Interest in the circular economy is growing internationally, but what will it take for this new approach to really flourish? Researchers are talking to local businesses on this path.
Biodegradable food packaging, easy-to-disassemble office printers, carpet that is leased not sold to ensure it is returned for remanufacturing … there is evidence that “circularity” is gaining traction with entrepreneurs and business people mindful of their impact on people and planet as well as profit.
But researchers at UTS Business School are investigating what obstacles may be restraining an even faster transition to a circular economy – an economy where products are designed so they last longer, can be repaired and upgraded, as well as being redesigned, reused, resold and remanufactured.
Circularity is a “restorative” alternative to the prevailing take-make-and-dispose linear economy – being designed to take-make-and-recreate instead, explains Dr Melissa Edwards, who has been talking to Australian businesses on this path.
It is gaining traction globally, with leading businesses like Unilever, Philips, H&M, Dell and Google adopting circular economy models.
Global research has already established the economic potential of a restorative system, Dr Edwards says. One estimate is that waste reduction and lower capital requirements for business could mean a gain of $US1 trillion in savings by 2025.
“We know that we have the models and the technology available to enable us to transition to this circular economy,” says Dr Edwards.
“So we started asking questions about the social element – why is it that we don’t transition to these models, if they exist? What is it about the way we currently organise that keeps us stuck in a linear system?”
Among the case studies Dr Edwards and her collaborators are collecting is the story of a local entrepreneur who wanted to help recirculate goods in the economy for longer. “He wanted to make sure objects that were beyond their use in one household could be exchanged with others who wanted those objects,” Dr Edwards says.
“He had the technological innovation available to do this – an online platform to enable this exchange – and he found there was a need: used goods were in high demand.”
But he found he had a really tough competitor. “There was nobody else providing the same service, in this space, which is the traditional way we think about competition,” Dr Edwards says. “He found his competition was something else – his competition was the bin, the local council kerbside collection.”
In this case, and others, the linear economy prevailed because we don’t put a proper value on the goods and services we consume, because we don’t put a value on waste as a resource, Dr Edwards says. “It’s a systemic problem.”
The concept that competition can actually be “the status quo” is one of four preliminary insights from this local research.
The second is that purpose is important to people who are organising within the circular economy, and they will change “shape” to ensure this purpose remains at the forefront.
“The traditional lines between for-profit and not-for-profit are becoming blurred,” Dr Edwards says. “We’re seeing the emergence of lots of ‘hybrid’ organisations in this space: for-benefit B-Corps, social enterprises, collaborative consumption platforms, along with a resurgence of mutuals and cooperatives.”
The third finding is that entrepreneurs in this space will become innovators and advocates for change if necessary.
“When people encounter something in their operating environment that blocked their ability to implement circular principles, they were innovating to turn problems into opportunities, or were acting beyond their own organisation to become advocates for change,” she says.
“For example, they started to work in partnership with larger organisations and regulators to develop ways of valuing waste streams as resources, or to substitute more sustainable materials into the supply chain.
“They worked with retailers and consumers to raise their awareness of compostable or reusable features of their products. Or they developed networks with other businesses to share information and resources, such as the Ellen McArthur Foundation CE100 network.”
The fourth finding is that systemic innovation seems to happen via the “collective imagination”, with a set of stakeholders, perhaps from the same industry, finding ways to collaborate to innovate. This is something we need to do more of, Dr Edwards says.
“In the circular economy, the outputs from one organisation might become the inputs for another,” she explains. “Organisations need to talk to each other to realise that opportunity.
“Once again, we have the technology to make this possible but what we don’t have – or we don’t engage regularly in – is the socially innovative, collaborative processes where these opportunities can emerge.