The circular economic model is gathering momentum and incoming policy and regulation could further accelerate this shift. We discuss the need for a new economic model and how implementing a systems thinking approach may be the key to resiliency.

Linear system. Finite planet 

The current average population increases by an estimated 81 million people per year. This means 81 million more inhabitants jostling for a share of the world’s resources. A rapid increase in population growth, coupled with a growing middle class, has placed the planet’s resources under strain. As the world industrialized, we adopted linear production and consumption models. We have normalized patterns of producing, consuming, and discarding. And, whilst we have made significant strides in resource efficiency, this is not enough to halt the damage to our planet. We require a new way of thinking and a new economic model.  

The Ellen McArthur foundation describes the circular economy as a system that aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system.  

Designed to fail 

If you’re of a certain age, you’ll sometimes find yourself reminiscing about an age where things were built to last. Today, the average lifecycle of an iPhone is three years. The price we pay for this innovation is a much-shortened lifecycle. And it is known as planned obsolescence. Why? Well, the answer lies in the race to create the need to manufacture products as cheaply as possible to maximize profit – a deliberate choice to create products that will eventually need replacing.  

So how many businesses will rise to the challenge of designing products that are built to last? As sustainability finally starts to take center stage, and with the global economy on shaky grounds amidst the COVID-19 crisis, this might just turn out to be what separates the innovators from the rest.  

What does circularity mean in practice? 

It means radically altering our understanding of waste as something to be discarded, to something that is a valuable resource instead. The circular transition requires innovative business models that can promote more sustainable production and consumption.  

In March 2020, the European Commission presented, under the European Green Deal a new circular economy action plan that includes proposals on more sustainable product design and reducing waste. Specific focus is brought to resource intensive sectors, such as electronics, plastics, textiles, and construction. Its aim is to ensure that the resources used are kept in the EU economy for as long as possible. The plan and the initiatives therein will be developed with the close involvement from the business community. 

Aligned with these values is Grover, a Berlin-based tech startup founded in 2015. It has a subscription service that allows customers to rent from a portfolio of over 1300 tech products. At the end of the rental period, customers can easily return the product and exchange it for something new. Aiming to reduce throwaway culture, Grover’s model allows items to be circulated multiple times. 

The business case for circular economy is compelling – not only in terms of economic growth but also in terms of benefits to the planet. Studies show that the global economy could benefit immensely from a more circular approach, embodied by material savings, emissions reductions, and job creation. Additionally, a circular economic approach can help fulfil several of the UN Sustainable Development Goals. 

Ideally, circular practices seek to create a world where all energy and materials stay in a closed loop, to solve for the rapid depletion of resources. These practices can be embedded not only at national levels and through new business models, but also at an individual level. Listed below are a few tips we can all use to embrace a circular lifestyle. 

By highlighting the fragility of our current system, the pandemic has reinforced the need to rethink our economic model. The circular economy provides a clear framework to help achieve the goals of the Paris Agreement and a resilient economic recovery that can work in the long term, unlike any plan entrenched in the take-make-waste principles of the current linear economy. The circular economy has the potential to create greater resilience to shocks in society — attributes valuable well beyond our current situation. We hope that you, too, can see the circular economy as offering unparalleled opportunities for the benefit of people and the planet.