INTHEBLACK December 2021 - Magazine - Page 19
Proponents of a circular
economy argue that
circular economic
principles can foster
innovation and
productivity while creating
more job opportunities
and encouraging
social inclusion.
“There is a clear distinction between designing from
waste and designing out waste. The circular economy
focuses on upstream innovation,” says Morris.
Coreo started out advising 45 small businesses
in one city street on how to implement a range of
tangible circular economy concepts around energy,
water and waste.
The company’s success is a mirror of how quickly
circular economy ambitions have grown. Four years
on, Coreo has delivered more than 100 circular
economy projects with organisations including
BHP, Lendlease, Mirvac, the City of Sydney and
the Queensland Government.
THE CIRCULARITY GAP
Despite a circular economy’s great promise, global
statistics tell a different story. The Circularity Gap
Report 2021, first published in 2018, shows that,
pre-COVID-19, the world economy was 9.1 per cent
circular. In 2021, that figure fell to 8.6 per cent.
“Circular business models are still not well
understood by the finance community, and so circular
economy initiatives are not always readily financed,”
says Lisa McLean, CEO at NSW Circular, a governmentfunded body whose aim is to deliver a zero-carbon
circular economy in New South Wales.
The business models and cash flows of circular
businesses are quite different from linear companies
that take, make and waste. Instead, circular companies
share, reuse, recycle and repurpose. They can be very
profitable, because they have multiple revenue
streams, taking waste and turning it into a new or
renewed product, and reducing costs because they
require less virgin material.
For example, UK charity the Ellen MacArthur
Foundation, in an analysis of medium-life products,
has estimated that the cost of remanufacturing mobile
phones could be reduced by 50 per cent if the industry
produced phones that were easier to take apart and if
there were more incentives in place for returning
phones. Similarly, if high-end washing machines were
leased instead of sold, it would save customers about
a third on each wash, while earning manufacturers
about a third more in profits.
The challenge is that regulators do not currently value
externalities associated with sharing and reuse, says
McLean. “There’s not a level playing field for circular
businesses. Work needs to be done to open our markets
to new circular solutions and to enable them at scale.”
“WE’VE GONE PAST
THE POINT OF
SUSTAINABILITY
BEING ENOUGH.
SUSTAINABILITY
SEEKS TO BE NEUTRAL
– TAKING AS MUCH AS
WE ARE GIVING BACK.
THE CIRCULAR
ECONOMY NEEDS
TO BE DOING MORE
GOOD, NOT SIMPLY
LESS BAD.”
LISA MCLEAN, NSW CIRCULAR
CLICK HERE
TO BORROW
Circular Economy
from the
CPA Library
McLean believes that the circular economy
represents a colossal multi-trillion dollar economic
opportunity. “This is where the new jobs and
industries of the future are coming from.
“Over the next decade, 100,000 new jobs could
be generated. Opening up closed markets to more
innovation – more recycling, sharing and reuse –
would boost the economy.”
Not only does the circular economy help tackle
resource scarcity and prevent climate breakdown,
says McLean, but circular economy businesses have
also been found to outperform traditional
competitors and promote social justice and fairness.
CIRCULAR OPERATING MODEL
Understanding the circular economy is one thing,
but how you apply its concepts to your own
business, or how to participate in it as a consumer,
is far from clear.
Adrienna Zsakay, CEO of Circular Economy Asia,
argues, “We do not need circular economy general
practitioners, but specialists who fulfil a job within
the core functions that enable the circular economy
to be integrated within a company’s operation,
delivering an agreed intended impact.”
Reverse logistics is another core function of the
circular economy, Zsakay says, by virtue of the fact
that, if you cannot get a product back, you cannot
assess how any of the other circular economy
functions can be applied – for example, repair,
remanufacturing or the reprocessing of materials
when products reach the end of their use-cycle.
Zsakay suggests that aligning the functions of the
circular economy with environmental, social and
governance (ESG) reporting, increasingly essential for
companies and more mature than the current status
of the circular economy, provides businesses with
extra insights into their resource efficiency and
resource management in ways standard
environmental issues do not.
Government and business are understanding it is
not enough to just be zero carbon, agrees McLean.
“We need to decouple economic growth from virgin
resource use and transition our investments, our
infrastructure and services to be regenerative.
“We’ve gone past the point of sustainability being
enough. Sustainability seeks to be neutral – taking as
much as we are giving back. The circular economy
needs to be doing more good, not simply less bad.”
intheblack.com December 2021 19