Digitalisation and the Circular Economy
The Japanese concept of mottainai expresses that it is a shame for something to go to waste without having made use of its potential in full — something that happens with regularity in a linear economy. — (United Nations Industrial Development Organization — (Circular Economy))
What is a Circular economy?
A circular economy is a novel approach to generating value and prosperity. It works by extending product lifespan through better design and servicing, relocating the waste from the end of the supply chain to the beginning — in other words, by using resources more efficiently by using them repeatedly, rather than just once.
In a circular economy, however, products are designed for durability, reuse and recyclability, and materials for new products come from old products. As much as possible, everything is reused, remanufactured, recycled back into raw material, used as a source of energy, or as a last resort, disposed of responsibly.
ResearchGates has mentioned in one of their articles, “The Circular Economy — A new sustainability paradigm?” the meaning of Circular economy is a “regenerative system in which resource input and waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling.”
Implementing Circular Economy in the Digital World
A circular economy necessitates fundamental changes across the value chain, from product design and technology to new business models, new methods of preserving natural resources (extending product lifetimes) and turning waste into a resource (recycling), new modes of consumer behaviour, new norms and practices, and education and finance (EEA, 2019).
Circular entrepreneurs want and require intelligence about their products and users. In a circular business model, such as the sharing of machines, tools, or cars, the quality of the service and customer satisfaction is determined not only by the physical product (e.g., the vehicle) but even by the quality of the digital service, such as the app that allows the user to make a reservation, book, make a last-minute change, or see where the product can be found. The digital aspect determines its feasibility, usability, and customer (or instead of user) satisfaction.
Digital technologies such as the Internet of Things, big data, and artificial intelligence must be further integrated into existing circular business approaches to provide such services and information to strengthen and scale up the circular economy.
All circular strategies can benefit from the use of digital technologies. Three main such processes are listed below:
- Processes — Robotisation, additive manufacturing, digital design, sensor technologies, machine learning, etc., are examples of technologies that enable greater efficiency and circularity in material processing and product manufacturing.
- Products — Technologies that enable product and component tracking and tracing, value chain optimisation, product as service development, increased reuse, repair, and refurbishment: IoT, blockchain, digital twins
- Platforms — Technologies that connect consumers and producers, enable the development of services and dematerialisation, and industrial symbiosis: apps, websites, etc.
Digitalisation
Digitalisation is a critical enabler for scaling up the circular economy. This includes encouraging the expansion of existing small businesses and the use of circular business approaches in large corporations. Both aspects can be aided by a more comprehensive implementation of the IoT, big data, and data analytics.
The digital industry has a significant environmental footprint and energy intensity. Its growth must be coordinated with the introduction of renewable energy sources. Although the hardware may allow for more extended use, IT products typically have a relatively short lifetime. Digital technologies' environmental and societal impact must be carefully assessed, and circular principles must be embedded in digital products as a condition for their deployment in the economy to ensure a global net positive balance. The circular economy can be used as a guiding principle in digitalisation to reach a sustainable end-point.
It is critical to recognise that we will not be able to build a circular economy alongside the new digital economy. We must ensure that the actual digital economy becomes circular.
In Conclusion
When the world is engulfed with the concept of digitalisation, it is critical to keep track of the digital and physical footprints that are left behind. Businesses can fathom this complexity by implementing the idea of the circular economy into their eco-system using a powerful tool like Design thinking.
Design Thinking can provide an early insight by providing a method for generating momentum through prototyping and improving an understanding of what works (and what doesn’t) before investing much time and resources. This new guide is intended to assist innovators in developing more elegant, practical, and creative circular economy solutions for the business.
References
https://www.unido.org/sites/default/files/2017-07/Circular_Economy_UNIDO_0.pdf
https://designthinking.ideo.com/blog/design-and-the-circular-economy
