The circular economy explained


The circular economy explained

Unsustainable consumption combined with global population growth stress our planet to the limit – and the demands are increasing. Numbers of the purchase-powerful middle class are ever-growing. This is especially apparent in Asia, where the middle class demographic is expected to rise from around one billion today to over three billion by the year 2030.

Cutting down demand is not a realistic way to resolve the problem: politicians will not base their plans on reducing standards of living. To fill the gap between increasing demand and decreasing natural resources we must find new, less resource intensive solutions. This vision is accomplished in the circular economy.

Not recycling, but a circular economy

The circular economy is often confused with recycling. While the terms are related, recycling includes only the environmental aspects of disposal. Whereas the circular economy offers a more holistic approach which holds enormous promise. For example, the EU estimates that ‘waste prevention, eco-design, re-use and similar measures could bring net savings of €600 billion, or 8% of annual turnover, for businesses in the EU, while reducing total annual greenhouse gas emissions by 2-4%’1.

The circular economy model challenges our industrial linear production method of ‘take, make, dispose, and repeat’ with life cycle thinking. Its approach is to ‘take, make, re-use, and recycle’. Yesterday’s used products provide today’s raw materials, at yesterday’s raw material costs.

A key part of the circular economy is producing commodities and services in a new way. This can be challenging for companies to deliver. It requires the industrial society to adopt a new mindset: manufacturers must design in reusability, recyclable materials must be invented, and new value chains are needed for complete and repeated life cycles to become viable.

One Remarketing realizes the circular economy

In the electronics industry collection rates are only about 50%, with re-use rates  below 5%. Our One Remarketing business model is based the circular economy model of ‘product life extension’. In other words collecting and refurbishing a product. When devices are collected, product re-use is practical.

Delivering a more circular economy will make demands on consumers and businesses to think in new ways. If businesses are to deliver their CSR promises, and if green aspirations are to be more than greenwash, also buyer behavior needs to change. Sustainability needs to become a primary decision criterion, rather than a nice-to-have secondary consideration.

Effective device management through its lifecycle becomes even more important. And as these new devices become obsolescent, a sustainable approach to their use and reuse is critical for a healthy planet.

1Source: European Commission Circular Economy Package, December 2015