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Symposium 2015

Solution for Re-assessing Waste Management and the Circular Economy

The Challenge

Environmental degradation and resource depletion threaten the sustainability of economic growth in the developed world, and build enormous pressures in the developing world as it strives to match th ...

Environmental degradation and resource depletion threaten the sustainability of economic growth in the developed world, and build enormous pressures in the developing world as it strives to match the West’s prodigal lifestyle. Both issues can be addressed by the Circular Economy (CE): if we stop generating waste, and re-use and recycle resources, we avoid environmental degradation and stave off resource depletion. But, the financial realities of (mostly) capitalist societies make so many recycling initiatives unattractive.

Accelerating the Circular Economy with Drivers of the Linear Economy

As with most things circular it doesn’t work when you consider the proposition in a one dimensional perspective. There is unlikely to be a silver bullet for all. Far more likely is the requirement to address the opportunity of circularity from all angles, legislation, innovation, enterprise and education. The question needs to be: how can we build the environment to accelerate and mobilize the circular economy by utilizing the current drivers of the linear economy?

To start with, the conditions for adoption must be improved most particularly and urgently in terms of eradicating the subsidies to the linear economy and its cost of pollution. The more the true cost of a linear economy—resource supply and price fluctuation instability, subsidies to polluting and exploiting industries—is part of the equation both for business and critically for the citizen the clearer the opportunity for circularity is going to be and the higher the risk of not being “circular.”

What is also required is the promotion of disruptive opportunities so that we can create an environment in which residual value can be utilized and monetized in a way that mobilizes the circular economy. Often circular opportunities such as shared economy solutions are blocked by outdated legislation and linear economy vested interests.

However, what is often overlooked is the role of the consumer. Part of the vested interests comes from the intrinsic model of how a product is sold. The main incentives, bonuses, salaries for organizations are often based on sales and how many units are going out of the door. Interestingly, if you look at the vanguard of this model, the advertising industry, whose historical purpose has been to sell as much to as many as often as possible, they are also an industry under pressure. In the last decade they have undergone multiple disruptions: first digital, then data driven targeted advertising, followed by cheaper production, and finally the consumers’ drive for authenticity. This has resulted in a shift away from traditional sales towards consumer-oriented services.

As a result, I suspect that we are going to see a wealth of disruptive circularity services burst into our lives. When you think about companies like Uber and AirBnB, neither of these two services were designed with circularity in mind, instead they are logical uses of “sleeping” value—turning underutilized resources into value for the individual owner. It is the connectivity of multiple services within our daily lives and the ability for them to connect with each other that will revolutionize the way we live and efficiently use our resources.

More than legislation, more than technological innovation, the biggest engine of the linear system is consumerism. In this context, circularity is above all else an incredible opportunity to re-think how we get the services rather than just products we want. In an age where we are the first generation who can create digital eco-systems that can service the circular economy and build the aspirational future that we all desire, at last the practical implementation of a circularity is possible.

There is a huge opportunity to utilize the power and creativity of consumer-focused marketing and advertising to drive circular economies and get industry to put its weight behind CE. Its relationship with its clients could well become one of helping those clients reinvent their products as services, of selling circularity as a premium experience for the consumer. Beyond this, these eco-systems should prove to be modular by nature. In other words, if you invent a service that increases the circularity of the system, it should quite naturally blend in.

And this brings me to the greatest and most interesting challenge of all in communicating and marketing circularity—understanding the opportunity within a circular economy and measuring the outcome. What is the new unit for measuring the value of circularity?

The issue with the term “value” is that it is very loose—it can mean financial, environmental or social values. What is needed is a collective unit of value that captures, in a measurable and reportable way, circularity for not only politicians and businesses, but also—importantly—the consumer. The better you can measure the loss to the city, the business, and the citizen from a traditional linear model and the value gained from a more circular model, the easier the decision to implement the circular economy becomes.

To take an ethos like circularity forward we need to be able to measure it. How does a mayor understand success or failure and sell it to her voters if she can’t measure it in a way that is understandable and logical. The CEO, CFO, board members, the staff and shareholders must be able to speedily understand the value captured, retained and created by implementing systemic circularity through an organization. It is key to incentivizing creativity and implementation.

Right now the danger is that the circular economy is seen as an extension of sustainability—glorified recycling, while it is, in fact, so much more. In its most compelling form it is, as Bill McDonough elegantly put it, “enough for everyone forever.” Being able to quantify circularity as a unit of value could be a game changer. When we talk about retaining or even creating value, instead of traditional terms such as “waste,” “recycling” or “secondary energy,” we change the perception to one of available resources, available value or wasted value. If you can measure circular value you can move the conversation from a topic for a small minority of experts into a way of life understood at the kitchen table.

In summary, circularity is restricted only by the availability of unused “value” and the implementation of business models that enable positive exploitation of that value. The greatest breakthroughs in circularity have surfaced because there is a clear opportunity to retain or create value out of a something where the value is currently sleeping. In the case of AirBnB, this is driven by an understanding that there is a value waiting to be tapped from a resource that is currently wasted.

The drivers for change are already there and are by the day becoming stronger: fluctuating commodity prices that spur new innovations, a digital revolution capable of connecting and empowering services that just ten years ago we could only have imagined, and the giant signpost towards a low carbon future now being embedded in China’s next five year plan—the course is set.

Ensuring that the circular economy is accessible to all in practical and scalable form from the creative industries to the entrepreneur will take our circular thinking far beyond the boundaries of the present. In parallel, being able to measure and define circularity for companies, shareholders, investors, cities and governments will enable its exponential growth and the transformation from a linear economy to a circular one.

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