What is a circular economy model?
Issue 4 of our green guide will take inspiration from the Ellen MacArthur Foundation’s ‘Circular Economy’ and the Circularity of Assets.
Wikipedia describes the circular economy as ‘a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible’
The circular economy is a theory on transforming our current global system so that waste is eliminated, resources are circulated, and nature is regenerated. Here is a useful video to explain the circular economy:
The Circular Economy Theory gives us the tools to tackle climate change and biodiversity loss together, while addressing important social needs. The three principles required for a circular economy are eliminating waste and pollution, circulating products and materials, and the regeneration of nature. This theory has been gaining popularity especially in light of the climate crisis as it helps to minimise consumption of raw materials and emissions. It also helps to open up new market prospects and increase sustainability.
It also gives us the power to grow prosperity, jobs, and resilience while cutting greenhouse gas emissions, waste, and pollution.
The circular economy is in contrast with the linear economy. In this system, natural resources are turned into products that are ultimately destined to become waste due to how they have been designed and manufactured.
The idea of circularity of materials is not a new theory, it appeared as early as 1966 in a book by Kenneth E. Boulding
Why switch to a circular economy?
Earth’s population is growing and so is the demand for raw materials, crucially, however, raw materials are limited and will eventually be used up at the rate we are going. The use and extraction of raw materials have a major impact on our environment, it increases energy consumption and CO2 emissions. By switching to a circular economy, raw material use would decline which in turn would lower emissions.
Measures like waste prevention, ecodesign and re-use could save companies money while in turn also reducing their carbon footprint. This is good when ticking off ESG goals.
Moving towards practices of circularity of assets could reduce pressure on the environment, improve security of raw materials, increase competitiveness, stimulate innovation and boost economic growth. There is also a bonus to consumers as products will be more innovative and durable and save them money in the long run.
You can read more about this here.
Finance and the circular economy:
A fundamental part of moving to a circular economy will be how to finance the change. This offers massive opportunity for the finance sector to deliver on climate commitments and ESG goals while also assisting in new and better growth and value creation.
Nearly half of climate-change-causing emissions come from how we make products and food, in a circular economy climate change and biodiversity loss can be tackled in one. Job creation and increasing the resilience of supply chains could also be a feature of this economy.
With circular economy strategies, investment risk can be lowered; this provides merit to lenders, brokers and businesses alike.
The adoption of such an economy has the potential to reduce risk and increase business model diversification which also increases resilience.
The expert quote:
Dr Renuka Thakore, Founder of Global Sustainable Futures, Sustainability Practitioner, and winner of the 2022 Global SDG’s Woman Ambassador Award, commented:
“Understanding the environmental, economic and social impacts and costs of agriculture (and/or forestry) within the context of the Circular Economy becomes significant with the growing demand for food. Generations of agricultural waste, limited availability of natural resources, linear product cycles in manufacturing, and limited knowledge of designing products are all factors that could apply circular economy principles. All these areas increasingly demand work on innovative solutions to move towards a circular economy and circularity of assets.
Systemic assessment and comparing the agricultural products by applying systematic thinking at multiple levels (individual, local, regional, and global) presents a holistic way of assessing across the supply chain of in-between steps from ‘farm to fork’. With the increasing uncertainties in rainfall, water availability and other natural resources, dealing with the demand to conserve and protect the land, land use, water use, and energy use, the agriculture sector is under immense pressure. In such events, partnerships, engaging with the relevant stakeholders, sharing knowledge, responsibilities and ownership and accountability come into play with the highest value for sustainability. Inevitably, in the process of climate adaptation and resilience, a circular economy could become the governing rule for all, individuals, and collectives.
Finally, when the circular economy has the capacity to embrace all stakeholders, it can be used as a vehicle to attain just transition.”
Contact us today:
If your business is looking to make a move towards circularity of assets and ticking off those ESG goals, then get in touch today! Our team is best placed to connect you with the perfect funder for your sustainable and green requirements.
Our actions as a business:
- Encouraging those we finance to tick off their ESG goals
- As mentioned in other issues, all 3 of our directors operate electric or hybrid vehicles with the recent move by our managing director
- Our green guide aims to promote awareness of sustainable actions that businesses can take
- By reducing the amount we have to commute by having WFH policies and more meetings online, we hope to reduce our carbon footprint as a business
- Getting in touch with those that work in sustainability to spread their input
Stay tuned for issue 5 in one months time!