Embracing a Circular Economy for a Sustainable Business Future and Planet

What is Circular Economy?

You are a farmer with a tract of land where you cultivate your crops. You spend a lot of money buying fertilisers. The farm is full of weeds, but the labour required to remove them is beyond your means. Here is an alternate path for you to enrich your soil with nutrients and have the weeds removed free of cost.

Invite a poultry, goat, or dairy farmer to graze his animals inside your farm after you harvest your crop. These animals spend their lives on your farm for a month or two. The animals eat the weeds, solving a problem you would have in the next cultivation. Their excreta falls on your farmland, providing it with free fertiliser. Once they leave, you can start ploughing your land. The manure is mixed with the soil homogeneously. And now, you can plant a new crop.

This simple plan exemplifies the concept of a circular economy in an eye-opening way. Circularity is not limited to this modest example; its implications are huge. It is a virtuous circle where people collaborate in a loop of economic activities, and everybody wins economically, socially, and environmentally.

The Origin of the Concept of Circular Economy

Kenneth Boulding, a British-American economist, was instrumental in presenting the world with an idea that grew into the circular economy theory. He was a peace activist and, in his 1966 essay, ‘The Economics of the Coming Spaceship Earth’, introduced the concepts of ‘open economy’ and ‘closed economy’. This formulation led to further concepts evolving, such as ‘feedback systems’ and ‘closed loop’, and eventually a circular economy.

Three major premises of the circular economy can be listed as:

1. The natural cycles of materials that exist in our ecosystem

2. Ecological symbiosis, leading to industrial and economic-level symbiosis

3. Circular businesses, and transforming businesses through circularity.

The circular economy is a powerful and revolutionary framework for living life and economic activity. One key premise of this concept is a critique of waste in a modern economy.

Our civilisation has reached a point where we consume all essential and non-essential materials, water, and energy in such great abundance that they are becoming scarce on the planet at an alarming pace. We must recycle these resources rather than throw them away after a single use. This is where the circular economy comes in, by which the idea of waste is eliminated.

As in the example at the beginning of this article, a farmer’s weed problem can be changed into the fodder solution of cattle farmers. The waste from the animal husbandry activity is then recycled back to the first farmer as fertiliser.

Differences Between a Linear Economy and a Circular Economy

In a circular economy, the companies are service providers instead of sellers. For example, instead of selling furniture to a customer, the customer rents the furniture for her entire office or home from the company, and the company services, maintains, and replaces the rented items as and when required. In this model, the wastage is minimal. The company can take the damaged furniture, mend it, and put it to use again.

H&M, one of the largest clothing retailers, has been collecting old clothes and recycling since 2013. Their motto is to become 100% circular, having zero wastage. They process around 50,000 tonnes of old fabric to produce new fabric.

Another example is that of the European Union. Based on its 2015 Action Plan, the EU is working on supply chains to transform them into circular. It is envisaged that by becoming circular, the GDP of the European Union could be increased by 12%.

There will be some initial costs to make an economic activity circular. The supply chains, production and distribution models, and technologies will all need changes.

Though many companies have started collecting back their produce for reuse or recycling, only a small percentage of it gets recycled; this will have to change. The governments need to assist the companies in this venture.

Even when there is a way to turn circular, people are averse to new ways of thinking. Yet, the change is coming and is going to stay.

The BEGA Circular Valley Project, Australia

In Australia, the BEGA Group is practising this method to get their farms freely fertilised. There are poultry and cattle farmers who are ready to engage in this mutually beneficial arrangement with the BEGA Group.

For example, the mobile chicken coops of the poultry farmers are moved from one place to another across the project land from time to time. The chickens eat the weeds in these farming lands and fertilise the soil. The cheese-making unit of the farm uses wood waste as fuel. The sawmills nearby can resolve their waste problem when the BEGA Group buys the wood waste.

After burning wood waste as fuel, what remains is fly ash. This is given away to dairy farmers as a substitute for lime. Research is ongoing to see if fly ash can be used as a raw material in cement production to reduce CO₂ emissions.

The wastewater from the factory is recycled to irrigate the pastures. Research shows this wastewater can also be treated and used in seaweed farms. Seaweed is a new superfood full of omega-3 and other beneficial elements and offers a superlative solution as we face food insecurity caused by climate change.

The beauty of circularity lies in its potential to transform entire regions into interconnected ecosystems through thoughful planning and collaboration. Nature is circular, as we see in the food chain. We just need to replicate it with creativity.

Finding multiple uses for a single resource comes under the business category of enterprise stacking. From an economic view, everybody wins. Materials circulate in the system multiple times for as long as possible, and the process reduces the need to spend money each time on finding new resources. Also, the natural systems are regenerated in this cycle. The circular economy reverses supply chains so that materials are recovered before they become waste and set for reuse or recycling.

The Netherlands Circular Economy Model

The Netherlands plans to have a 100% circular economy by 2050. This ambitious project encompasses production, consumption, distribution, and logistics. The Buiksloterham district in Amsterdam is a 'circular' district. Everything is reused and recycled. The Eindhoven town hall's tower was renovated using 95% recycled material. In The Hague, an energy-neutral waste collection and separation centre functions efficiently. In Utrecht, an abandoned industrial space was converted into a space for people to work, meet, and learn. A bubble barrier is set up in the IJssel River to prevent plastic waste from entering the sea. 'Lease a Jeans' is another smart and innovative project where you can rent jeans from an apparel company. The country recycles plastic, uses paper pulp as ship fuel, recycles clothes, and repurposes old buildings. So many such projects are making the Netherlands a country of circularity.

Experts call the circular economy plan of the Netherlands a dream of a world without waste. In 2018 alone, the country implemented 85,000 circular economy projects. These projects created 420,000 jobs and prove that circularity and sustainability are not hurdles for economic growth but good for it. These barriers are built by a Dutch company, The Great Bubble Barrier.

Circularity and Climate Change

Circularity is a crucial step towards achieving net zero goals and combating climate change. In a circular economy, carbon, the major cause of global warming, is recirculated and not lost back into the atmosphere as carbon dioxide.

The beauty of a circular economy is its interconnectedness and scalability. There is no limit to how small or big the circular flow can be, and there is always scope for expansion.

References

The Economics of the Coming Spaceship Earth, Kenneth Boulding, 1966.

What is the circular economy? CNBC Explains, Jan 19, 2018, CNBC International, YouTube.

Bega’s Bid to Become a Circular Economy to Reduce Waste, ABC Australia, July 29, 2024, YouTube.

Circular Solutions from the Netherlands, November 26, 2018, Amsterdam InChange, YouTube.

A World Without Waste: A Peak Inside the Netherland's Circular Economy, n.d., investinholland.com