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What does the Circular Economy mean for my business? Tinna October 12, 2021
What does the Circular Economy mean for my business?
Circular Revolution

What does the Circular Economy mean for my business?

Global demand for extracted resources has more than tripled since 1970, outstripping population growth which doubled over the same period. A recent report shows that annually we now consume more than 100 billion tonnes worth of material, only a third of which remains in use after a year. The remainder is either classed as waste or gets dispersed or emitted into the environment. Just 8.6% of all material was cycled back into the economy.

Aside from the obvious environmental concerns associated with our insatiable demand, from a simple economic point of view our current system is unsustainable; increased demand and finite supply will lead to greater competition, increased price and volatility, and supply risks.

The circular economy is more than just a way to tackle the critical environmental issues we are all facing. It is about shifting from a linear take - make - dispose economy to one that decouples economic growth from the consumption of finite materials. This means:.

  • Rethinking how we design products and services, maximising lifespan and minimizing waste and pollution.
  • Prioritising stock optimisation and promoting low-carbon, low-resource solutions.
  • Dematerialising our patterns of consumption by moving from business models based on ownership of goods, to those centred on use, utility and selling goods as services

To paraphrase Walter Stahel, for businesses, it is about maximising value and competitiveness in a resource constrained economy.

So what are the opportunities for my business?

Efficiency gains and waste reduction
UK business benefit of up to £23 billion through low or no cost improvement in the efficient use of resources¹
 
Reduction in raw material and disposal costs
40–60% manufacturer cost associated to raw material²
 
Reduced liability and warranty costs
Longer lasting, environmentally friendly products²
 
New revenue streams
Leasing to customers with capital expenditure restraints;Up selling services for longevity³
 
Capitalizing on residual value of waste streams
Refurbished and repaired goods could add £54 billion to UK Gross Value added, whilst cumulatively saving 381 Mt CO 2eq by 2050
 
Consumer preference for sustainable alternatives
Increased margins for premium products³
 
Consumer Preference for sustainable alternatives
43% consumers actively choosing brands due to environmental values
 
Stronger customer relationships
Moving towards service-based offerings increases difficulty of replication
 
Preferred supplier
Welsh Government prioritizing resource efficient suppliers in public procurement