What is a circular economy?.

3 Jun 2014

James Griffin, project leader of SBN’s new work stream on Accelerating the Circular Economy in New Zealand, sheds light on one of the biggest growth areas in sustainable business, including the opportunities for New Zealand.

What is a circular economy?

Essentially a circular economy is one where companies manage all resources as valuable assets. The lifecycle of products is maximised, utilisation optimised and at the end of life of a product all materials are fully reutilised. This is achieved by designing and optimising products for multiple cycles of disassembly and reuse, eliminating waste throughout various life cycles and uses of products and their components. A circular economy aims to moves away from a traditional linear ‘take-make-waste’ economy.

Other terminology used to describe a circular economy include ‘Cradle to Cradle’ and ‘Closed Loop’.

The following diagram from the Ellen MacArthur Foundation is a great visualisation of the circular flows of resources involved.

circular economy

Source: Ellen MacArthur Foundation

What are the opportunities?

The opportunities are enormous. There are significant benefits arising from the circular economy, all of which apply to New Zealand. They include cost savings, mitigating supply risks, job creation, innovation, and the minimisation of detrimental environmental impacts.

On a global scale, a report released in Davos earlier this year by the World Economic Forum, in collaboration with the Ellen MacArthur Foundation, states that more than US$1 trillion a year could be generated by 2025 for the global economy and 100,000 new jobs created within the next five years if companies focused on building up ‘circular’ supply chains to increase the rate of recycling, reuse and remanufacture.

“Today’s goods are tomorrow’s resources at yesterday’s prices

Walter Stahel, Founder-Director of the Product-Life Institute

What’s already happening in New Zealand?

With the circular economy representing efficient use of all resources, many Sustainable Business Network (SBN) members have been operating towards circularity for years. Some examples include the following:

• The Interface ReEntry Programme run by Inzide Commercial in New Zealand, where old carpet tiles are collected from customers and sent back to the original manufacturer, where they are stripped and remanufactured into new carpet tiles.

• The Resene Paintwise scheme is a pioneering example of the principles of the circular economy in New Zealand. Customers can drop off unwanted paint into their local Resene ColorShop, and good quality paint is offered to community groups for reuse, other paint sent for recovery or responsible disposal, and containers recycled.

• Other long-standing examples of circular activity include the converting of food waste into compost by the likes of We Compost, Reclaim and Rubbish Direct.

• New business models are starting to emerge that support the movement towards a circular economy, e.g. peer-to-peer sharing platforms such as Your Drive and Rentaholic.com, which look to maximise the use of underutilised assets, providing opportunities for access as opposed to ownership of products.

However, all (to varying degrees) are facing certain blockages (such as scale, infrastructure, awareness, technology and procurement policies) which prevent them from fully maximising the opportunities a circular economy offers. SBN is identifying these leverage points for change and accelerating the circular economy in New Zealand, by working collaboratively across sectors and the value chain through our new work stream (see more below).

What is the Sustainable Business Network doing?

Our new work stream, Accelerating the Circular Economy in New Zealand, is a national platform for awareness building, knowledge sharing, connecting and galvanising activity, as well as crucially working on key leverage points to unlock opportunities.

We are using a ‘system innovation’ approach developed by Forum for the Future (UK), which is a collaborative tool used to solve complex sustainability challenges.  We begin by robustly diagnosing the system to map stakeholders, their influence and connectedness and identifying key opportunities. We then move into the innovation phase via a series of design workshops where we specifically work on key issues that will accelerate the move towards a circular economy in New Zealand.

We are delighted to announce that Inzide Commercial have now been confirmed as Partners for the work stream with Fisher & Paykel Healthcare confirmed as Support Partners.

What is product stewardship and how can I find out about it?

Product stewardship, which is a key supporting component of a circular economy, is the responsible management of a product through all stages of its lifecycle to reduce the risk of adverse environmental impacts. Product stewardship schemes include all parties involved in the life of a product – such as producers, brand owners, importers, retailers or consumers.

Encouraging news from the Government is that the Ministry for Environment is currently consulting on plans to nominate priority waste streams for product stewardship. There is a specific consultation event for SBN members on the morning of Thursday 12 June at the SBN offices in central Auckland, where a representative from the Ministry for Environment will be present to explain and answer questions on the proposed schemes. We will also have Adele Rose from 3R Group providing an overview of product stewardship in New Zealand, as well as discussing the benefits local schemes have derived. Anyone interested in product stewardship should consider attending.

For those interested businesses not based in Auckland we recommend attending one of the other planned workshops around the country.

How can I get involved?

We’re currently embarking on an initial phase of stakeholder research on the circular economy in New Zealand.  If you would like to contribute, we’d love to hear from you. Once we have analysed this feedback we will be bringing the ‘system’ physically together at workshops around the country to start to identify the key leverage points for accelerating the circular economy in New Zealand. We will further build on this at our national Conference ‘Project NZ’ in September.

Also it would be great to see you at the Product Stewardship event on Thursday 12 June.

Please contact James Griffin if you would like to input or simply find out more. 

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SBN is working with businesses in four transformation areas.
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