could net a savings of up to $630 billion. And that’s just savings from materials.
There are also considerable savings in energy and operations to be had, which indirectly translates into carbon emission reductions as well. Some of the savings will be recouped by the company directly, but some of the savings will benefit the city.
Let’s explore some of these cost-and-operational savings:
Just one recycled plastic bottle saves enough energy to power a 100-watt bulb for 4 hours (while also creating 20 percent less air pollution when compared to manufacturing a new bottle).
If the United States were able to boost its recycling rate to 75 percent (from the current 34 percent), it would be the equivalent (in emissions) of removing 50 million passenger cars from the roads.
The energy needed to make 1½ million tons of plastic could power 250,000 homes. Every year, humans produce 300 tons of plastic.
Materials such as glass and aluminum are infinitely recyclable.
A single ton (2,000 pounds) of recycled paper saves over 350 gallons of oil, 17 trees, and a large area of landfill.
Redefining risk and liability
When it comes to business, risk is defined as any exposure the company might have that would affect its ability to make