The cycle of what we consume

It is a fact that one of the most important current challenges is to identify solutions that contribute to the reduction of waste at a global level. Nowadays, production systems are mostly based on linear models, that is, on a supply chain that includes stages of extraction, transport, transformation or manufacturing, distribution, consumption and finally disposal. Commonly known as “from the cradle to the grave”, this model has caused tens of billions of tons of natural resources to be extracted today, generating around 11.2 billion tons of solid waste, according to UN data. Taking into account the above, what alternatives to new production models favor a scenario that promotes the satisfaction of the needs of the global population and that contributes to reducing our impact on the environment?

A cyclical alternative

The answer to the previous question is the circular economy. To understand what the circular economy consists of and what its potential is, it is necessary to talk about the way in which nature is governed, where the concept of “garbage” does not exist. However, there is the concept of nutrients, which in this case, are biological nutrients with the capacity to be reintroduced back to nature and be useful to other organisms. For example, a tree will grow throughout its life consuming nutrients from the soil and providing food for multiple species of birds, mammals, or insects. When the leaves of that tree fall or when the tree dies, decomposing organisms feed on organic matter and are responsible for reintroducing nutrients to the soil so that new generations of trees can grow. In other words, biological nutrients are part of an endless or “cradle to cradle” cycle.

Thus, in order to be able to introduce a successful circular economy model, it is necessary that we replicate nature in this regard while satisfying our needs. For this reason, just as nature has biological nutrients that are part of a cycle, the circular economy must also have them. So, we can talk about the fact that the circular economy will be supported by technical nutrients, which can be parts and components of products, complete products or even by-products and waste. This means that under a circular economy model, as well as in nature, the concept of waste will not exist either, but that we will have technical nutrients that will be cyclically reintroduced in processes of transformation of materials or in the maintenance of the products we need. This is supported by a series of principles initially proposed by the Ellen MacArthur Foundation, which we see below. For the circular economy to truly be successful, we must:

1. Preserving and improving natural capital

To comply with this principle, it is necessary that all non-renewable resources be controlled and viewed solely as a reserve. On the other hand, we must ensure that those resources that are renewable and that have the highest performance are extracted and used in a sustainable manner, at the same time that we generate the conditions for the restoration of the ecosystems from which they are extracted. The circular economy is then a regenerative economy.

2. Optimize product performance

The longer we can keep technical and biological nutrients in the cycle, the better. For this reason, the cycle should be as tight as possible. This means that it will always be better to maintain than to recycle.

3. Promote system efficiency

This principle consists in eliminating from the cycle any negative external factor or, as they are formally called, externalities. This means, for example, considering alternatives to eliminate the climate and health impacts caused by greenhouse gas emissions, resulting from the burning of fossil fuels.

How can we achieve this?

There are many challenges and opportunities surrounding the circular economy, however, there are three main ways to strengthen its introduction in all corners of the economy:

Rethinking and redesigning products

The circular economy will only be successful in the long term if the three principles mentioned above are taken into account from the design phase of the products we use. If from this moment on we consider the source of the materials, the resources required for their production, what their performance will be, the energy consumption during their use, how and when their useful life will end and how we can reintegrate both technical and biological nutrients back into their respective cycles, then we will have achieved a great victory.

Visibility in the supply chain

Any company dedicated to generating a product or service is part of an extensive and complex supply chain. On many occasions, we think of supply chains as a linear series of business links that begins with the extraction of natural resources and ends with the final consumer. On the other hand, supply chains are really networks of companies that interact with each other and in most cases, companies have no visibility of what is happening beyond the companies with whom they have a contract or direct contact. Often, and even more so for large companies, this puts their reputation at risk and prevents them from knowing the true environmental impact behind their product, from the depths of their supply chain. In fact, the greatest contribution to the environmental impacts of any product occurs along the supply chain. For example, for the food and beverage industry, around 83% of its greenhouse gas emissions correspond to its scope three emissions. Scope three emissions consist of those indirect emissions associated with a company's supply chain, for example, agricultural production, transportation of raw materials, packaging, distribution and refrigeration of the product. Thus, a circular economy will depend on a transparent, traceable supply chain, with relevant environmental objectives and regularly monitored.

Develop innovative business models

In this regard, there are two considerations for scaling business models that are compatible with a circular economy. The first is that a transition is required from business models based on the supply of products to business models based on the supply of services. This is known as”Dematerialization”. In this way, consumers will be paying only for the benefits that a certain product actually provided previously. This not only contributes to reducing the environmental impact, but it may have associated economic savings with users or even make it possible to meet needs that would not have been possible otherwise. Let's think, for example, of the mobile applications with which we request a private transport service: we don't assume the costs and responsibilities of having our own vehicle and we only enjoy the shuttle service from where we are to our destination.

The second consideration is for companies to include in their business model a reverse logistics for your supply chain. Reverse logistics consists of all those activities necessary for a company to ensure the return and recovery of any material that had previously left its facilities. For example, when Apple accepts old and used iPhones from its customers in exchange for a discount on a new product, this is a simple form of reverse logistics because Apple will reuse the components of the recovered iPhone. Of course, it would be ideal for the consumer to use each product as much as possible to comply with the principle we saw above of optimizing product performance. Then, the only way to ensure the circularity of technical nutrients will be with reverse logistics processes that also meet the highest standards of robustness, transparency and traceability.

Circular models in action: a success story

Kalundborg is a small city located off the coast of Denmark and is known worldwide for a group of companies that pioneered “industrial symbiosis”. This concept emerged in 1972 from the idea that in nature there are certain species that have an intimate association with other species to benefit each other. Similarly, industrial facilities in Kalundborg generate mutual benefits across a network of twelve companies. Interconnected by a local pipeline and logistics system, solid waste, water and energy from one company is raw material for another. For example, Novo Nordisk is a company specialized in the production of insulin that, for its own processes, receives water that the municipal plant draws from Lake Tissø. In addition, it receives steam from the energy company Equinor, which Novo Nordisk will use for its production and heating processes. Finally, Novo Nordisk will generate as waste water, biomass, ethanol and yeast waste that it will share with other companies and plants to generate mainly biogas that Gyproc will use and clean treated water that will be incorporated again by companies such as Equinor, Novozymes and Ørsted.

Let's close the cycle

It is a fact that to face the environmental crisis, great efforts are needed and it will definitely be necessary to add initiatives, creativity and many new ideas. Therefore, the most important thing about the circular economy is that it has to be an inclusive and distributive economy. Only in this way will we be able to generate environmental value and prosperity for the people who compose it. Let's dare to innovate and close the cycle.

References

Ellen MacArthur Foundation (2021), “What is a circular economy?” , https://ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview

Kalundborg Symbiosis (2021), “Explore the Kalundborg Symbiosis”, http://www.symbiosis.dk/en/

Kate Raworth (2017), “Doughnut Economics. 7 Ways to Think Like a 21st Century Economist”

Michael Braungart, William McDonough (2002), “Cradle to Cradle”

United Nations (2021), “Act now. Facts and figures”, https://www.un.org/es/actnow/facts-and-figures#:~:text=Becca%20McChaffie%2FUnsplash. -, Waste, from%20gases%20from%20greenhouse effect%20

Principles of Responsible Investing (2021), “Climate Action 100+ sets new decarbonization expectations for food and beverage industry in line with Paris Agreement goals”, https://www.unpri.org/news-and-press/climate-action-100-sets-new-decarbonisation-expectations-for-food-and-beverage-industry-in-line-with-paris-agreement-goals/8361.article

UNEP (2019), “We're gobbling up the Earth's resources at an unsustainable rate”, https://www.unep.org/news-and-stories/story/were-gobbling-earths-resources-unsustainable-rate

Yossi Sheffi, Edgar Blanco (2018), “Balancing Green. When to Embrace Sustainability in a Business (and When Not To)”