Circular Economy

By Sneha Alex

How many times have we thrown away our appliances because one of its components is spoilt or discarded a bag because the zip isn’t working? Have we ever considered taking it to a repair shop to mend it? Repair shops are almost non-existent these days and even if you manage to find one, the cost of repair would be equivalent to that of buying a brand new product, if not more.

In the natural ecosystem, materials flow. For example, plants take in nutrients, grow and the nutrients are fed back to the ecosystem when they die. As humans, we have adopted a linear approach when we take – make – dispose. This leads to a staggering inefficiency in the way we manage the Earth’s resources.

A circular economy is an economy in which we keep resources in use as long as possible, extract the maximum value whilst in use and regenerate products and materials at the end of their service lives. There are several approaches to achieving a circular economy.

One would be to encourage recycling and turn waste into resources in a closed loop. This would mean having global standards for products to ensure recycling is efficient irrespective of who or where it is manufactured. To implement such standards, synergies between businesses, governments and recycling authorities are crucial. The electric battery industry has already adopted such a practice.

Businesses can also take an initiative by rethinking their model. Extended producer responsibility (EPR) is a concept in which manufacturers and brand owners are responsible for the products they make or sell, and any associated packaging, ensuring accountability of their product past its factory gates. Several companies have started in-store takebacks such as M&S’ shopping initiative, Ikea’s second life for furniture and lightbulb recycling reverse vending schemes and Argos’ trade-in service for unwanted gadgets.

In addition, governments can also support adopting a circular economy by reducing taxes on labour, removing VAT on recycled materials and using public funds to facilitate research on recycling.

Some other companies are taking a step further. Products are sold as a service giving companies the incentive to make products that last as long as possible and that can be easily repaired and recycled. When remodelling Amsterdam’s Airport, the company signed a contract for ‘light as a service’ rather than buying bulbs. In future, rather than a buy and consume economy, products would be rented, leased or shared wherever possible.

By helping build economic, natural and social capital, a circular economy model generates business and economic opportunities and provides social and environmental benefits.