For a sustainable world, the transition from a linear to a Circular Economy is a necessary condition. This approach aims to decouple economic growth from the use of natural resources and ecosystems. Jamie Butterworth, CEO of the Ellen MacArthur Foundation, the leading organization on the concept of Circular Economy, explains.
“Today, we tend to extract raw materials and process them into parts. We assemble those components into a product, which is marketed, sold and then eventually thrown away. This ‘linear’ approach has led to huge economic growth worldwide, but it is no longer sustainable. It relies on cheap, readily available energy and resources – metal, water, agricultural products, polymers and so on – which are becoming increasingly scarce.”
Circular Economy: refurbishment and remanufacture
“Between 1900 and 2002 the price of these commodities declined as we became better at producing, extracting and processing them. From 2002 to now, however, that price decline has been eradicated. This is having a significant effect on the global economy. Furthermore, billions more people are now demanding access to a higher standard of living. In China alone, a billion people have entered the middle classes in recent years.”
“The Circular Economy offers the opportunity to decouple growth from resource constraints. This is a more permanent solution than simply trying to extract less materials from the earth and use these more efficiently, which can only buy some time. In the Circular philosophy, which takes a restorative approach to materials usage, recycling means more than reusing a product once and then disposing of it anyway. We believe in designing products differently, like Philips is doing with healthcare equipment, so they can be refurbished and remanufactured.”
Selling ‘performance’ to enhance sustainability
“A major difference between the traditional economic approach and the Circular approach is the fact that the latter gears towards selling ‘performance’. The customer will increasingly ‘pay to use’ a product or service instead of ‘pay to own’ it. Take for example durable consumer goods, where we are increasingly seeing a shift towards ‘performance’ models e.g. one leading telecom provider offers a service that allows you to buy into a product technology lifecycle. Every 18 months you have access to a new generation of technology without ever owning the hardware.”
Designing products for the circular economy
“The circular economy can actually provide a better level of product or service to a customer, at a more attractive price point. This has a positive effect on a company’s competitive position. There’s no ‘one size fits all’ approach, though. The Circular Economy provides a great framework for rethinking things. We believe that the best way forward is to present the concept to businesses and allow them to work out what it could mean to them!”
A Circular Economy seeks to rebuild capital, whether this is financial, manufactured, human, social or natural. This ensures enhanced flows of goods and services. The system diagram illustrates the continuous flow of technical and biological materials through the ‘value circle’. Two types of material flows are distinguished: biological materials, designed to reenter the biosphere safely, and technical materials, which are designed to circulate at high quality without entering the biosphere.