News 2015 / May

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What is circular economy and why is everybody talking about it?

Not too long ago the concept of circular economy was just another powerpoint slide buzzword used by sustainability experts at presentations. More often than not, the audience consisted of other sustainability professionals – so it was more or less a case of preaching to the choir. But now the idea of circular economy has really started to gain traction, and these days that choir has grown pretty big.

Many companies, including Unilever, Apple and Ikea have already adopted the model into parts of their production processes. Ikea, for example, says that all home furnishing products should come from renewable, recyclable or recycled materials by the end of 2015. Apple made an effort to allow customers to exchange old devices for credits toward a new model. The materials from the old devices are later reused when building new ones.

So what is circular economy? In the seventies the cradle-to-cradle concept emerged, brought forward by Swiss economist Walther Stahel. But the concept never reached its full potential and today the number of cradle-to-cradle products is limited. In the nineties, the key principles of cradle-to-cradle were elaborated into the new black: Circular economy – a global economy model for a world with finite resources. What it means, basically, is that instead of digging up raw materials, turn them into products and when those products become obsolete you throw it away as waste – which is the case in a linear economy – you should bring the raw materials back in your production by salvaging it from your old products. This does not only make sense from an environmental perspective, but also from a strictly economical one, as the ever-increasing prices on the market for raw materials clearly shows.

But it is not only businesses that are starting to take notes; regulators are talking about it too.

A first legislative package on the matter was presented in Brussels last year, which was later withdrawn in December with the promise of a “more ambitious” proposal this year, probably already after the summer. The withdrawn proposal dealt with issues such as increased packaging waste recycling, a phase out of landfilling of recyclable products, traceability of hazardous waste and streamlining the reporting obligations for SMEs, to name few.

Ok, so this all sounds really good, making money and saving the planet at the same time. What’s the catch?

What ChemSec is concerned about, alongside many others, is the fact that many products on the market contain a lot of hazardous substances. There is a high risk that recycling will just bring these substances back in an endless production cycle where it is used and reused over and over again, particularly if they are in products with a long lifetime, such as construction materials. Furthermore, our understanding of toxic substances improves over time. Certain levels of certain substances might be considered safe today, but tomorrow researchers come to another conclusion, as have been the case with many substances. Another fear is a weak legislative package which could work as a disadvantage, as customers will potentially hesitate to buy recycled products due to the uncertainties around it.

So is legislation the only way forward? Of course not. There is not a shortage of companies with great policies for how to use recycled material, but in practice it can be very difficult to achieve. Let’s say you are building a toy out of recycled plastics. If you are serious about your toy-making business you want to make sure the plastic is free of hazardous additives like phthalates. The only way to know for sure is to test the material, every single batch of it, which can be very costly. In order to avoid these costs companies tend to use virgin material for those uses, and then you kind of lost the concept of circular economy. This is where REACH comes into play.

Imagine a strict and well-functioning framework for chemicals that limit the amount of hazardous substances allowed in your products. It could be pretty costly to adjust to, sure, but once you’ve done it your recycling business will be travelling fast down easy street, and you will save lots of money recycling for reuse since you already know there are no hazardous substances in your products in the first place.

So to summarize, here’s a couple of things to consider when moving your business towards circular economy.

  • Don´t use hazardous substances in the product design
  • Design products in a way that they can be re-assembled and re-used
  • Implement take back schemes for your own products
  • Control the recycling processes

In the end though, there are no simple solutions. It is obvious, however, that the companies working on cracking the code of circular economy today, stand a good chance of being market leaders tomorrow.