On July 27, Portland hosted the U.S. premiere of the film Closing the Loop: A Documentary Film About the Circular Economy Revolution, which brought the topic of innovation and manufacturing to the forefront. The packed room watched as innovative applications of technology, process improvements and labor solutions presented a compelling vision of what’s possible when manufacturers make good on their ability to design out waste and pollution, create cycles of disassembly and reuse, and tease out the renewable, self-generated energy buried within their current systems.
The idea behind the circular economy is to recover the large amounts of available energy and lost labor that occur in traditional manufacturing. The World Economic Forum puts it simply – to “design out” waste. Every manufacturing system has the potential to improve designs so that resources are maximized; it just takes looking at the system with new eyes and new intentions, perhaps with a higher purpose of contributing to a sustainable future. This is the foundation of the circular economy.
So what is the circular economy and how can it work?
It is a call for a fundamental shift in the way we think about and enact manufacturing so economies no longer rely upon extracting resources from the environment, but instead circulate existing energy and materials within closed systems. As the movie explained, the aim is to shift from a take-make-dispose model to reduce-reuse-recycle-renew-reinvent approach.
When we design systems that stop depleting the finite resources in our environment, we create a win for businesses that strengthens supply chains and competitive advantages, a win for consumers who can continue to enjoy the fulfillment of their expanding needs, a win for the environment that can begin to renew and restore and a win for future generations who inherit a world of commerce that enables them to enjoy the same or better quality of life.
The business benefits are real. The Ellen MacAuthor Foundation, a leading proponent of the circular economy approach, identifies three main benefits for businesses who adopt these practices. First, they gain a competitive advantage by lowering material cost, reducing energy costs and improving customer retention (think about social media and the power of positive business in today’s marketplace). Second, businesses gain innovation advantages with the potential to patent and globalize circular designs and technologies. And third, companies can develop and leverage the digital technology that drives so many U.S. manufacturing advances.
Looking to the future, manufacturing for a circular economy is a top initiative in the U.S. and globally. In FY17, IFC’s Manufacturing, Agribusiness and Services Department committed $1.86 billion toward 56 projects that addressed climate-related issues. Supply Chain Manufacturing Review reported on an extensive study done for European markets, stating, “The study Growth Within: A Circular Economy Vision for a Competitive Europe estimated that a shift to the circular economy development path in three core industry sectors – mobility, food and built environment – would allow Europe to increase resource productivity by up to 3 percent annually.”
The report went on to propose that moving toward a circular economy aligns with the growth of a digital economy. It’s not hard to imagine a future where businesses that leverage the power of digital technology to innovate system design will lead the pack.
How can businesses start moving toward a circular model?
First, do some research. Watch the Closing the Loop film or host a screening at your company. Search Google for “circular economy” to access a variety of web sources. Get familiar with what others are doing. The Ellen MacAuthor Foundation provides a library of case studies that includes dozens of examples to spark ideas and inspire the shift to circular. The foundation also funds research (including the study mentioned above), so look at the numbers and impact of adopting circular approaches. Finally, attend a business summit (such as the annual Circular Economy Summit) to join with your peers to strategize ways your business can benefit from adopting a circular approach.
The bottom line is this. Any business can begin with small steps that lead to bigger steps that ultimately transform the system. The invitation to embrace innovation toward a win-win-win economic reality is on the table for any business to accept. It’s time to take action.
Kymm Nelsen, MS, PhD (ABD) is the founder and CEO of the Institute for Conscious Leadership, an innovative coaching and education service that supports positive business practices. She is a co-founder and board member of the Conscious Capitalism Portland Chapter. Nelsen can be reached at firstname.lastname@example.org.