
Chapter 6 — Closing the Loop: Welcome to the Circular Economy
Our current industrial system was developed when humans had a very different sense of the world. A world of “unlimited” natural resources, fuelled by cheap energy and sustained by easy transportation.
We remained ignorant of the impact of our ways of production and consumption on climate change. But as we realise the real price of that model and its threat to life on Earth, we are forced to recognise that our industrial system is reaching its physical limits.
Circular Economy
The idea of the circular economy is gaining a lot of traction. It has many different aspects, but each one promotes a radical shift in how we consider and use materials, design products and conduct business.
The circular economy promotes a production system as an ecosphere that can run indefinitely, because all our goods are perceived as nutrients that can be fed back into the cycle instead of becoming waste. Instead of taking more than we have, we would give more than we need.

“The driver of the circular economy isn’t scarcity, it’s opportunity. By keeping resources economically productive for as long as possible, companies can achieve greater growth.
Most companies have waste hotwired into their existing ways of doing business, and it will take many steps for most to turn waste into wealth. But those who get there first will achieve circular advantage that differentiates them in their market.”
– Peter Lacy, managing director for growth, strategy and sustainability, Accenture Strategy
The backbone of the system is a renewable energy supply because it powers everything. Products would be designed in a way so that they are “made to be made again”, or can safely reenter the biosphere and become nutrients for new products.
As a result, companies would be less vulnerable to risks involved in acquiring raw materials. They would drive greater resource productivity, be energy independent and reduce waste. The result is that we could position our economy to better address emerging resource security and tackle climate change significantly at the same time.
LET’S BREAK IT DOWN:
- A circular supply chain allows materials to be sourced over and over, either being fully renewable, recyclable or disassembled and easily reused with a different purpose. This saves money and protects companies from the volatility of raw materials prices.
- Sharing platforms maximise the use of underused assets and enable companies to create additional value out of products that have already been sold.
- Replacing ownership-based models with lease or pay-for-use arrangements can increase margins, enable new revenue streams and make a product more accessible for more people. We can recapture residual value at the end of a product’s life and make it a good business to design quality products that last longer.
- Recovery and recycling leverages technological innovations and capabilities to recover and reuse waste to turn it into resources. Some major companies already reuse 100 percent of waste at certain manufacturing sites.
- Giving a second life to products that would otherwise be wasted enables companies to sell the same product again and again, or to offer new repair, upgrade and maintenance services.

Bye-bye buying: Why own when you can lease?
Leasing as an alternative to ownership is economically friendly and potentially beneficial to the environment, as it can help address the challenge of material redundancy.
“The average time that a drill is used across its product life is 12 minutes. But most people own one,” says Ranan Lachman, cofounder of toy rental company Pley. The point is that most people don’t want a 6mm drill, they want a 6mm hole.


Leasing items when we need them also addresses the fact that we are living in smaller spaces and have evolving needs, particularly in relation to children. It’s easy to see the attraction of leasing expensive toys that kids will grow out of in a few months, or pricey gadgets that will quickly be superseded by newer tech.
Idle resources: Maximising what is already there
People across the world are choosing to share, trade or lease everything from homes and vehicles to finance and skills, using the internet as a platform to connect with peers.

Agile new companies find novel ways to create tremendous value out of things that have already been made and sold. These are business models that don’t depend on finite resources. The so-called “sharing” economy is projected to be worth $335bn by 2025, including peer-to-peer lending and crowdfunding, online staffing, car sharing and peer-to-peer accommodation.

Sharing can make life more affordable, but thrift is not the only factor. Sharing allows us to forge new relationships across both physical and digital communities.
It promotes a collaborative “we”-based culture over a “me” based culture. Sharing connects people on all levels, from local individuals to the wider neighbourhood, and between different communities across the world, too.

IMAGINE: Exploring the brave new world of design and manufacturing,
is a SPACE10 publication investigating manufacturing in the digital age, materials of tomorrow and circular economies.
Read the next part:
Expert view: The Circular Economy with Joe Murphy
IMAGINE is also available as a free download. Grab your own copy here.




