By Rusen Kumar
Businesses may proactively contribute toward the circular economy by integrating a circular approach into their products and solutions. There is an urgent need to reduce the pressure on raw material resources and the environmental impacts associated with their extraction across the business operation.
One way to do this is to move toward systems that are more circular and ensure the maximum value from resources by recovering and reusing materials at the end of each service life. As the global middle class is expected to almost double in size by 2030, the demand for material resources will increase together with the demand for goods and services. For electronics, and steel business, this means they can expect the price of materials such as steel, plastic and electronic components to become more volatile.
At the same time, many industries are based on virgin materials that are non-renewable and fossil-based. However, there are opportunities to source materials with recycled content, and even bio-based materials from renewable sources.
For example, more than 400 million metric tons of plastic are produced globally each year and only about 12% comes from recycled materials. Pollution from non-degradable plastic is also a serious issue as it can leach into the environment.
According to the 2020 Circularity Gap Report by Circle Economy, only 8.6% of the resources used globally are cycled back into the economy after use, which is even lower than the year before. The report stresses the need for a circular economy that makes better use of resources to prevent further and accelerated environmental degradation and social inequality.
Across the world, consumers are increasingly demanding more circular products and solutions. This includes everything from recycled materials incorporated into our products and more sustainable packaging, to solutions that enable them to extend the lifespan of their products.
Virgin materials cause considerable greenhouse gas emissions through their extraction and manufacture. For example, the emissions from the production of plastic in products are approximately equivalent to the emissions from the business operations and transport activities combined.
Recycled materials on the other hand can have substantially lower greenhouse gas emissions. This means that increasing the amount of high-quality recycled materials in products can make an important contribution to combating climate change. For example, in electronics business, steel is the largest material businesses use by volume and is an even greater source of CO emissions than plastic.
For example, by sourcing scrap-based steel, business can make a significant reduction in CO footprint from materials. Emissions can also be reduced by extending the useful lifetime of the products.
This can be achieved through promoting more circular business models or providing aftermarket services that ultimately make better use of resources. However, there are opportunities to source materials with recycled content, and even bio-based materials from renewable sources.
Business must work with three circularity workflows – 1. increasing the proportion of recycled materials in products, 2. extending the lifespan of products and 3. developing circular business models.
It is expected that businesses will contribute to the circular economy by integrating recycled materials into product platforms, promoting recyclability, using more sustainable packaging solutions, increasing the availability of spare parts to repair products, and developing circular business solutions.
(Rusen Kumar writes on CSR, Sustainability, Corporate Governance, Business Affairs and Responsible Business. He is the founder of India CSR Network)