2

TOWARDS THE CIRCULAR ECONOMY | 04

From linear to circular

Accelerating a proven concept
Discussing how the principles of the circular
economy apply to consumer goods—within
both the biological and the technical spheres.

1
Some 37% of the world’s proven oil reserves
and 19% of proven gas reserves are in
countries with a high level of political risk.
Political motives also drive cartels, subsidies,
and trade barriers, all of which can trigger or
worsen resource scarcity and push up prices
and volatility levels.
Greater interconnectedness of resources is a
related issue. Commodity prices now show
significant correlation with oil prices—and
this holds true not only for metals and mining
products, but for food categories such as
maize, wheat, and rice as well as beef. These
links increase the risk that shortages and
price changes in one resource can rapidly
spread to others.
The swift integration of financial markets
and the increasing ease of transporting
resources globally also mean that regional
price shocks can quickly become global. As
the World Bank’s ‘Turn Down the Heat’ report
notes, specialisation in production systems
is continuing its unstoppable evolution and
has gone international: our dependence on
infrastructure to deliver produced goods is
therefore growing—and with it, our economic
exposure to events across the world.
Natural catastrophes with ripple effects are
numerous in recent history: Hurricane Sandy
(with costs estimated at USD 100 billion)
on the U.S. East Coast just last October,
and Typhoon Bopha in the Philippines in
December 2012 (which according to early
estimates caused a GDP loss of 0.3%). This
trend is likely to continue and become more
acute as emerging markets integrate more
thoroughly into global value chains and
financial systems. Many up-and-coming
economic centres in Asia, such as Kolkata
 26 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Accelerating a proven concept

The linear ‘take-make-dispose’ economic the same use afterwards. In a linear system,
model relies on large quantities of easily this irreversibility of consumption is also the
accessible resources and energy. Much of fate of the many technical materials—tied
our existing efforts to decouple the global up in one-way packaging, fast fashion, or
economy from resource constraints focus on semi-durables. A circular economy, however,
driving ‘linear’ efficiencies—i.e., a reduction advocates the increasing use of a ‘functional
of resources and fossil energy consumed per service’ model for technical materials, in
unit of manufacturing output. Proponents of which manufacturers or retailers retain
the circular economy argue that focussing ownership of their products (or have an
on efficiency alone will not alter the finite effective take-back arrangement) and, where
nature of resource stocks, and—at best— possible, act as service providers, selling the
simply delays the inevitable. A change of use or performance of products, not their
the entire operating system is necessary. consumption. This shift has direct implications
for the development of business models that
The concept of the circular create value in novel ways. Innovator and
economy industrial analyst Walter Stahel explains: ‘The
linear model turned services into products
The circular economy refers to an industrial that can be sold, but this throughput
economy that is restorative by intention. It approach is a wasteful one. [...] In the past,
aims to enable effective flows of materials, reuse and service-life extension were often
energy, labour and information so that natural strategies in situations of scarcity or poverty
and social capital can be rebuilt. It seeks to and led to products of inferior quality. Today,
reduce energy use per unit of output and they are signs of good resource husbandry
accelerate the shift to renewable energy by and smart management’.57
design, treating everything in the economy
as a valuable resource. The idea goes beyond Based on natural principles
the requirements of the production and
consumption of goods and services. The The circular economy takes its insights
concept of the circular economy is grounded from living systems as these have proved
in the study of real-world, non-linear, adaptable and resilient, and model the ‘waste
feedback-rich systems, particularly living is food’ relationship very well. They also bring
systems. A major outcome of taking insights insights around the cascading of materials as
from living systems and applying them to a way of recognising and capturing value as
the economy is the notion of optimising entropy (disorder) increases.
systems rather than components. Context
is everything, so the rebuilding of capital Design out waste. Waste does not exist when
stocks to provide productive and long-lasting the biological and technical components of
flows is an integral part of this ‘design to fit’ a product are designed by intention to fit
approach. The circular economy requires within a biological or technical materials cycle
careful management of material flows, which designed for remarketing, remanufacture,
are of two types. These are characterised disassembly or repurposing. The biological
by McDonough and Braungart in Cradle to materials are non-toxic and can easily
Cradle: Remaking the Way We Make Things be returned to the soil by composting or
as biological nutrients—materials designed anaerobic digestion, and may also yield
to re-enter the biosphere safely and rebuild higher-value substances before decomposing.
natural capital, and technical nutrients, Technical materials—polymers, alloys, and
designed to circulate at high quality without other man-made materials—are designed
56 William McDonough and
entering the biosphere.56 to be recovered, refreshed and upgraded,
Michael Braungart, Cradle to
Cradle: Remaking the Way We minimising the energy input required and
Make Things, New York: North
Point Press, 2002.
As a result, the circular economy draws a maximising the retention of value (in terms
sharp distinction between the consumption of both economics and resources). This is
57 Unless explicitly stated
otherwise, all quotations in this and use of materials. Consumption is the a vital difference versus recycling within a
document are from interviews
inevitable fate of materials like food and linear economy, which takes products never
conducted in the period from
October 2012 through January drink that are irreversibly altered during designed for regeneration by intention and
2013 (a list of experts consulted
for the analysis and reporting is
their useful life, and can no longer be put to often results in a rapid degradation of value.
given in the appendix).
 TOWARDS THE CIRCULAR ECONOMY | 27

Build resilience through diversity. Modularity,

Efficiency vs. effectiveness— versatility and adaptivity are prized features
a key distinction that need to be prioritised in an uncertain
and fast-evolving world. Production systems
Eco-efficiency begins with the should be flexible—able to use many different
assumption of a one-way, linear inputs. Diverse systems with many nodes,
flow of materials through industrial connections and scales are more resilient
systems: raw materials are extracted in the face of external shocks than systems
from the environment, transformed built simply for efficiency—throughput
into products, and eventually maximisation—as this results in brittleness.
disposed of. In this system, eco- Since efficiency can introduce additional
efficient techniques seek only to risk, there is a business case for allocating
minimise the volume, velocity, and resources to building resilience, rather than
toxicity of the material flow system, using them as a reserve fund.
but are incapable of altering its
linear progression. Some materials Shift to renewable energy sources. Systems
are recycled, but often as an end-of- should ultimately aim to run on renewable
pipe solution, since these materials energy—enabled by the reduced threshold
are not designed to be recycled. energy levels required by a restorative,
Instead of enabling another ‘cycle’, circular economy. The agricultural production
this process actually sees products, system runs on current solar income but
components and materials lose value. significant amounts of fossil fuels are used
This downgrading of material quality in fertilisers, farm machinery, processing and
limits usability and maintains a linear, through the supply chain. More integrated
cradle-to-grave dynamic of materials food and farming systems would reduce the
within the economy. need for fossil-fuel based inputs and capture
more of the energy value of by-products
In contrast to this approach of and manures. They would also increase the
minimisation and dematerialisation, demand for human labour—which Walter
the concept of eco-effectiveness Stahel has argued should be an integral
proposes the transformation of part of this evolution: ‘Shifting taxation
products and their associated from labour to energy and material
material flows such that they form consumption would fast-track adoption of
a supportive relationship with more circular business models; it would also
ecological systems and future make sure that we are putting the efficiency
economic growth. The goal is not to pressure on the true bottleneck of our
minimise the cradle-to-grave flow of resource-consuming society/economy—there
materials, but to generate cyclical, is no shortage of labour and (renewable)
cradle-to-cradle ‘metabolisms’ that energy in the long term.’
enable materials to maintain their
status as resources and accumulate Think in systems. The ability to understand
intelligence over time (upcycling). how parts influence one another within a
The result is a mutually beneficial whole, and the relationship of the whole to
relationship between ecological the parts, is crucial. Elements are considered
and economic systems—positive in relation to their environmental and social
recoupling of the relationship contexts. While a machine is also a system,
between economy and ecology. it is clearly narrowly bounded and assumed
to be deterministic. Systems thinking usually
refers to the overwhelming majority of
real-world systems: these are non-linear,
feedback-rich, and interdependent. In such
systems, imprecise starting conditions
combined with feedback lead to often
surprising consequences, and to outcomes
that are frequently not proportional to the
 28 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Continued

input (runaway or ‘undamped’ feedback). Think in cascades. For biological materials,

Such systems cannot be managed in the the essence of value creation lies in the
conventional, ‘linear’ sense, requiring instead opportunity to extract additional value from
more flexibility and more frequent adaptation products and materials by cascading them
to changing circumstances. Systems through other applications. In biological
thinking emphasises stocks and flows. The decomposition, be it natural or in controlled
maintenance or replenishment of stock is fermentation processes, material is broken
inherent in feedback-rich systems, which are down in stages by microorganisms like
assumed to have some longevity, and has bacteria and fungi that extract energy and
the potential to encompass regeneration nutrients from the carbohydrates, fats, and
and even evolution in living systems. In a proteins found in the material. For instance,
business context, their modular and adaptive going from tree to furnace forgoes the
properties mean more leeway for innovation value that could be harnessed via staged
and the development of diversified value decomposition through successive uses as
chains, as well as less dependence on purely timber and timber products before decay
short-term strategies. and eventual incineration.

Understanding flows in complex systems The complete biological entity should

also tells us something more about the be considered. Mycelium packaging, an
trade-off between efficiency and resilience. innovation based on the bonding properties
Systems that are increasingly efficient have of mushroom ‘roots’, uses the entire ‘living
fewer nodes, fewer connections, and greater polymer’—as well as the organic waste
throughput but also become increasingly system on which it grows. A holistic,
brittle or—to use Nassim Taleb’s term— cascade-based relationship with coffee
‘fragile’. This makes them vulnerable to would consider the entire fruit (the cherry)
the effects of shocks like price volatility or and the whole coffee-growing protocol.
interruption of supply. Systems with many The entire shrub in its context also needs
nodes and connections are more resilient, but integrating: as a shade-loving plant, it may
can become sclerotic—slow to change (at the well be positioned adjacent to other trees.
extreme), and thus ineffective. Effectiveness In addition, coffee production generates
is the sweet spot where resilience and 12 million tonnes of agricultural waste
efficiency interplay: efficiency (doing things per year. This waste could be used to
right) is welcome, but in the service of replace hardwoods traditionally used as
effectiveness (doing the right thing), with growth media to farm high-value tropical
the prime objective of ensuring the business mushrooms, a market with double-digit
fits the economy. This is another way of growth (currently USD 17 billion globally).
seeing the systems optimisation question Coffee waste is in fact a superior medium,
discussed earlier. Because more of the as it shortens the production period. The
flows of materials, goods, and services are residue (after being used as a growth
valorised in a circular economy and because medium) can be reused as livestock feed,
risk is reduced, the firm is compensated for as it contains valuable enzymes, and can
the reduced upside of efficiency with lower be returned to the soil in the form of animal
costs, additional cash flows and—in many manure at the end of the cascade.58
cases—fewer regulatory concerns (as wastes
are eliminated, or are now benign flows).

58 http://theblueeconomy.org/
blue/Case_3_files/Case%203%20
Coffee.pdf
 TOWARDS THE CIRCULAR ECONOMY | 29

FIGURE 4 The circular economy—an industrial system that is restorative by design

Mining/materials manufacturing
Farming/collection1

Materials/parts manufacturer
Technical materials
Biological materials

Biochemical
Product manufacturer
feedstock
Soil Recycle
restoration Biosphere

Retail/service provider
Refurbish/
remanufacture

Reuse/redistribute

Biogas Maintain
Cascades
6 2803 0006 9

Consumer User
Anaerobic
digestion/ Collection Collection
composting2

Extraction of
biochemical Energy recovery
feedstock2

Leakage—to be minimised

Landfill

1 Hunting and fishing

2 Can take both post-harvest and post-consumer waste as an input
SOURCE: Ellen MacArthur Foundation circular economy team

Figure 4 illustrates how biological and

technical materials (and the products/
components based on them) cycle
through the economic system, each with
their own set of characteristics. Unlike
biological materials, technical materials
are not cascaded to other applications
but the functionality, integrity and the
value of embedded energy are maintained
through remarketing, reuse, disassembly,
refurbishment and remanufacture.
The second law of thermodynamics
prevents endless unaltered cycles—
everything decays. How this circular
system would work will be elaborated
on later in this chapter.
 30 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Continued

Circular economy—schools of thought insists on the importance of selling services

rather than products, an idea referred to
The circular economy concept has deep- as the ‘functional service economy’, now
rooted origins and cannot be traced back more widely subsumed into the notion of
to one single date or author. Its practical ‘performance economy’. Stahel argues that
applications to modern economic systems the circular economy should be considered
and industrial processes, however, have a framework, and its supporters see it as a
gained momentum since the late 1970s coherent model that forms a valuable part of
as a result of the efforts of a small a response to the end of the era of low-cost
number of academics, thought leaders, oil and materials.
and businesses.
Cradle to Cradle. In the 1990s, German
The general concept has been developed chemist and visionary Michael Braungart
and refined by the following schools went on to develop, together with American
of thought. architect Bill McDonough, the Cradle to
Cradle™ concept and certification process.
Regenerative Design. In the 1970s, an This design philosophy considers all material
American professor named John T. involved in industrial and commercial
Lyle launched a challenge for graduate processes to be nutrients, of which there
students. Lyle asked students to forge are two main categories: technical and
ideas for a society in which ‘daily activities biological. The Cradle to Cradle framework
were based on the value of living within focuses on design for effectiveness in terms
the limits of available renewable resources of product flows with positive impact, which
without environmental degradation’, fundamentally differentiates it from the
according to a California research centre traditional design focus on reducing
that is now named after Lyle.59 The negative impacts.
term ‘regenerative design’ came to be
associated with this idea—that all systems, Cradle to Cradle design sees the safe and
from agriculture onwards, could be productive processes of nature’s ‘biological
orchestrated in a regenerative manner (in metabolism’ as a model for developing a
other words, that processes themselves ‘technical metabolism’ flow of industrial
renew or regenerate the sources of energy materials. The model puts particular
and materials that they consume). See emphasis on precisely defining the molecular
for example Regenerative Design for composition of materials: ‘knowing what
Sustainable Development (Wiley, 1994).60 you have, which is the basis of every quality-
based materials recycling system’. In some
Performance Economy. Walter Stahel, cases, durability is not the optimal strategy—
architect and industrial analyst, sketched some (parts of) consumer goods end up very
the vision of an economy in loops (or dispersed because of consumption patterns
circular economy) and its impact on job or are extremely hard to retrieve for different
59 ’History of the Lyle Center’,
Lyle Center for Regenerative creation, economic competitiveness, reasons, for example because of severe
Studies, Cal Poly Pomona
(http://www.csupomona.
resource savings, and waste prevention in soiling. In such instances, it is preferable to
edu/~crs/history.html) his 1976 research report to the European design the products such that material purity
60 Regenerative Design for Commission The Potential for Substituting is maintained throughout, rendering it easier
Sustainable Development (The Manpower for Energy, co-authored with to extract their regenerative powers and
Wiley Series in Sustainable
Design) by John Tillman Lyle, Genevieve Reday.61,62 Stahel’s Product- return them to the land. The Cradle to Cradle
John Wiley & Sons, 1994.
Life Institute, considered one of the first framework addresses not only materials
61 The report was published pragmatic and credible sustainability think but also energy and water inputs, and builds
in 1982 as the book Jobs for
Tomorrow: The Potential for tanks, pursues four main goals: product-life on three key principles: ‘Waste
Substituting Manpower for extension, long-life goods, reconditioning equals food’—‘Use current solar income’—
Energy.
activities, and waste prevention. It also ‘Celebrate diversity’.
62 http://www.product-life.
org/en/major-publications/
performance-economy

63 www.biomimicryinstitute.
org
 TOWARDS THE CIRCULAR ECONOMY | 31

Industrial Ecology. Industrial ecology is the ‘innovation inspired by nature’.63

study of material and energy flows through Biomimicry relies on three key principles:
industrial systems. Focusing on connections
between operators within the ‘industrial • Nature as model: Study nature’s models
ecosystem’, this approach aims at creating and emulate these forms, processes,
closed-loop processes in which waste serves systems, and strategies to solve human
as an input, eliminating the notion of an problems.
undesirable by-product. Industrial ecology
• Nature as measure: Use an ecological
adopts a systemic point of view, designing
standard to judge the sustainability of our
production processes in accordance with local
innovations.
ecological constraints, while looking at their
global impact from the outset, and attempting • Nature as mentor: View and value nature
to shape them so they perform as close to not based on what we can extract from the
living systems as possible. This framework natural world, but what we can learn from it.
is sometimes referred to as the ‘science of
sustainability’, given its interdisciplinary Permaculture. Australian ecologists Bill
nature, and its principles can also be applied Mollison and David Holmgren coined the
in the services sector. With an emphasis on term ‘permaculture’ in the late 1970s,
natural capital restoration, industrial ecology defining it as ‘the conscious design and
also focuses on social wellbeing. maintenance of agriculturally productive
ecosystems, which have the diversity,
Blue Economy. Initiated by former Ecover stability and resilience of natural
CEO and Belgian businessman Gunter ecosystems’. Considerable interest in the
Pauli, the Blue Economy is an open-source concept exists around the globe, propelled
movement bringing together concrete case by thinkers and practitioners like Masanobu
studies, initially compiled in an eponymous Fukuoka in Japan and Sepp Holzer in
report handed over to the Club of Rome. Austria. Permaculture draws elements from
As the official manifesto states, ‘using the both traditional sustainable agriculture
resources available in cascading systems, and modern innovations and principles.
(...) the waste of one product becomes the Permaculture systems improve yields and
input to create a new cash flow’. Based on diets while reducing water consumption,
21 founding principles, the Blue Economy improving soil quality and restoring
insists on solutions being determined by their biodiversity. Permaculture integrates
local environment and physical/ecological elements from agroforestry (forest farming,
characteristics, putting the emphasis on alley cropping, windbreaks), conservation
gravity as the primary source of energy. The agriculture (fertiliser trees, no till and
report, which doubles up as the movement’s uncompacted soils, permanent soil cover),
manifesto, describes ‘100 innovations that organic agriculture (organic inputs and
can create 100 million jobs within the next on-site nutrient recycling), and traditional
10 years’, and provides many examples of agriculture (rainwater harvesting and water
winning South-South collaborative projects— infiltration, including key-line design and tied
another original feature of this approach contour bunds). Further aspects it covers
intent on promoting its hands-on focus. are sustainable livestock management
(integrated crop-livestock systems) for
Biomimicry. Janine Benyus, author of subsistence smallholders and commercial
Biomimicry: Innovation Inspired by Nature, operations, and agro-ecology (the optimal
defines her approach as ‘a new discipline that selection of system elements originating
studies nature’s best ideas and then imitates in different times and places). It deploys
these designs and processes to solve human methods that are compatible with the
problems’. Studying a leaf to invent a better sustained intensification of production.
solar cell is an example. She thinks of it as
32 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Continued

Terminology • Biochemicals extraction

Applying biomass conversion processes
• Fast-moving consumer goods and equipment to produce low-volume
(or ‘consumer packaged goods’) but high-value chemical products. In a
Fast-moving consumer goods are ‘biorefinery’ these processes are combined
characterised by high throughput volumes to produce more than one product, and fine
and frequent purchases; they represent chemicals extraction can be combined with
a large physical volume and come at the extraction of bulk chemicals as platform
relatively low prices. Most fast-moving molecules or for fuel production.
consumer goods have a short to very short
lifespan. Some product categories are • Anaerobic digestion
literally consumed, others are deployed for A process that takes place in the absence
only a relatively short time or used just a of oxygen in which microorganisms break
few times. Fast-moving consumer goods down organic materials, such as food scraps,
include food and beverages, apparel, beauty manure, and sewage sludge. Anaerobic
products, and others. In the remainder of digestion produces biogas and a solid residue
this report when we refer to ‘consumer called digestate. Biogas, made primarily of
goods’ we mean ‘fast-moving consumer methane and carbon dioxide, can be used
goods’—and their packaging. as a source of energy similar to natural gas.
The solid residue can be applied on land as a
• Reuse of goods fertiliser or composted and used as a
The renewed use of a product for the same soil amendment.
purpose in its original form or with little
enhancement or change. This can also apply • Composting
to what Walter Stahel calls ‘catalytic goods’, A biological process in the presence of
e.g., water used as a cooling medium. oxygen during which microorganisms
(e.g., bacteria and fungi), insects, snails, and
• Cascaded use of components earthworms break down organic materials
and materials (such as leaves, grass clippings, garden
Putting materials and components to debris, and certain food wastes) into a soil-
different uses after the end of their like material called compost. Composting
lives across different value streams and is a form of recycling, a natural way
extracting their stored energy and material of returning biological nutrients to the
‘coherence’. Along the cascade, their soil. In-vessel composting (IVC) is an
material order declines (in other words, industrial form of rapid composting under
entropy increases). controlled conditions.

• Materials recycling • Energy recovery

– Functional recycling. The process of The conversion of non-recyclable waste
recovering materials for the original materials into useable heat, electricity, or
purpose or for other purposes, excluding fuel through a variety of waste-to-energy
energy recovery. processes, including combustion, gasification,
pyrolysis, anaerobic digestion, and landfill
– Downcycling. The process of gas recovery.
converting materials into new materials
of lesser quality, economic value, and/or • Landfilling
reduced functionality. The disposal of waste in a site used for
the controlled deposit of solid waste onto
– Upcycling. The process of or into land.
converting materials into new materials
of higher quality, economic value, and/or
increased functionality.
 TOWARDS THE CIRCULAR ECONOMY | 33

Sources of value creation

The principles of the circular economy offer

not just a description of how it should work
as a whole, but also a guide to where the
profit pools are. The economics and relative
attractiveness of different circular models
(reuse versus remanufacturing versus
recycling, for example) vary significantly for
different products and markets, all of which
we spell out in the next chapter. Abstracting
from the differences, we have identified
four models (plus ‘regeneration’ as the
heart of the circular economy), as patterns
for creating more value from the materials
used in consumer goods. The overarching
fundamentals remain the same in all cases.

• Retain resource value by converting associated costs. Whenever the costs to

today’s ‘waste’ streams into by-products— the economy of collecting and reprocessing
creating new effective flows within or across the product, component or material, are
value chains. lower than the linear alternative (including
the avoidance of end-of-life treatment
• Retain the overall effectiveness of the costs), circular systems can be economical.
system—do not optimise individual parts This arbitrage opportunity, revealed by
of a process or design while neglecting the contrasting a linear with a circular setup, is
impact of such changes on the system as a at the core of the circular economy’s relative
whole. This requires knowledge of the system economic value creation potential.
in its geographical context as well as its For consumer goods and their packaging,
performance and evolution over time. opportunities lie in building efficient (re)
distribution systems that result in reuse
Power of the inner circle at scale: collecting and washing bottles
The closer the system gets to direct reuse, to refill them with beverages, or reusing
i.e., the perpetuation of its original purpose, clothing instead of performing single-sale
the larger the cost savings should be in transactions. Higher resource prices and
terms of material, labour, energy, capital fully reflecting externalities such as avoided
and the associated externalities, such as landfill can make this arbitrage more
greenhouse gas emissions, water, or toxic attractive. This is especially important as such
substances. This opportunity applies mainly systems get started, given that they typically
to the elements of fast-moving consumer require high density levels and volumes to
goods that still exist ‘beyond the end user’, make collection efficient and worthwhile.
such as packaging or goods that can be
directly reused such as apparel. Given
the inefficiencies along the linear supply
chain, tighter circles will also benefit from
a comparatively higher virgin material
substitution effect. Consumer goods in
general have a relatively low unit value, very
high throughput, and account for a large
proportion of household waste. As a result,
greater direct reuse—by circulating the same
packaging multiple times, for example—can
substantially reduce the amount of virgin
material needed, and its embedded and
34 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Continued

$ $ $

Power of circling longer Power of cascaded use across industries

A second way to create value stems from and inbound material/product substitution
keeping products, components, and materials While the previous value creation
in use longer within the circular economy. opportunities refer to reusing products
This can be achieved by either designing and materials, there is also an arbitrage
products and systems that enable more opportunity in using discarded materials
consecutive cycles or by spending more time from one value chain as by-products,
within a single cycle. Such shifts primarily replacing virgin material inflow in another.
require greater durability. For garments this The arbitrage value creation potential in
could mean yarns, fabrics, and finishes that these cascades is rooted in the fact that the
are more resistant to wear and tear, designs marginal costs of repurposing the cascading
that can be easily repaired, or styles that can material are lower than the cost of virgin
be updated while in use. Higher resource material (including its embedded costs
prices and increased commodity price and externalities). Capturing a multitude of
volatility will render this approach to value possible value streams (rather than just one)
creation even more attractive. associated with a specific consumer item can
also improve companies’ economic resilience.
True consumables like food will by definition Examples include:
cycle only once. Many will never even
complete that one cycle: they may be • Manufacturing processes for food and
discarded, or diverted from their intended beverages tend to result in sizable flows of
use. It is important to review excessively valuable, unused materials that are rich in
stringent product specifications, improve nutrients. While these are partially cascaded
stock management, and make better today, for example as food for animals, there
household choices to help ensure that such is significant additional economic potential
products are put to good use in their once- to be captured. For example, widening good
only cycle. practice to more geographies and value
chains, and identifying more economically
For true consumables and other consumer valuable cascades for today’s process
goods alike, a further necessity is applying ‘rejects’ to cycle through.
technology and building awareness to
improve recovery rates from current • Discarded food has huge potential as a
recycling systems—and by doing so, retain source of value, whether as energy, nutrients,
a higher proportion of the material within or carbon, if it can be efficiently collected
the cycle. and sorted. A number of municipalities
already promote the process of anaerobic
digestion or composting, although the
practice is still sub-scale in most markets.
 TOWARDS THE CIRCULAR ECONOMY | 35

• Fully circular systems would also capture of the circles. Unlike pure wool, which can
the value of human and animal waste as an be re-spun with hardly any loss of quality,
agricultural input that helps replenish both fabric blends are still difficult to separate for
macro- and micronutrients. recycling without degradation in value.

• Similarly, transforming cotton-based In a similar vein, optimising product and

clothing into fibrefill for furniture, and packaging design in conjunction with sorting
later into insulation material before safely and collection systems creates an ensemble
returning it to the biosphere. (provided no suitable for full-value recovery. Designing
harmful additives or dyes have been used packaging to fit both a product and its
in the production process). use environment (in which it will also be
discarded) makes sorting, cascading, and
recycling much more cost effective. This is
not a trivial task with increasingly complex
packaging technology, particularly within
the retail food sector. Differences also exist
between packaging for on-the-go products
versus at-home products. Both of these differ,
in turn, from packaging for food items to be
sold at a specific event, which typically offers
a more controlled environment for collection.
Some companies, when selecting packaging
for different markets, systematically integrate
the nature and quality of end-of-life systems
in those markets into their decisions.

Power of pure, non-toxic, or at least

easier-to-separate inputs and designs
The power of this fourth major lever is its
ability to enhance the impact of the first
three by rendering them ‘fit for onward use’.
Beyond the need to enhance product life and
the ability to cycle tightly and many times,
a product’s true end-of-life stage needs to
be anticipated in the choice of materials.
Currently, many post-consumption material
streams become available as mixtures of
materials, either because of the way these
materials were selected and combined in
a single product (e.g., PVC labels on PET
bottles), or because they are collected or
handled without segmentation or regard
for preserving their purity and quality (food
waste discarded via mixed municipal waste
collection, for example).

As with durables, designing fast-moving

consumer goods so they can be easily
separated into their material components is
an important contributor to enhancing the
value that can be extracted in one or more
36 | TOWARDS THE CIRCULAR ECONOMY

2. From linear to circular

Continued

Coming full circle, regeneration activities

round out a system. Preserving and
rebuilding the long-term resilience of
the agricultural system and the ‘systems
services’ provided by the larger biological
system in which agriculture is anchored
are the foundation for creating value from
these assets in the future. While biological
systems services are ‘externalities’ that
do not show up on the balance sheet
of an individual business, they do play
essential roles such as providing clean
water, pollinating crops, and decomposing
and detoxifying waste. Damage to these
services is of increasing interest to food,
textiles and beverage industries, as it can
diminish harvest yields and ultimately limit
the resilience of a business and its medium-/
long-term growth. Puma’s initiative to
publish ‘Environmental Profit and Loss’
reports show that some industry players
have started to integrate this factor in their
core strategy, and the PPR Group who own
the brand have announced they will be
extending the methodology to all of their
brands by 2015.