The circular economy

Designing out waste and pollution: Products should be created with “circular capabilities”, made of durable and non-toxic materials and manufactured in ways that allow them to be used, repaired, repurposed or recycled easily and safely. For example, IKEA, is rethinking the design of its flatpack favourites so they are simple to take apart as well as assemble.

Extending the life of products: Goods should be used more intensely and be kept at their highest value for longer. Take cars, for example, they are usually only used for 5% of the time, but through car sharing companies a single vehicle can be shared by multiple households, resulting in more intensive use and therefore a far more efficient use of resources.

Regenerating nature: At end of their life, biological matter, such as food waste, should be returned to nature in a way that can nourish the soil and allow new materials to grow (think food compost). For example, Indian start-up and 2021 Earthshot Prize winner, Takachar, is addressing the environmental impact of burning agricultural waste through a cheap, portable technology that can be attached to tractors to convert crop residues into sellable bio-products like fuel and fertiliser.

The World Economic Forum estimates that the circular economy will provide a $4.5 trillion global opportunity by 2030 through avoiding waste, making businesses more efficient and creating employment.

But becoming a circular company cannot be done in isolation. Businesses will need to work with their entire value chain as well as the broader ecosystem that they’re part of to create a real shift.

Whether you’re a big or small organisation, start by looking at your products and service to visualise material flows, the goals and purpose of your company, and the sector that you’re in. How can you work with others and learn from each other to influence a bigger change? Organisations of all sizes, across both public and private sectors, need to collaborate to deliver net zero targets and achieve the Sustainable Development Goals.

Regulators in the EU and UK are equally ambitious in their vision.

In the UK, regulation already in place includes rules on single use packaging and a plastic tax. In the coming years the government will also introduce a new extended producer responsibility system and a deposit return scheme for beverage containers.

In the EU, the Circular Economy Action Plan, aims to accelerate this transformation through regulation on digital product passports, a refresh of the eco-design legislation and energy labelling for smartphones, minimum standards for recycled content in products and a plastic tax.

Policy changes will help incentivise positive shifts and make circular choices more appealing for consumers.

The understanding and demand for more sustainable choices is already there. In the UK, peer-to-peer and secondary marketplaces are mature, and many companies are using existing technology to create circular value through design principles, and repair and recycle services.

But there is an intention-action gap – consumers are generally reluctant to pay more to ‘do the right thing.’

Marketing can help drive demand for sustainable choices and make circular solutions mainstream by creating easier access, essential consumer education and incentivising right behaviours. Take smartphones…

The vast majority of a smartphone’s total emissions are generated by the manufacturing process. But if a device can be used by another owner, extending its working lifetime, it drives down those emissions. Did you know that there’s an estimated 24 million old smartphones tucked away in drawers across the UK?

Organisations know they must move away from resource-intensive business models. But when you’ve been successful for a long time in a linear economy, there’s a lot to change – and it can be hard to know where to begin.

Here are three tips from Deloitte’s Circularity Lead, James Pennington:

• Understand your waste: Knowledge is power. Get in touch with your key suppliers to create a full picture of your material footprint and what goes in and comes out.
• Comply with the rules – and get ahead: Get to grips with the sustainability legislation that’s coming and understand what it means for your business.
• Start small: Think about what’s relevant to your sector, your values and your purpose. Start small, test, then closely evaluate to scale.