The concept of a circular economy – which refers to reusing resources to avoid their depletion – is central to the debate on how to ensure sustainable development. The Circular Economy is a short but important book by the Swiss economist Walter Stahel, who pioneered the book’s namesake concept. In the book, Stahel discusses ways to reuse resources (down to the level of recovering molecules and atoms), situates the concept of the circular economy in its historical context, and points toward what is likely to occur in the future.
The linear economy still dominates global value-creating processes. Despite efforts to make resource use more efficient, the residuals from value-creating processes are typically discarded when those processes are completed. Although nature itself provides examples of circulation (e.g., the breakdown of food waste into soil and methane gases), many new materials cannot be found in nature and are not biodegradable. An example is plastic, which has already caused an enormous waste problem in the Earth’s oceans.
Aside from this emergence of new, nonbiodegradable materials, continuous efficiency demands have led to an increased propensity to discard rather than repair any devices that are no longer fully functional or that become obsolete. Traditional professionals such as cobblers, electricians and automobile mechanics are having to adapt because their circular tasks (repairing shoes, fixing electrical equipment and maintaining automobiles) are now less in demand. Admittedly, increased quality and reliability have led to longer economic life in many cases, thus indirectly contributing to circularity by conserving resources. However, the linear economy has a major propensity toward discarding rather than repairing.
Dr. Stahel proposes six actions to maintain the value, quality and quantity of resources. He calls these the R-factors:
Reusing
Repairing
Remarketing
Remanufacturing
Re-refining
Reprogramming
In his view, individual consumers, who are the owners of most assets, are primarily responsible for achieving these six goals.
Stahel readily admits, however, that recovering materials for new resources from end-of-life objects is not easy but that it can be done. Companies that succeed in doing so can achieve considerable competitive advantages.
The manufacturer Caterpillar, for instance, accepts broken-down engines, which it then repairs. It then sells these engines, whether new or reconditioned, as integral parts in its machines. What matters is that each installed engine performs well – not whether it is new or old. Selling performance rather than objects can enhance circularity.
Specifically, Caterpillar has introduced new business operations ("remanufacture" and "rebuild") that aim to provide immediate cost savings, help extend life cycles and use materials more efficiently by refurbishing genuine Caterpillar-made parts. This has already started with machinery from the Sustainable Solutions, Solar Turbines and Progress Rail Services Units, for which these refurbished parts are provided with a like-new machine warranty. Dealers are also included in the process, through specific training on how to make the most appropriate decisions on which parts to reuse in order to achieve expected longevity of rebuilt components.
Stahel points out that rather radical cultural changes among consumers are necessary to make an effective circular economy a reality. One company that has understood - and taken advantage of - the massive change in consumer preferences is Patagonia. The underlying concept at the heart of their brand is to go beyond just manufacturing the products, but also to repair and recycle products in order that they last a lifetime. They provide a lifetime guarantee for all of their wares: if a product can no longer be repaired, Patagonia will recycle it and reimburse the customer with gift vouchers for the value of the item. They also made the headlines recently through their effort to protect Bears Ears National Monument in Utah from being developed for oil and gas.
A third example of a company harvesting the advantages of the circular economy is the Oslo-based company Bookis. This firm is albeit not to be found in Stahel´s book but on the Lorange Network Deal Wall. Bookis seeks to facilitate the re-use of books by linking used booksellers with buyers via a digital platform, an app. Once buyers and sellers agree, the used book is wrapped in paper and placed on the sellers’ doorstep. Then, the newspaper delivery person picks up the wrapped book, and via the newspaper distribution system, the book is in turn delivered on the buyers doorstep. Books can be re-used, and existing resources can be used more efficiently. And, people might even end up reading more!
As the three examples illustrate, holistic approaches are necessary. However, Stahel admits that practical solutions that enhance circularity and sustainability are not yet always available, even if science-based solutions already exist. Regional solutions must reflect the fact that certain (typically wealthier) regions are more immediately ready to adopt circular approaches because they can afford such relatively expensive methods; measures to enhance circularity could simply be too expensive for poorer regions.
In general, Stahel´s book provides some concrete approaches for realizing a circular economy. The process of creating a more sustainable reality by adopting elements of a circular economy have only just begun; this process will become more advanced in the years to come. Companies that do so will achieve competitive advantages among younger, more environmentally conscious consumers. Stahel’s book represents an important sign on the road toward this new reality.
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