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The Circular Economy - What is it?
- 1. The Circular Economy – What is it? Thursday 12th July 2018 1200 – 1230
- 2. Agenda Sunil Shah – Introductions and background Calum Irvine – The Circular Economy Q & A www.acclaro-advisory.comDavid.johnston@acclaro-advisory.com
- 3. Speakers Sunil Shah, MD Acclaro Advisory www.acclaro-advisory.comDavid.johnston@acclaro-advisory.com Calum Irvine, Sustainability Analyst
- 4. Objectives 1. Circular economy is a concept to be applied – how depends on the business model 2. Explanation of circular economy concepts 3. What you need to transition to it www.acclaro-advisory.comDavid.johnston@acclaro-advisory.com
- 5. Acclaro Advisory A responsible business holds long-term advantage. At Acclaro we aim to take your organization to sustainability, and beyond. We support organisations on their environment, social and governance journeys, and empower them to act responsibly. • Four lines of services: • Environmental and Social management • Energy and Energy Finance • GHG and reporting • The Sustainable Facilities Management Index www.acclaro-advisory.comDavid.johnston@acclaro-advisory.com
- 6. www.acclaro-advisory.com • Stakeholder Engagement • Reporting • Awareness • Materiality Assessment • Compliance • Aligned with Business • Accuracy / Validated • Sub-metered / zoned • Appropriate • Senior Level Ownership • Day to day Business • Training and Support Culture Data Stake- holders Issues
- 8. The Linear Economy www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com Take Make Use Dispose • One-way flow • The natural ecosystem is the source and the ‘sink’ • The system needs cheap materials, energy, and credit The circular economy relies on retaining the value of resources
- 9. Ellen MacArthur Foundation www.acclaro-advisory.com
- 10. A ‘Living’ System www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com • The circular economy favours ‘biomimicry’ of resilient natural ecosystems • Systems thinking • There is no ‘waste’ • Diversity and sharing drives resilience • Energy comes from resources that are quickly restored
- 11. So why should I use the circular economy? www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com • Value of products and materials is retained • Fewer resources are extracted from the natural environment, and less harmful waste is passed into it • Sharing, repairing, and reusing enables more people to use products and materials and participate in the economy
- 12. What makes it difficult www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com • Recent economic circumstances • Transforming how we see ‘waste’ • Getting the right resources, in the right quantities, to the right people
- 13. Drivers www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com • UN Circularity Gap Report • EU Circular Economy Package • Public pressure • Corporate Commitments
- 15. Approach to Circular Economy www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com CE Business Model Culture Procurement Managing Suppliers Service Provision Awareness
- 16. Business Models www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com Corporate Vision / Values Sustainability Strategy Procurement Strategy Sustainable Procurement 1. Circular Supplies: supply fully renewable recyclable, or biodegradable resources that support circular production and consumption systems. 2. Resource Recovery: eliminate material leakage and maximize economic value of product return flows. 3. Product Life Extension: extend the current lifecycle of a product by means of repairing, upgrading, and reselling. 4. Sharing Platforms: stimulating collaboration among product users increasing productivity of the assets. 5. Product as a Service: products used by one or many customers by means of a lease or pay-for-use arrangement
- 17. Good Practice www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com "If we're successful, we'll spend the rest of our days harvesting yester-year's carpets and other petrochemically derived products and recycling them into new materials; and converting sunlight into energy; with zero scrap going to the landfill and zero emissions into the ecosystem. And we'll be doing well, very well, by doing good. That's the vision." -Ray C. Anderson
- 18. Procurement • Review the whole life of the product • Understand how it will be used – optimisation and culture • Collaboration – internally and with suppliers • Key areas in catering, construction, furniture, flooring www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com
- 19. Case Study www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com Key Partners • Clients • Hardware Providers • End Users • Recycling Centres • Technology Partners Activities • Purchasing • Asset Management • Security • Validation Resources • Refurbishment • Deployment • Sold / donated • Recycled
- 20. Summary www.acclaro-advisory.comCalum.Irvine@acclaro-advisory.com • Circular Economy is not a new concept, but does need to be adapted to how we operate today • There are clear regulatory, reputational and financial benefits on starting on the journey • There are a number of approaches – identifying the right one for you is important to make it work • CE is progressive, small chunks over time
- 21. Q&A www.acclaro-advisory.cominfo@acclaro-advisory.com Tel: 0118 3273 519 Email: info@acclaro-advisory.com https://twitter.com/AcclaroAdvisory https://www.linkedin.com/company/accl-ro-advisory
Editor's Notes
- We can think about the circular economy as a response to what you might call the linear economy. In the linear economy, you take something from the environment, you make it into something, you use it, and then dispose of it by putting it back into the environment. So the flow of materials and energy is one-way, and the natural ecosystem is both the source of raw materials and the ‘sink’ for waste. For example, a drinks bottle comes from materials that have been extracted from the earth, refined, and manufactured. You use it once and get rid of it. Most plastic bottles produced around the world end up in landfill or in the oceans(1). The system relies on cheap materials and energy, as well as credit, because you can’t raise revenue until the ‘take’ and ‘make’ stages are complete. In recent human history, we have had cheap materials, energy, and credit, but the circumstances are changing: resources are increasingly hard to get – just look at long-term increases in the price of crude oil - and biodiversity is in decline. The circular economy is based on the idea that extracting, refining, and producing materials comes at a cost, so it’s therefore sensible to use the value produced for as long as possible. Keeping products and materials in economic circulation as long as possible brings opportunities to create value continuously. In the linear economy, we think of a product life cycles as ‘cradle-to-grave’. In the circular economy, that is transformed to ‘cradle-to-cradle’. (1) https://www.theguardian.com/environment/2017/jun/28/a-million-a-minute-worlds-plastic-bottle-binge-as-dangerous-as-climate-change
- The most effective circular economy functions take place at the level of the user. That means items being reused, shared, or redistributed to other users, as well as maintaining and prolonging the lives of products. These aren’t new concepts – in fact they often mean a return to activities that are seen as ‘traditional’. But new ways of doing this are emerging, such as apps that allow you to get rid of your old things by selling them or giving them away. There’s also refurbishing, remanufacturing, and recycling – retaining as much of the value of what has already been produced as much as possible. Returning to plastic bottles, the optimal case after use is that you use it again and again, filling it up with tap water each time. But if that’s not a practical outcome, the bottle can be sent for recycling, transforming it into the highest grade of plastic possible. After a user is done with a material, it’s important to direct it to where it has optimal value somewhere else. There is a lot going on to make this work with food waste. Where it’s no longer edible by people, it could still be fed to livestock, or find other agricultural uses. Failing that, it can be a suitable feedstock for energy production. It’s really important to say that there are companies that are doing this successfully right now. One is example is businesses that cannot find an internal use for their old IT products, who are sending them to specialists that refurbish them, or use their parts elsewhere. They get a rebate for this, because the value has been so effectively retained.
- The ecosystems of the natural environment have developed to show resilience over extreme periods of time and the principles behind the circular economy are designed to mimic this. To enable this, the whole interconnected economy should be looked at as a system. Here, materials do not become ‘waste’ once they have been used. Instead they feed another part of the system, just like dead plant matter returning nutrients to the soil in nature. Another factor in live systems is that diversity in the system, and shared strengths and resources, helps to resist the shock of disruptive events. Finally energy should come from resources that are quickly restored. Plants photosynthesize energy from the sun, while economies can be built on renewables.
- Now you have to ask yourself what you want, and what the circular economy can do for you. It’s really about sustainability, and its three pillars of economic, environmental, and social gains. You gain economic sustainability as the value of products and materials is retained. That means there are cost savings along workflows, and that is a huge business driver. Organisations are going to want to find partners who will help them fulfil their circular economy goals. There are obvious environmental benefits from avoiding extracting resources from the natural environment, and passing harmful waste into it. And there are social outcomes as well; sharing, repairing, and reusing enables more people to use products and materials and participate in the economy. People really respond to circular economy concepts because it feels like the right thing to do with benefits throughout the economy.
- So what’s holding the circular economy back from further adoption? Well we should recognise that many of these principles have already been proved in certain traditional industries that focused on repair or dealing in second-hand item. however, they have fallen back a bit in the age of fast technological development and cheap goods. Secondly, we already have a waste hierarchy in law in the UK, requiring us to favour reuse and recycle where we can. But it’s not truly empowering to the user – instead it passes control and responsibility on to waste companies. The transformation to a circular economy would mean that we see the value in the items they we are finished with, even if we can’t realise that value ourselves. Then there is the practical challenge of how we get sufficient quantities of materials to the people who can put them to good use. And they have to be of suitable quantity. There are clear pathways to doing this for things like plastic waste or IT waste – you collect these items into separate waste streams and then pass them to an organisation that can use them. But there are still so many products where this is not practical. We will require designing-in reusability or recyclability, and communication up and down use streams to understand who needs what, and how value can be passed on.
- There are a couple of major drivers that aim to address these. The UN Circularity Gap Report monitors and measures progress, with a Global Circularity Metric for goal-setting and guidance on future action. It aims to make sure transition to the circular economy aligns with societal needs, by building coalitions across sectors and developing local pathways for circular change. The EU’s Circular Economy Package aims to address the barriers. That includes a specific strategy on plastics, focusing on their design, production, use, and recycling; a report on critical raw materials and their place in the circular economy; a promise to better align legislation on chemicals and waste; and a framework for EU and national-level monitoring. There are ‘pull’ factors too. The circular economy is a bit of a niche concept at the moment, but there are related elements that are really engaging with the public at large. Again the example of ocean plastic waste – it’s been really high-profile this year and people – and supply chains - are asking companies what they do about it. Implementing the circular economy can be a really nice way to answer those questions – you’re not just saying that you don’t do harm, but you’re also saying that you are actively leading the way in doing good. It’s also a solid foundation for meeting corporate commitments because you can get internal buy-in from demonstrating savings, new revenue, and engaging with employees at different levels.
- CE applied by incorporating tailored business models, rethinking design, enable partnerships and reverse logistics. These aspects involve a myriad of factors that may not be fully relevant to every organisation but are vital to the functioning of the ‘circularity’ widely used by the manufacturing industry. The CE framework will depend on three main aspects: 1) Business model: A tailored value proposition to generate economic opportunities of a CE which often mean emphasis on access over ownership - these are the foundation of CE services 2) Design: takes client needs into consideration such as space availability, demand and purpose of the service 3) Rethinking how current services are managed and engaging suppliers towards more sustainable approaches with long-term feasibility.