A winning circular argument

The way we produce, use and dispose of goods is unsustainable, rapidly depleting the Earth's natural resources. Urgent action is needed to tackle key global issues that result: rising carbon emissions, losses of biodiversity, degradation of land and marine environments, an increasing gap between rich and poor. To achieve this, we need to understand the relationships between population, consumption and the environment.

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Fortunately, responding to pressure from consumers, NGOs, shareholders and others, an increasing number of businesses are gearing up to be 'future-fit' by making positive changes to their production and consumption processes ahead of changes to the regulatory environment. For practical and brand reasons, there is an emerging trend for companies to consider the social and environmental aspects of their value chains. Consumer demand for sustainably-produced goods and services is up; commodity prices are becoming more volatile; and some new technologies are energy-hungry and hence expensive. In such circumstances, sustainable production becomes a winning approach.

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Consumption is equally important, as current business models and marketing strategies drive unsustainable behaviours. Demand for products and services far outstrips efficiency and productivity improvements. In fact, efficiency gains can drive more consumption, as consumers are able to access more goods at affordable prices.

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How should we respond to these challenges? As a starting point, we need to take a holistic view, to recognise the interconnections in a complicated system, to help understand causes and effects. What this means in practice is that companies cannot only focus on a single aspect of the value chain. While progress has been made in application of eco-efficiency measures and more responsible resource stewardship, these are unlikely to bring about the scale of change needed in the short timeframe available to us. It's time for ambitious, radical and faster responses.

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It's typically the case that value chains are conceived as linear, with the end product discarded and disposed of at the end of its life: raw materials - design - processing & manufacturing - transport - retail & service provider - consumer - waste.

In contrast, a circular economy model replaces the concept of ending product lives through disposal as waste, with recycling and restoration. In short, it is a system that is designed to be both regenerative and restorative: recover - recycle - remanufacture - repurpose. Such a system emphasises the use of renewable energy, the elimination of toxic chemicals, and aims to 'close the loop' and eliminate waste. Superior design is at the heart of the circular economy: materials, products, systems and business models - all need to be reconfigured.

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The business opportunities are considerable. Significant cost-savings can be achieved; brand image can be improved greatly; supply chain risks, including price volatility, can be mitigated; while the trust and engagement of employees and consumers can be enhanced. It's not always easy and the initial change may be uncomfortable for some businesses, but a thriving long-term economy that delivers profits along with lasting social and environmental benefits has got to be worth the effort!

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