The hidden value in your waste
Humans throw away tons of waste each year. However, some of that waste still has much to offer. From repairing old products to enabling new business models, discover how the circular economy can deliver exponential potential for business and society.
Moving from the linear to circular economy
In the 1970s and 1980s, it was an event if you received a brand-new gift for your birthday. Clothes and toys were often handed down from relatives and friends, and houses were full of second-hand furniture and items repurposed for other uses. People shopped locally and frequently, especially for food, while several meals in the week comprised of leftovers. But by the 1990s, globalization and conspicuous consumption had replaced thrift. Weekly shops at out-of-town supermarkets gave us buy-one-get-one-free offers and family-sized packages of vegetables flown in from the other side of the planet. Leftovers were thrown away and replaced by takeaway meals and eating out. Cheap credit meant people could buy today and worry about paying later. If something broke, it was cheaper to buy new than repair an item. We embraced the ‘Take-Make-Waste’ linear consumption pattern based on globalization, mass production and short-life disposable products.
But thirty years on, we need to recalibrate. Our global population has risen from 4.5 billion in 1980 to nearly eight billion people in 2023. It’s hard enough to look after a rapidly increasing population, but flooding and drought and other events brought on by climate change, are reducing the places where humans can safely live, work and grow food.
We can’t afford to be so profligate with our natural, finite resources. Extracting and using fossil fuels, metals, minerals and rare earths to power our 21st-century lives generates greenhouse gas emissions (GHG) that further increase global temperatures. Sourcing raw materials and production processes can lead to air and water pollution, contamination of groundwater and soil, and the destruction of habitats and local communities.
Data shows consumption patterns must change
According to the Global Footprint Network (GFN) and York University, Canada, at current consumption rates, humanity is using the equivalent of 1.75 times the earth’s natural resources each year. Each year, GNF runs an annual calculation to show the date we would exceed the earth’s resources if we all consumed like the people in that country. The 2023 Earth Overshoot Day calculation (Figure 1) shows that if the whole planet consumed like the US, the overshoot day is March 13th, but if consumption matched Colombia, the overshoot day is November 8th. Most developed world countries pass the limit before midsummer and for the earth as a whole, the date would be July 27th, 2023.
Country Overshoot Days, 2023
E-waste represents hidden value
With so many natural resources dwindling, there is one thing that we’re producing in abundance - waste. According to The World Counts, we throw away two billion tons of household waste per year, globally – that’s 60 tons of household waste per second. We also generate 50 million tons of e-waste per year, which is equivalent to throwing away 1,000 laptops every second. Not only is this incredibly wasteful, it also represents a tremendous amount of lost value – up to $57 billion per year that could be reclaimed from high-value materials, such as iron, gold and copper, according to Global E-waste Monitor (2019). Consequently, we need to break the linear ‘Take-Make-Waste’ production and consumption pattern and extract value and use from what we currently throw away.
Figure 2: The value of waste
The circular economy goes beyond recycling
One solution is to move away from the disposable society, where products have built-in obsolescence, and move towards a Circular Economy, where products are designed to have a longer, second or multiple lifecycles. To be clear, the circular economy is not about recycling something when it has reached the end of its life or usefulness. The circular economy is based on three principles, driven by design:
- Eliminate waste and pollution
- Circulate products and materials at their highest value
- Regenerate nature
Circularity represents a decoupling of economic growth from resource consumption and feeds into goals to reach net zero. If manufacturers make products more robust and resilient, and allow everyone to repair and maintain them, we can keep products in use for longer and reduce the amount of waste going to landfill. If new products are also designed so they can be disassembled, repaired, reclaimed and given a second life, this helps to reduce demand for new raw materials, energy consumption and embodied emissions (i.e. all the emissions other than those from the use stage).
Figure 3: Circular economy
Material use constitutes around 40% of global emissions and currently a mere 10% of materials are treated as circular. Reuse, recycle and refurbish should be the guiding principles for the future. In that respect, optimum use of available resources, efficiency and digitalization are essential to inject circular practices into the creation of new products and services. In simple terms, the circular economy promotes the concept of retaining the value of components, products and resources by extending their lifecycle and optimizing waste management.
Circular business models create value on multiple levels
For many years, it was commonly believed that a company couldn’t be financially successful and use sustainable business practices. However, over the last ten years, it has emerged that the reverse is true. According to studies from the NYU Stern Center for Sustainable Business, in 58% of cases, there is a positive relationship between ESG strategies, like net zero and diversity goals and financial metrics, such as return on investment and stock prices. Then in 2022, the CEO of BlackRock, the world’s biggest asset management company, said, “Our conviction at BlackRock is that companies perform better when they are deliberate about their role in society and act in the interests of their employees, customers, communities, and their shareholders.” Clearly, investors see robust ESG strategies as a value generator for commercial enterprises, so ensuring circular practices are in place will not only help companies reduce waste and increase their chances of reaching net zero, it can also increase their success in obtaining future financing.
Swedish furniture maker IKEA is advanced in its thinking on environmental issues and is emerging as a leader in circular practices - for both the design of products and operational processes. They are driven by customers who are “becoming more conscious of the impact that their choices have on the planet.” 60% of IKEA’s furniture is based on renewable materials and more than 10% contains recycled materials. It also offers spare parts and fittings to extend the life of products, sells pre-owned furniture in-store, and has introduced a buy-back scheme for old furniture.
Other companies have used waste from one industry to provide low-cost raw materials in another and produce completely new or desirable and high-end items. Small-scale but innovative examples include Elvis & Kresse, which reclaims fire hoses destined for landfill and turns them into luxury handbags and accessories, while ROKA London’s canvas bags are made from recycled plastic bottles that would otherwise end up in landfill or oceans.
When disposing of household electronics, such as laptops or mobile phones, one of the simplest ways to embrace the circular model is to look for take-back schemes. This means old devices will be accepted when a new purchase is made. Alternatively, people can sell these items on one of the many consumer-to-consumer sales websites, such as Amazon, Craigslist, eBay or Facebook groups.
Consumers and governments drive the circular economy
User behavior is changing. Their objectives could be to stand out from the crowd with unique clothes and accessories, a desire to live more sustainably, or simply a necessity due to the cost-of-living crisis. They’ll buy and sell pre-owned clothing, furniture, consumer electronics, DVDs and CDs on Gumtree, Music Magpie or Vinted. Others opt to stream content rather than buy outright for occasional use; they might also rent a bicycle to get them from A to B in a town center or book an Airbnb holiday rental for a cheaper family holiday.
They might also want to review their car ownership. The average car or van in England is driven just once every 24 hours, but sunk costs include buying or leasing the car, insurance, maintenance and fuel. Car sharing and pay-per-use models offered by Zip Cars, for example, could offer a cheaper alternative, especially for occasional users and those living in urban areas. Provided quality and convenience are maintained and the product is offered at a reasonable price, households are willing to embrace the pay per use and sharing economy model.
Of course, offering affordable and reliable public transport - powered by renewable energy - is the ultimate ride-share option. Public transportation might not seem an obvious part of the circular economy, but it eliminates waste and regenerates nature and has the added advantage of reducing pollution, national energy consumption and embodied emissions across more than one industry. Some governments are taking steps to encourage people to move to mass transport options. For example, on May 1st, 2023, the German government approved the Deutschland ticket, a €49 per month ticket valid throughout Germany on the Bundesbahn’s regional trains. One month later, almost 10 million of these tickets had been sold, including 700,000 new customers. And on May 23rd, 2023, the French government banned short-haul domestic flights, for private jets and commercial airlines, where a train journey under two and half hours is available on the same route.
Circular practices require collaboration
As with all new business models, an ecosystem of partners is necessary to achieve shared objectives. For example, a vendor may offer asset recovery, refurbishment and recycling services to their customers. However, they are unlikely to undertake all the recycling in-house. Where the vendor uses approved recyclers, it’s important that the recyclers follow international standards for handling different types of waste and adhere to local laws on worker health and safety, human rights and data privacy (regarding processed items).
Each partner in the ESG supply chain needs to have transparent frameworks and methodologies for collecting and reporting data on their emissions and materials. They will need to categorize the materials used in components, the levels of recycled materials used and identify where and how those materials are sourced. For example, since 2021, telecommunications operator Orange’s OSCAR program has placed the circular economy at the heart of its infrastructure procurement policy. It has set an ambitious target to achieve net zero carbon emissions by 2040 (10 years earlier than most of the telecoms sector) and integrating circular practices across the business is key to achieving that aim. Orange has asked network infrastructure suppliers to offer refurbished equipment in tenders and expects vendor partners to work with approved local recyclers where necessary.
Technology helps the world act together
Digital technologies and advanced connectivity are entwined with the net zero goals to reduce energy consumption and emissions, but they can also reduce demand for raw materials and keep products in life for longer. Accelerating the digitalization of industry and society can lead to more sustainable design and judicious use of resources. For example, in manufacturing, digital twin technology allows design and (stress) testing in a virtual environment before a product is manufactured and deployed. This should reduce production of faulty or sub-standard products and so avoid waste.
Predictive monitoring and analytics can be used to anticipate potential outages and schedule maintenance and servicing before machinery fails, while IoT sensors and grids can monitor environmental conditions in a supply chain to ensure food, pharmaceuticals and processed goods arrive in optimal condition and minimize waste.
Cloud-based services also focus on the use phase of a circular economy and reduce embodied emissions for users. SaaS-based services are a business version of the shared economy and mean that companies don’t have to invest in manufacturing, testing and shipping equipment for their network infrastructure nor in the development of associated software and services. Instead, they can buy what they need on a per-use basis and specify the necessary quality and service levels for their business.
So, can we reduce the amount of waste going to landfill? It’s clear that we can make all kinds of products sustainable by design. We can design them to be maintained, repaired, refurbished, and kept in circulation longer. By extending their first life, we can reduce the embodied emissions associated with manufacturing brand new laptops. The same sustainable design would also allow us to reclaim high-value materials or disassemble products so the component parts can be used to create a second life for them in new products and functions.
Adopting circular economy has clear socio-environmental benefits. It supports a low carbon, sharing economy and is spawning innovative and creative uses for waste. It’s also a powerful tool for companies that value financial success. But most important of all, it offers ways to protect the planet for future generations and create a thriving economy.