The Circular Economy Guide For Entrepreneurs

In 2002, His Highness Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, was flying a helicopter in the “Saruq Al-Hadid” area located in the South Dubai Emirate at the northern edge of Rub’ al Khali desert. That was when he noticed a strange difference in the shape of the sand dunes and that they were arranged in a rather unusual way with a large spattering of black rocks. His Highness wanted to verify the matter, and he did inform the relevant authorities to take the necessary action. So, archaeologists began excavating, researching – trying to understand what had been happening in the past in this particular region.

Evoking unprecedented surprise was that the Polish research team discovered copper, bronze, and iron objects, which had been reconfigured from broken earthenware. And this was a few thousand years ago, which in turn means that inhabitants of this region had been recycling – broken and used ceramic pots were not disposed of – this is one of the fundamental principles of the Circular Economy.

What is the Circular Economy? How can it be an opportunity for companies and entrepreneurs in sustainable recovery? How will this pattern change the world by 2030?

Our present-day economy depends mainly on a Linear Economy – this relies on extraction, production, consumption, and disposal. In other words, it works on extracting materials and then manufacturing products or commodities from these raw materials that are in turn sold to the consumer and then disposed of after a short period of use.

The problem here is not just the waste. It goes beyond that by affecting our lives as a whole, simply because these wastes – or products of what we use or consume in our daily life – lead to air and water pollution and hence affects our health. It pollutes the oceans and, in turn, affects underwater life and marine wealth, and soil pollution. All these results in the exposure of animals and plants to pollution, which reflects on us humans, not to mention the destruction of the ecosystems that sustainably guarantee life on this planet.

Why is this crucial to us as humans? That is because we as creatures need air, water, and food to survive. In addition to going through a linear economy, irresponsible production and consumption, a depletion of the planet’s limited resources – all these cause an imbalance in our ecosystem as a whole …

No one denies that this economy has aided us to reach the satisfactory point in the history of humankind that we are now at, yet it suffers from stagnation. When the foundations for this linear model were laid since the Industrial Revolution, there was no expectation or perception at that time that it would be incompatible with the changes in the environment and the current demographics.

What is more, for a linear economy, the value here lies in the production and consumption of as many products as possible, a path that leads us to the wastage of primary raw materials. In this way, it reduces our chances of progress.

In this sense, we should take a step back and rethink how we can offer innovative alternative solutions, but as Einstein says, “You cannot solve problems using the same kind of thinking that you used when you created them.”

We need to design products, goods, and services to be more sustainable – to close the loop on productions. This is called Circular Economy since it depends on the better use of resources by complete retrieval of materials instead of wasting them – closing the circle of flushing out of resources.

Circular Economy aims at maintaining the use of products, equipment, and base infrastructure for a more extended period, and by that improving the productivity of these resources.

 All “waste” must become “food” for another process – either as a by-product or a recovered resource for another industrial process or a renewable resource for nature.

“Some thinkers use the term from “cradle to cradle” instead of “cradle to grave” as a way of expressing Circular Economy. Thanks to the Swiss architect and environmentalist Walter Stahel, who invented the “from cradle to cradle” rule in 1976, in the book for the economics of natural resources and the environment, published in 1989, by its British authors – David Pearce, and Archery Termes – which focuses on the possibility of renewing the utilization of products through recycling and re-excluding them in new forms and uses to serve the Economy and the environment.

There are more than 110 definitions by writers and economists of Circular Economy, but most of the definitions focus on the 3R approach:

1- Reduce (use minimum resources)

2- Reuse (maximum reuse of products and parts)

3- Recycling (reuse of high-quality raw materials)

According to (Korhonen, Nuur, Feldmann & Birkie (2018)) definitions that focus on regime change often emphasize three elements:

1- Closed cycles

This is concerned with the closing resource cycles by following the example of an ecosystem.

Nothing goes to waste in a fully circular economy because we can use any remaining by-product to create another product. Toxins are removed and separated from the residual streams in a biological cycle and a technical cycle. Manufacturers take back their products after use and bring them back to a new life. In this system, it is not only essential to recycle materials properly but also that products, parts, and raw materials in these cycles remain of high quality.

2- Renewable energy

In a Circular Economy, energy, like raw materials and products, lasts for as long as possible. The system here is fed from renewable energy sources because it is not possible to recycle energy. What is meant here is not an ‘energy cycle,’ but instead the direct ‘cascade type energy flows,’ which is the transfer of energy from the small scales to the large scales.

Likewise, the energy needed to run this system must be renewable – to reduce dependency on resources and increase natural and economic systems’ resilience.

3- Systematical thinking

The Circular Economy does not just require closed physical cycles and renewable energy but also systematical thinking. Every player in the Economy (an organization, a person, a living being) is linked to other players. Together, they form a network in which the actions of one player influence the other players.

To take this into consideration, we must include both short and long-term outcomes in the options and the impact of the entire value chain.

Additionally, some researchers have also added social inclusivity as a necessary part of the Circular Economy.

Goal No. 12 for sustainable production and consumption, Goal No. 13 concerning climate change, Goal No. 14 concerning oceans and Goal No. 15 for life on Earth.

In conclusion, Circular Economy has become a necessity for both governments, companies, and entrepreneurs and has even become a source of sustainable business opportunities and generating value from waste – maximizing the value of products over time. Circular Economy will be committed to providing new job opportunities and opening new economic horizons.

Implementing Circular Economy could help in generating up to $4.5 trillion and that would be as an additional income by 2030. This is in reference to a recent research that had been carried out by Accenture (NYSE: ACN) which then deduced that Circular Business Models could aid in decoupling resource consumption with economic growth whereas competitiveness would see a marked rise.

This is between 4-5% of the projected Gross Global Domestic Product (GDP), which is more than the entire German Economy today (the fourth largest in the world).

The transition to a circular economy could take quite some time, and the effort will be arduous. However, there are huge benefits and opportunities at our disposal. We must lead this transformation to protect our prosperity, well-being as humans, as well as the climate and the planet.

We look forward to 2030 with a thriving economy fueled by growth on all levels.

Be involved in accelerating this shift to a circular economy through your business model, and start now!

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