17 JUNE 2016

A Career in the Circular Economy? Six main things you need to know about it

A Career in the Circular Economy? Six main things you need to know about it

If you have not heard of the term circular economy, you will soon and you may end up considering a career in this emerging new trend. The term is not new, but its application will soon become urgent, since our current economic model of “take, make and dispose” is using up ever more of the world’s rapidly depleting resources, pushing us towards scarcity. For instance, Europe creates the highest amount of e-waste in the world on the per capita basis.[1] In Germany alone, some one-third of the household appliances in 2012 were still functioning, when replaced.[2] 31% of food in Europe goes to waste along the value chain. Almost half of fruits and vegetables was lost from the edible mass, mostly, sadly, thrown away.[3] And this is not just the consumer; businesses waste a lot too. It is estimated that 90% of the raw materials used in production ends up as waste before the product leaves the factory.[4]

Hopefully, as we have your attention now, we will be able to tell you more about what circular economy is all about?

1.   It brings a lot of benefits

The circular economy represents a different pathway for us to prosper. Instead of taking the path from “cradle to grave”, it stresses going from “cradle to cradle”. In this case, it is not so much about doing more with less, which has resonated as the classic call for action of this last decade. Rather, it is about doing more with what we have at our disposal, through technology and business models based on reuse, repair, renewing, refurbishment, capacity sharing and dematerialisation.[5]  In other words, it is a smart way of looking at the optionality of wasteful material, before it does become waste.

The reward for taking this on is big: Accenture estimated that for the global economy, this way of running our economies can add more than five times the value of current best estimates by 2030 through lowering resource constraints to growth.[6] In Europe, households’ disposable income by 2030 could be as much as 11% higher than the current development path, representing some 7% more in GDP terms.[7] So the circular economy is, first and foremost, a great economic opportunity.

2.   Just recycling is not enough

So what about recycling? Isn’t this what being circular means?

Recycling is a small constituent of the “circularity” and the trouble with recycling is that it often ends up being “an environmental excuse for instant obsolescence”.[8] We ended up using more. It has long been suspected that costs of recycling plastic water bottles are borne by bottle producers. The reason: to reduce our conscience of using up disposables. Another problem with recycling is that is that only part of the value is recovered. For instance, a reused iPhone retains around 48% of its original value, whereas its value as recycled material is just 0.24% of its original value.[9] It makes a lot more sense if the phone can be sold in the second hand market instead of taken apart for reusing components, in the same way as it would be better for the environment if the plastic used for bottled water could be use beyond water, for other industrial uses.

3.     Technological disruption is not enough

For years we thought that one way to gauge our increasing carbonisation was to invest in green technology. Sure, technologies are essential to the adoption of circular economy. But they are, by themselves not enough to solve our resource problems. This is because, first, technologies often represent new and better ways to squeeze out more productivity out of a system that depends on the conventional resource-based “take-make-dispose” model. Second, as technologies lead to more productivity, it would likely push prices down and consumption up. This would somehow outgrow the benefits achieved.

4.     Making changes to perceived obsolescence

Planned obsolescence is probably one of the greatest industrial inventions of the 20th century. A precursor to the kind of consumption that led to the creation of fast moving consumers’ goods. It was introduced and popularised by the American industrial designer Brooks Stevens who described it as "instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary.” But if obsolescence is the child of a generation that climbed its consumption as an emblem of self-image, our needs to dramatically slow down our urge for replacements requires serious thinking. But this is not just a consumer’s issue. Think of Governments too. Remember those “cash-for-clunkers” schemes that encourage people to buy new cars. Yes, it may boost our economies (and the car manufactures’ profits). But we ended up having a lot of unwanted cars and increasing linear economies as a result of that.

5.     It’s OK not to own

A key to achieving the circular economy is to turn from selling a product to providing a service. Take the Dutch firm Mudjeans, for instance. Instead of buying jeans from the company, customers effectively rent the jeans from them as it retains the ownership of the cotton. This means that any customers who no longer want their jeans, they can return them to the company for reuse or turning into vintage. As consumers, for certain you are recycling the items for proper use. For Mudjeans, they can buy less cotton. Renting a pair of jeans versus owning a pair of jeans does not lessen the experience of wearing it. This small change in the mind-set is where the circular economy ought to prosper.

6.     A new economic infrastructure = new jobs!

Circular economy activities have already opened up new job opportunities. For example, people can take on more work by signing up as drivers for Uber, a job that is previously non-existent. Moreover, study in the UK reveals that adapting a circular economy could bring 10,000 to 102,000 net jobs, offsetting 1% to 18% of predicted skill decline in skilled employment over the next decade.[10] But this is just the beginning. The sharing economy, as one of the possible options for circularity, helps us diversify jobs by creating new streams of productive capacity, where there weren’t before.

The circular economy is here and is knocking on our door, as an epochal opportunity to shift our industrial models towards circularity. It is the best single handed opportunity to truly make our societies sustainable. It is up to us to live to its premise.



[1] Baldé, C.P., Wang, F., Kuehr, R., Huisman, J. (2015), The global e-waste monitor – 2014, United Nations University, IAS – SCYCLE, Bonn, Germany

[2] Umweltsamt (2014) Einfluss der Nutzungsdauer von Produkten auf ihre Umweltwirkung: Schaffung einer Informationsgrundlage und Entwicklung von Strategien gegen „Obsoleszenz“

[3] UN FAO (2011) Global Food Losses and Food Waste: Extent, Causes and Prevention

[4] Girling, R. (2005) Rubbish!: Dirt on our hands and crisis ahead, Eden Project Book

[5] Accenture (2014) Circular Advantage Innovative Business Models and Technologies to Create Value in a World without Limits to Growth

[6] Accenture (2014) Circular Advantage Innovative Business Models and Technologies to Create Value in a World without Limits to Growth

[7] Ellen Macarthur Foundation (2015) Growth Within: A Circular Economy Vision for a Competitive Europe

[8] Simon Fairlie (1992). Long distance, short life: Why big business favours recycling, The Ecologist, 22 (6)

[9] Benton, D., Hazell, J. and Hill, J. (2013) Resource Resilient UK

[10] WRAP (2015) Employment and the Circular Economy: Job Creation in a more Resource Efficient Britain

 


Mark Esposito is a Senior Associate of the University of Cambridge Institute for Sustainability Leadership and member of the teaching faculty of the EMBA at the Judge Business School. Read Mark's full career profile.