Is awareness of the circular economy translating into business practice?

BESTsmall from the selection. Shutterstock_534939328

There are real signs that a new circular age is dawning.

Pledges from Unilever to implement fully recyclable packaging by 2025, corporate networks such as the CE100, a Dutch circular economy week, and Scotland’s national policy agenda to “make things last” are just some of the initiatives that have helped grow public and business awareness over the last five years. But is this awareness really translating into business practice?

Businesses such as Interface carpet tiles, Orangebox office furniture and Fairphone, which have put the idea of service, product longevity and keeping materials in use at the heart of their business, are the oft-cited pioneers, but for many circular economy experts the pace of change overall is incremental.

The circular business model

At the core of circular economy is a business model with a different type of cooperation across the supply chain. Everything else, from design and manufacturing to materials recovery, stems from this. But, for most companies, which have built operations around a take-make-dispose model, what does circular actually mean?

According to Douwe Jan Joustra, director and owner at ICE-Amsterdam, one of the Netherlands’ leading experts on circular economy, it entails a radical shift in understanding the circular economy as recycling materials and managing waste to service design and asset management. It’s not about improving waste, but providing services, and “valuing assets” in an “ecology of things”.

No one-size-fits-all with leasing

Many businesses have begun experimenting with leasing products as services, but there is no “one-size- fits- all” solution. According to Eelco Smit, sustainability director at Philips International B.V. (which launched its first major LED lighting-as-service with Schiphol in 2015) the “servitisation” model works well in a B2B context, but it doesn’t necessarily translate directly into a consumer context. The next stage of work is a series of pilots with consumers to develop an offering that is both affordable and meets their needs.

One company that has garnered attention for its lease model is Dutch brand Gerrard Street – headphones guaranteed to last with a repair service for a monthly subscription of €7.50. But, according to co-founder Tom Leenders, gaining a loyal following hasn’t come from branding the product as circular, it has come from an unrivalled sound quality and design. Circularity, embedded in the business model, isn’t visible.

Enabling consumer access

Subscriptions or deposits can create extended producer responsibility, but a growing portfolio of monthly subscriptions can be a “noose on the consumer’s neck”, according to Eva Gladek, CEO and founder of Metabolic, a pioneering consultancy and venture-builder for the sustainable economy, “It makes sense for rapidly changing products like games consoles, but it’s important to consider all possibilities for enabling consumer access.”

And, she adds, keeping products in use for as long as possible is not always the best thing to do since improvements in performance and efficiency may necessitate their recovery.

Diverse skills needed in the circular economy

The electronics sector is only starting in its move towards circular models, because of the complexity of the product, according to Sybren Bosch, consultant at Copper8. “This challenge encompasses not only technical, but also organisational and financial issues. We not only need designers of electronics suppliers, but also financial and procurement experts to be able to make the step from linear to circular.”

There other, more systemic, factors in scaling up the transition. While countries are bound by the EU Waste Electrical and Electronic Equipment (WEEE) Directive to recover more than half the weight of electronic equipment sold, the wide variance in recycling methods and take-back infrastructures poses a real barrier to meeting these targets.

Systemic factors

The EU Circular Economy Package emphasises eco-design – reparability, upgradeability, design for disassembly – but with electronics products market cycles spanning as little as 12 to 24 months and business models built on novelty, it’s difficult for companies to shift towards durability.

Institutions have a role to play by exercising their purchasing power and helping raise the demand for circular products and services. The efforts of pioneering individuals and companies need to be matched with policy and legislation that accelerates transition. Taxes must ensure the true-cost of linear disposability is recognised – and paid. Subsidies must be re-directed so that the last barrier – the cost of going circular – is removed.

The potential for impact

But while there are hurdles, the potential for circular electronics to make impact is significant. A 2015 report by the European Environmental Bureau showed that selected electrical and electronic devices placed on the EU market over one year cause the equivalent of 1,500 million tonnes of CO2 emissions over their lifecycle; an amount equal to what the entire annual energy production of the UK, Germany and Poland emits, combined. Tackling this has the potential to wholesale reduce CO2 emissions, as well as reduce other environmental burdens such as water use, waste generation and the release of hazardous substances.

What’s clear is that circular economy is a constant process of benchmarking materials, not just against budgets, but against social and environmental impact, as well as planetary boundaries. Identifying measures to evaluate progress is a critical step, but creating a shared vision is fundamental.

Download your set of circular economy principles for electronics

This feature was written as part of “Spark#1: Circular Electronics”, held during Nederland Circulair’s “Week van de Circulaire Economie”. The event brought together Climate-KIC education participants, members of the public, expert practitioners for a panel discussion, breakout sessions and presentations at Fairphone’s Amsterdam headquarters.

The focus was on the challenges of transitioning to a circular electronics value chain, the role of business models, sustainable procurement, product design, and e-waste management, leading to the creation of a set of circular economy principles for electronics. You can download these principles here

References / further reading:

European Environmental Bureau, Delivering Resource Efficient Products. Click here.

European Commission (2016) Report from the Commission on the implementation of the Circular Economy Action Plan. Click here.

Triple Pundit. Extending the Lifecycle of Our Products and Services. Click here.

Guardian Sustainable Business. Innovation or E-Waste? Apple’s Rumoured Plan to Ditch Headphone Jack. Click here.

Guardian. Phone Companies Release too Many Models, say Consumers. Click here.

PBL (2016) Circular Economy Measuring Innovation in Product Chains. Click here.



Wrong form ID

About the author(s)

Gina Lovett

Gina Lovett

Gina Lovett steers content and edits the Daily Planet. For Climate-KIC, she leads content development and thought leadership. She has a background in journalism and higher education, with extensive experience in publishing, producing events and managing strategic projects in the field of climate change, sustainability, design and innovation.