How to move from linear to circular economy

What is circular economy?

Circular economy is a business model that aims to keep the same resources in circulation for as long as possible, reducing waste production and minimising the extraction of raw materials. Achieving this means considerably reducing all emissions from the processes that lead from the extraction of said materials to their processing and, finally, product manufacturing and distribution. This is done by reusing by-products from industrial, agricultural or manufacturing processes in other industries, recycling materials from discarded products and trying to extend their lifespan and value in the economic cycle. In addition to the environmental benefits, this model also presents considerable economic advantages.

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The UN Global Compact

The fight against climate change is one of the most debated topics in the context of large international and supranational organisations, such as the United Nations, which has included a commitment in the Global Compact to guide entrepreneurs towards more sustainable and circular business models. To this end, a number of ideas were included in the report, that a company should implement as part of its strategy in moving from a linear to a circular model, in order to make its operations more sustainable. First of all, the entire production chain must be part of a circular economy system. Secondly, as with any production effort, precise and measurable targets need to be set (for instance, in terms of tonnes of waste products recycled or reductions in CO2 emissions). Virtuous cycles must be created that progressively extend these targets. Finally, it is essential to work with all stakeholders at all levels of the supply chain to identify the best ways to optimise production by eliminating waste. Only then will it be possible to create a true circular economy model. The UN document illustrates each suggestion with examples from real businesses to help entrepreneurs embrace the circular model.

Why is circular economy good for business?

CThere is no doubt that circular economy is good for the environment, but what do companies stand to gain? Switching production processes tends to be expensive: how can this cost be balanced out to make this business model truly cost-effective? To answer this question, we need to consider the production process as a whole. For a company, entering a circular economy system does not mean becoming “independent” and recycling what it wastes: that kind of circular model works well in a domestic environment, not an industrial one. In a business context, entering this model requires entering a whole economy. If, for instance, a company uses fuels for its production processes, switching to biomass can help reduce costs (biomass is cheaper than oil) and, at the same time, can help another company, for whom biomass is a by-product, move into circularity. The same applies to raw materials: being able to source them without extracting new ones often reduces costs. In addition, a company rebranding that includes the concept of circular economy will always have a positive impact on the more ” environmentally aware ” audiences, positively impacting brand awareness and brand image.

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