Walking in Circles is Not a Bad Idea After AllBy Víctor Leal | Thu, 10/01/2020 - 14:00
There is still a certain reluctance among some businesses to consider sustainability as a pillar of their business, partly because of ignorance, and partly because they think that it is not entirely profitable to implement a model with these characteristics. However, more and more companies and individuals are seeking to drive change to build a better world and have even adopted the United Nations' Sustainable Development Goals (SDGs) in their corporate strategies.
The SDGs contemplate 17 sustainable goals but No. 12, in particular, promotes responsible production and consumption. This is where the circular economy comes into play, which proves that profitability is not at odds with care for the environment and natural resources.
The COVID-19 crisis left important lessons for the circular economy, which must be revalued and applied more than ever today. These include value and supply chain resilience, general risk mitigation and the importance of acting early to avoid a significant negative impact, as well as having the ability to make significant changes in the way we live, work and produce in a short time.
Generally, companies take resources from the environment, design and manufacture products that they then make available to customers. Often, these are used for a limited time and end up becoming waste. However, this can and should be improved to limit the use of raw materials, reduce waste and create value for all.
When businesses invest in a circular economy, the production process begins with the supply of recycled materials and reduces the consumption of resources. It's a great start, but it is not entirely good to create a product with 80 percent recycled materials that ends up in the garbage. Therefore, it is important to establish partnerships and schemes that enable waste from one industry to be used as raw material in another.
Partnerships are essential in building a circular economy, since everything is about value chains and ecosystems. To create the greatest impact, businesses must strive and work together.
Three principles must be taken into account in ecosystems and circular business models, in order to achieve this successfully: to create valuable inputs for businesses beyond their customers, to add value to existing products and materials, and to draw on the sources of the economy, not ecological reserves. Therefore, innovation is an essential part of this scheme. At this point, companies must evaluate whether they are seeking to do so alone or through alliances, especially because the impact and value creation will affect everyone.
Eighty percent of the circular potential is defined by product design, but this will be lost without the right business model for all parties involved. To reverse this situation, it is important to identify the bottlenecks. There are certain aspects that prevent businesses from taking the decisive step, including: convenience, by producing single-use products while ignoring waste, which is useful for consumers and businesses to look for alternatives; trust issues, because collaborating in the value chain means sharing product data and information, and many are unwilling to do so, in addition to the perception of the value chain, since most clients and consumers are reluctant to pay more for products, just because they are circular (and much less so in a post-COVID environment).
In addition, there is some friction in the face of the possibility of changing to a new business model, especially because it may involve the denial of new contracts, as it requires time and energy. In terms of profitability, the technology or processes in many industries may hinder the immediate generation of sufficient profits or cost savings to justify the investments.
Luckily, the circular economy gives companies many reasons to adopt it. Lower costs, access to new markets, resource recovery, avoidance of resource dependency, flexibility in the face of economic fluctuations, compliance and access to talent are just some of its attributes.
On the other side of the coin, we have the option of choosing the circular economy as an alternative that seeks to redefine what growth is, with emphasis on the benefits it represents for society as a whole, while the current model, which consists of extracting, producing and wasting, reaches the limit of its capacity.
But this means dissociating economic activity from finite resource consumption. The circular model creates economic, natural and social capital, according to the Ellen McArthur Foundation, on the basis of three principles: the elimination of waste and pollution from design, as well as helping to maintain products and materials in use, and the regeneration of natural systems.
Achieving this revolution means a systemic revolution that will ultimately help businesses that choose this process become resilient in the long run, as it will generate economic and business opportunities as well. Not to mention that it will bring multiple environmental and social benefits, particularly as technical cycles allow the reuse, repair, remanufacturing or recycling strategies to recover and restore components and materials.
In reality, what this model truly is about is driving a transformation toward a more sustainable future and taking into account that not producing much, but producing better, is more profitable.
Great opportunities are available to do things differently. This is shown by the data. Statistics from the World Bank show that in Latin America, at least 430,000 tons of garbage are generated daily. This implies that each resident of the region generates an average 1kg per day of waste. Meanwhile, the Inter-American Development Bank has stated that in this entire region, no more than 2 percent of total waste is recycled. If the garbage were properly separated, almost 92 percent could be recycled.
Change is possible, but it implies that different social actors join forces. The paint, ink and coatings sector has done its part to encourage waste reduction at manufacturing sites and increase recycling of other waste in the industry.
On a global scale, there are even great efforts in this field. An example of this is the Coatings Care program, which has developed a series of guidelines allowing businesses to monitor their environmental footprint. Another part of the circular economy is the end of life for products. There is a lot of work to be done in this area. The United Kingdom produces more than 50 million liters of surplus paint each year, according to the British Coatings Federation, which would fill more than 20 Olympic swimming pools, but much of it ends up being wasted in reality.
That is why, through alliances with other manufacturers, they reprocess paint. All actions add up and, gradually, for this and the next generations, we will be able to paint a greener world, aware of how important it is to take this step ... going around in circles.