A more circular approach: will it just be a fad?

Circular economyMuch has been made of in the imminent launch (officially 2 December 2015), of the EU’s circular economy package. I have written previously about the EU’ circular economy.

An important factor will be in engaging closely with stakeholders along the value chain to understand what their needs are and how best these could be met. For example, IBM sought to move away from a more product-based, to a service-based approach by decentralising its structure to enable a flatter and localised approach, and also be providing training to enable staff to communicate more/better with those along the value chain, including customers. This therefore enabled closer relationships to be formed with key stakeholders, who in turn had a more informed understanding of the change in IBM’s approach and how it met their needs and expectations.

Another crucial factor will be about product design and producer responsibility. Products have to be designed to fit into the circular context (think for example, Xerox). Manufacturers suppliers have to take ownership for the products along the full value chain. Thus the responsibility for maintenance and upkeep would be retained by the manufacturer and/or supplier, who would then naturally want to make sure that products remain functional for a longer period of time. This is as opposed to encouraging a more throw-away approach. Several organisations are already and increasingly utilising various sustainable business models for this (e.g. pay-per-use, the Product Service System, Value Capture and Blue Economy). However, given how far along the throw away spectrum most companies and indeed we as consumers are, it seems difficult to imagine that turning full ‘circle’ (pardon the pun), will happen overnight.

The concepts of the ‘circular economy’ are not new. In the 1960s, Rolls Royce utilised the concept of power-by-the-hour’, providing its jet engines on a ‘cost-per-flying-hour’ basis. It is now 20 years since the positing of the concepts of sustainable development in the landmark Brundtland Report that came out of the Rio Conference. Even further back, the Maastricht Treaty that established the European Union as it is today, from the former European Community and which espoused protection of the environment, within the midst of facilitating increasing EU trade and market development is now 23 years old. Terms such as waste minimisation, resource efficiency and eco-innovation, which largely espouse the same concepts as the circular economy have been in vogue for some time.

The key issue now is to ensure that the circular economy concepts do not simply become just a fad, that will simply run its course, until the new buzz term comes along. And Europe and its partners are able to realise the full benefits from its effective implementation.

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