To understand the circular economy is important to describe the linear economy.
The Linear Economy is not working very well. Three reasons.
- Resources like fossil fuels, food and water are increasingly hard to get at.
- Biodiversity is in decline worldwide. Still, we seem to take the ecological services provided by the natural world for granted.
- The financial system almost crashed the entire economy.
As the economy grows, we need more raw materials for the production of goods and we produce more waste. This is not a problem as long as the economy is relatively small compared to our natural ecosystem. The natural ecosystem is both the source of raw materials and the “sink” for our wastes.
But today, our economies have become so large that we have to question the wisdom of extracting ever more raw materials and dumping more and more waste. This current economy of “take-make-use-dispose” is called the linear economy. It is not a sustainable model.
The Circular Economy, in contrast, aims to radically limit the extraction of raw materials and the production of waste. It does this by recovering and reusing as many of the products and materials as possible, in a systemic way, over and over again. The Circular Economy is a “make/remake – use/reuse” economy.
See the following video Animation by the Ellen MacArthur Foundation: https://youtu.be/zCRKvDyyHmI
The Circular Economy is inspired by natural systems which often have some amazing characteristics. What if we could make our man-made systems work more like natural systems? What are the ‘rules’ or ‘principles’ that govern these natural systems? And, can we use these to inform a Circular Economy?
The four principles of the Circular Economy are:
- Waste equals Food
- Build resilience through diversity
- Use energy from renewable resources
- Think in systems
Why it is difficult for companies to be innovative
- Real wages have been stagnant or falling for several decades.
- This has resulted in intense competition among companies selling products and services, and in an unfavorable market position for environmentally or socially benign products (these often cost more).
- The 3 billion new customers entering the market in the next 20 to 30 years will put an enormous pressure on the resource base if we continue along our current, linear ways
The circular economy is the best way to do business and become a sustainable company.