The circular economy is a model of production and consumption that aims to extend product longevity, reduce waste, and minimize environmental impact by creating a closed-loop system for resources and materials. The circular economy is gaining popularity as more organizations seek to decrease their ecological footprint. However, two types of companies are still involved with the circular economy.

First, some want to create great marketing without changing their business model. These types of companies will spend some marketing dollars to expound upon their successes and offer a lofty goal that is far in the future. These companies might strive towards these goals in fits and spurts but are not committed to the circular economy. These companies change their goal as the initial goal is getting close, and a magical change of direction to more pressing matters allows the company to forget the old goal and move on to the next. These organizations want to show progress, but if the resistance is too complicated or the economics are too much, they find another cause to market. These companies might stumble into innovation, but in the long term, these organizations are looking to maintain the status quote of take-make-sell-waste.

The second type of company is dedicated to the circular economy and may have a long term goal, but they understand that the path will be difficult. These companies are hyper-focused on this goal, and they keep pushing towards being a contributing member of the circular economy. These companies might take longer, but they will continue until they succeed. These companies must be highlighted and followed because these organizations will make a real difference in the world. Among the various aspects of the circular economy, the following three are critically important to companies willing to go the distance.

Circular Economy: Design for Longevity and Circularity

The foundation of a circular economy is designing products and systems with a focus on durability, reuse, and recyclability. This step is fundamental because it enables the other aspects of the circular economy by ensuring products and materials maintain their value and usefulness for as long as possible. Furthermore, these companies engineer their products with the end in mind. Designing for longevity and circularity involves considering the entire lifecycle of a product from the design stage, using eco-friendly materials, designing for easy disassembly and recycling, and minimizing waste and energy use during production. An example of this is the automotive industry, where vehicles are built to last many years, and even when the car is very old, it has been designed to be disassembled for parts or reuse. It is estimated that 86% of a car is recycled, reused, or used for energy recovery.

Circular Economy: Waste as a Resource

An organization committed to the circular economy understands that waste not as something to be discarded but as a valuable resource is central to the circular economy. A company must be focused more on upcycling rather than recycling. Waste is not something that is containerized and shipped off to another nation to sort and use. This perspective goes beyond Lean Manufacturing, which looks to reduce waste. The organization needs to embrace all materials as useful and valuable. This perspective transforms waste into a source of raw materials, conserving natural resources, reducing environmental degradation, and supporting economic efficiency. Companies can achieve this by developing methods to recycle and repurpose waste materials during production and at the end of a product's life. Waste materials can be upcycled and used in another manner, or they can be remanufactured into new products or broken down into raw materials for use in production.

The European Environmental Agency considers the concept of waste as a resource as fundamental to the circular economy. According to the European Environmental Agency:

"To turn waste into a resource, waste management objectives must be aligned with the goals of a transition to a circular economy. In a circular economy, the waste industry becomes a key partner of businesses. In this way, high-quality waste streams are generated for recycling and recovery. The key waste streams are municipal waste, packaging waste, food waste, bio-waste, and critical raw materials."

Reimaging waste as a resource rather than an acceptable aspect of business is vital to changing perspective to eliminate all waste. An organization must strive for 99%+ utilization of all material because the more waste that can be avoided is energy saved and material that does not enter the environment.

Circular Economy: Making money on everything

The old business model of making products and disposing of waste must be banished in the circular economy. This style of thinking is too easy as organizations are willing to accept certain levels of waste as 'part of doing business.' Organizations committed to the circular economy should take an example from the cattle industry; every part of the cow is used and sold. 64% of cattle is used for meat, but 99%+ % of cattle is used in some applications.

A less desirable example is the textile industry. It is estimated that 15% of materials purchased for production in the textile industry are wasted, and it is estimated that 85% of textiles are sent to landfills annually. Waste generation on this scale is unsustainable. It is understood that making every industry like the cattle industry might not be possible. However, companies can reimagine themselves and go away from generating waste to a business model making product-as-a-service, where they retain ownership of products. A company might act as a service providers, leasing products to customers. This approach incentivizes businesses to create durable, repairable products and facilitates the return and recycling of products at the end of their life.

Thus, these three key aspects of the circular economy – design for longevity and circularity, viewing waste as a resource, and making money on everything. The companies that commit to working together to create a sustainable, resilient, and efficient economy that benefits businesses, society, and the environment are the ones to watch long term.

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Dr. Robert Gordon