Circular Argument

Adopting nature’s business model may be best investment

With Scott Pruitt’s role as the head of the Environmental Protection Agency pushed closer to reality recently and he is now aimed for full Senate confirmation hearings, many have grave concerns over Pruitt’s history of attempts to dismantle environmental protections.

Along with the recent release of NASA’s statement that each month of 2016 was the warmest month globally, the past year was the hottest on record. This is the third consecutive year of record temperatures, we are again reminded that climate change is not only the most pressing environmental issue but also one of the most pressing issues facing humanity.

Scientists overwhelmingly agree that our climate is warming due to human activity and the contribution from business and industry practices are significant.

With limited action at the federal level, the onus for action rests at a local and state level. Businesses are stepping in to address environmental protection and climate change, but more can employ more successful natural models to stem waste and its climate impact.

The State of Green Business 2016 report and the Ellen MacArthur Foundation’s Circular Design Guide both emphasize the importance of business and industry moving toward circular models to reduce their negative environmental impact. It is estimated that a circular economic model could unlock anywhere from $1 trillion to $4.5 trillion in economic opportunity.

While businesses produce and profit from waste and environmental damage, these same businesses can shift tactics and signal real change by viewing waste as an unused resource and missed opportunity.

In the current linear economy, companies acquire resources, convert them into products to sell to consumers, then products are discarded or recycled when they are no longer of use to the consumer. Consider the popularity (and environmental impact) of disposable items such as individual coffee brewer cups, smart phones, and inexpensive clothing.

In this model, 100 percent of the resources embedded in the product are lost when the product is sold to the consumer. At the end of the product’s life, the resources embedded in the product are either packed into a landfill (as is the case with apparel), or sent to a recycling facility where products are disassembled and pieces crushed and melted to make new products (as is the case with electronics).

The linear economy take-make-waste model operates much like a balance scale. On one end we extract and reduce the quantity of natural resources, while on the other end we accumulate and increase the quantity of discarded resources in landfills. This really is not a very efficient model for the long term.

Our environment is out of balance. Nature itself can help regain order. There is no more sustainable operation on Earth than nature itself. Turning to nature (the master of sustainability) as a model can teach businesses valuable lessons for better practices that are far more efficient and do not degrade the environment.

Nature has 3.8 billion years of experience in operating on renewable energy, using resources in cycles that don’t produce waste, and creating and consuming no more than is needed (operating in balance) while reaching a stage of maturity without further growth.

Most everything in nature operates in a cycle: carbon cycles, water cycles, nitrogen cycles, oxygen cycles. In nature’s cycles, there is no waste as each byproduct becomes an input for another cycle.

A business model that repositions customers as temporary users rather than permanent owners of products allows the business to retain ownership of the resources embedded in the product.

At the end of the product’s useful life, 100 percent of the resources are returned to the company to refurbish and use again. Some states have implemented mandatory take-back and recycling programs for select items, such as electronics, but opportunities exist in all industries.

Retailer H&M has collected over 32,000 tons of garments to recycle into new clothing. Patagonia’s Worn Wear program goes one step further by repairing clothing for extended wear before recycling it into new clothing. Patagonia repairs about 40,000 items per year and has recycled over 95 tons of clothing.

In this cyclical model, the business neither extracts additional resources nor creates conditions for customers to discard valuable resources. Instead, resources are used again and again until they no longer have utility; the key is to cycle resources for continued utility rather than discarding products to landfills. The result is a make-use-return model.

The Ellen MacArthur Foundation estimates this circular model of usage that reclaims resources for continued utility could reduce the cost of remanufacturing mobile phones by 50 percent. It could reduce costs of materials and increase profits for washing machines, and could save $1.1 billion annually on landfill costs for organic food waste.

The impact across a variety of industries would be significant improvements in resource efficiency and profitability.

Interface, a carpet and tile manufacturer, takes back products and also incorporates waste as a raw material. The company has reclaimed over 309 million pounds of carpet (from any manufacturer) through its ReEntry program. Reclaimed carpet is recycled and reused for fiber and backing in new carpet products. This keeps discarded carpet products from the landfill, reduces the need to acquire new raw materials, saves energy, and reduces environmental impact.

Interface’s Net-Works program collaborates with coastal villages to collect discarded fishing nets to turn back into nylon carpet fibers; they have collected 125 metric tons of waste to make new carpet.

What a brilliant idea: Reclaiming used products and waste to acquire the resources needed to make new products. Why didn’t we do this sooner? This model just makes good business sense.

To be sure, the shift from a linear to a circular economic and business model will not be easy. Companies will make significant investments required in developing new business practices and models as well as changes in policy.

Nevertheless, these shifts create enormous opportunities for businesses to create jobs, build infrastructure, decrease costs, increase profits, and secure competitive advantage. General Motors reports that reusing and recycling materials adds $1 billion in annual revenue to the company’s bottom line.

A circular economy collaboration of companies in Ohio reports 30,000 annual tons of waste diverted from the landfill, 250,000 tons of avoided carbon emissions, and $3.5 million in annual cost savings.

Moving away from the human-designed take-make-waste linear economy model and toward a make-use-return circular economy model inspired by nature can move business and industry beyond a focus on short-term profit and growth and toward a focus on long-term survival and flourishing.

Then, regardless of who takes the helm of the EPA and when, business and industry can already be working to protect our environment and address climate change. This is critical during a White House administration that many say fails to protect the environment and acknowledge the crisis of climate change.

Nancy Landrum is a Professor of Sustainable Business Management at Loyola University Chicago, co-author of Sustainable Business: An Executive’s Primer, and a fellow with Loyola’s Public Voices Greenhouse through The OpEd Project.

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