The Benefits of a Circular Economy and Making the Transition

Published on
November 6, 2021
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Introduction: What is a Circular Economy and Why is it Better for the Environment?

What is a circular economy? It is an alternative economic system that seeks to reduce resource use and emissions of pollutants. It does this by designing products that can be reused, repaired, refurbished, resold, recycled or composted.

It was first established by the Ellen MacArthur Foundation (EMF), an independent charity that works with partners to accelerate the transition towards a circular economy. Together, EMF and partners aim to help save money, create new business opportunities and, most importantly, protect our natural resources.

The EMF has developed the following definition:

"A circular economy aims to protect natural capital and human well-being while delivering economic prosperity. It does so by reusing materials and products in a manner that enables perpetual cycles of use."

With today's society often using things and disregarding what happens after they no longer want or need it, perfectly usable resources go to waste. This leads to materials being extracted from nature to make up supply, instead of things being reused. The below diagram shows how supply chains can move away from the status quo and transition towards a circular economy.

Circular economy diagram Source: The Ellen MacArthur Foundation
Circular economy diagram Source: The Ellen MacArthur Foundation

The Three Main Principles of the Circular Economy

As explained above, the circular economy could be one of the most efficient ways to protect our natural resources and achieve sustainability. The circular economy can be broken down into three main principles:

  1. Eliminate waste and pollution: By reducing, eliminating or designing out waste and pollution, we can preserve natural resources and reduce environmental impacts. One benefit of reusing materials is the creation of economic opportunities, as covered below.
  2. Circulate products and materials: Products design should consider its frequent use to last longer. By exchanging goods through repair instead of replacement, we will need fewer raw materials to create new items, in turn reducing emissions production.
  3. Regenerating Nature: Regenerating nature means there is no concept of environmental waste. Everything goes back to use at some point in its lifecycle. This is achievable as nature is reusable - a fallen leaf can feed the forest. When we return nutrients to natural systems, we add back to the environment rather than consistently taking away.

The Circular Economy and COP26 - What is COP26?

The immediate shift towards renewables is essential to tackle climate change. This is one of the reasons why COP26 has gained so much coverage.

What is COP26? COP26 is the 26th UN Climate Change Conference held between 31 Oct – Fri, 12 Nov 2021, aimed at accelerating action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. To find out more, check out this blog on the COP26 website.

The circular economy could be one of the most effective ways to achieve climate goals, as 45% of global greenhouse gas emissions come from making and using products and food. If we can find ways to increase reuse in society, not only will we reduce the amount of waste, but we can also reduce carbon emissions produced in the creation and consumption of products and food.

Economic Benefits of a Circular Economy

The circular economy promotes the recycling and reuse of products and materials rather than their extraction or disposal. This reduces the amount of waste in landfills and oceans and the costs associated with extraction and replacement. One additional benefit of the circular economy is the economic growth it brings through new business models being brought to attention.

While recycling and reusing might seem straightforward, some industries are still far behind what is needed to achieve sustainability. For example, in 2019, only 17.4 % of E-Waste was recycled – despite significant residual value in the raw materials that make up this waste. This presents opportunities for companies who can benefit financially from solving the problems that prevent a circular economy from becoming more widespread.

This lucrative element has been shown in the UK, where electronics are worth 50 per cent more if sold for reuse rather than recycling. Despite this, only 23% are suitable for reuse, and only 2% are reused (source).

A circular economy could also help us boost competitiveness, stimulate innovation, promote GDP growth (by an additional 0.5%) and create jobs (700 000 jobs in the EU alone by 2035), leading back to a healthier, growing economy.

Benefits of a Circular Economy in the Telecommunications Industry

The rising communication technologies coincide with the increasing demand for wireless networks, particularly 5G equipment. This has led to a gradual depletion of copper and metal ores used to produce telephone wires and equipment.

Wireless networks have surpassed their wired counterparts in the number of users worldwide. Despite this transition, the wired networks, which were once most relied upon, are increasingly redundant and available to be reused.

Without unlocking the value of this equipment, operators instead buy new parts from OEMs or equipment resellers - who may no longer stock older platforms. For this reason, companies must focus on creating a circular economy to save money on raw materials and make the most of unused inventory.

Supply chains and the Circular Economy

Businesses often have a linear supply chain model - from the extraction of raw materials to finished products, as shown below. In some ways, this made sense as there were few alternatives. But as the world has progressed, it has become clear that this is unsustainable.

A Liner, Reuse and Circular economy comparison, Government of the Netherlands
A Liner, Reuse and Circular economy, Government of the Netherlands

Many businesses have adopted and benefitted from circular economy principles in recent years, including those within logistics and supply chains.

With COVID highlighting supply chain weaknesses such as lead times, lack of diversity and visibility, companies can de-risk through turning to an economy that relies less on international operations. Therefore, the circular economy can not only rebuild supply chains domestically but can also boost our progression to a sustainable future,

How RECOVAR can help you transition to the circular economy

RECOVAR's software digitises asset recovery to speed up and standardise the inspection and recovery of redundant assets. As a result of this acceleration, acceleration can be recovered for reuse, resale or recycling to boost the circular economy.

Asset owners can use our application to build inventories for recovery at scale rapidly. Asset recovery companies benefit from standardised equipment inventories that they can deploy to engineers in seconds via the RECOVAR mobile app.

By streamlining the end-to-end process in equipment recovery, decommissioning can be accelerated, leading to faster building closure and cutting costs.

To find out more about what RECOVAR can offer, feel free to get in touch!

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