The ideas that feed the circular economy go back to the 1960s, when the modern environmental movement was in its early days. Its principles are simple: recycle, reuse, repurpose, share, refurbish, lease, regenerate goods and materials. The goal? Mitigate our impact on the environment by reducing the amount of waste we discard. However, circular economy strategies have an impact beyond tackling climate change. Indeed, these strategies have also been lauded as a tool to create new jobs and reinvigorate economies.
In our infographic below, we look at some of the key reasons behind pushes for a more circular economy worldwide. We then look at trends in consumer opinions and research that has been done on the circular economy's impact.
Why we need a more circular economy
As human beings, we have had an arguably catastrophic impact on the environment since the industrial revolution. Both individuals and businesses play a role in massively speeding up the effects of climate change linked to the rise of consumerism as we know it today. The trends that have been observed over time are concerning:
- Materials production is projected to generate 649 billion tonnes of CO2 emissions by 2100, even when taking into account renewable energy and energy efficiency
- Consumers waste up to $460 billion each year by dumping still-wearable clothing into landfills
- 80% of consumer goods waste is burned or landfilled because of poor design and/or lack of end-of-life collection options
- We generate 1.3 billion tonnes of food waste each year
- We produce around 300 million tonnes of plastic waste every year
- 67% of global greenhouse gas emissions are related to material management
- The fashion industry consumes 93 billion cubic metres of water each year, which is enough to meet the consumption needs of five million people
- Less than 1% of textile fibres are recycled into new clothing
- We dispose of 20 to 50 million metric tonnes of e-waste worldwide each year
Many industries are notorious for their wastefulness: construction, fashion, FMCGs, etc. In addition to creating significant waste, waste management is poorly handled in many of these sectors. Circular economy strategies can provide an answer to this growing problem.
The benefits of a circular economy
Only 8.6% of the world's economy is circular today. What benefits can increasing that number bring?
- Making economies more circular could create 1.8 million jobs by 2040, according to the head of the UN Economic Commission for Europe
- Remanufacturing has been shown to reduce 80% of emissions in a study by the UN International Resource Panel
- Applying circular economy strategies could reduce emissions by 40% in 2050 if applied to materials like cement, steel, plastic and aluminum
- Circular economy strategies could lead to $700 billion worth of savings per year for the FMCG sector
- Purchasing 100 second-hand garments could displace the production of 85 new garments
- Applied to the food sector, we could see a 49% reduction of the sector's greenhouse gas emissions by 2050
- Using recycled materials in the construction sector could offer a 5-9% profit margin
How do consumers feel?
As awareness grows, consumers are changing their behaviour and asking businesses to change theirs. This is partially why highly consumer-driven sectors are embracing sustainability trends. For example, sustainable fashion is increasingly becoming a must for younger consumers. This has led brands to seek out new materials that are less damaging to the environment. There's also been growing demand for green real estate, often leading companies to seek out circular processes for material procurement and management. Consumer surveys continuously highlight shifting demand for more sustainable practices:
- 83% of consumers believe it's important/extremely important for companies to design reusable/recyclable products
- Three in five US survey respondents say they try to always make a conscious effort to repurpose or upcycle items
- 59% of surveyed female consumers in the UK have purchased or want to purchase second-hand fashion items
Looking to the future
Refurbished marketplace BackMarket experienced a 1,000% YoY growth from 2019 to 2020. Indeed, the pandemic has helped bolster consumers' adoption of refurbished/second-hand products, which often come at a lower price. Market projections are favourable for many sectors. For example, the global market for refurbished computers and laptops is expected to be worth $4.9 billion by 2027. In terms of fashion, second-hand items could become more popular than traditional retail as projections show the fashion resale market being worth $84 billion by 2030, versus $40 billion for fast fashion.
Many countries are implementing regulations to adopt circular strategies. Indeed, the EU recently adopted a Circular Economy Action Plan to achieve a carbon-neutral, sustainable, toxic-free and fully circular economy by 2050. Corporates are also embracing this shift, with companies like Danone pledging to make all their packaging reusable, recyclable or compostable. Of course, many challenges remain in transforming the linear economy we all know today. Corporates must avoid greenwashing and actually follow through with their pledges. Consumers must change their consumption behaviours to help businesses also shift their models. Governments will need to continue adopting and enforcing strong legislation to make our economy more circular.
Rated startups to check out
- Phenix develops an app for consumers to purchase unsold food items at a lower cost, to help restaurants, grocers, and other food shops reduce their waste
- Circular Systems transforms waste (organic and consumer waste, recycled cotton, etc) into fibres, yarn and fabrics
- Co-Recyclage develops a platform for users and businesses to resell and purchase used items more easily (furniture, equipment, materials, etc)
- Upcyclea develops a collaborative platform to enable circularity in building construction and management (recycle, reuse, resell building materials)
- Eiravato develops a marketplace for businesses to resell waste, rather then sending it to landfills, so that others can transform it for reuse in their projects
