Article: Part one

The circle has been an important symbol since early times. To many ancient Eastern and Western civilisations, it represented unity, balance and stability. Fast forward to 2023 and the circle is the most talked about shape in sustainability. Why? Because it’s time to get serious about the circular economy and the business, environmental and social benefits it offers.

What is ‘circular economy’?

Circular economy (CE) is an economic system that can help your manufacturing business reduce risks and costs, become more resilient and build your brand. It can also help you identify new income streams.

CE decouples using resources from economic growth. It recognises that the ‘linear’ economic system we use to produce and consume goods and services – ‘take-make-dispose’ – cannot go on forever.

As manufacturers, you know that the resources you use are finite (‘take’). You may be facing shortages or skyrocketing prices, particularly with critical materials like lithium. Many of you will be looking for a more sustainable way to manufacture your product (‘make’). You may be concerned about what happens when consumers dispose of your product (‘dispose’). Are you contributing to landfilled waste? Could you be liable?

Enter circular economy and solutions to these problems.

Circular economy is based on three principles

Principle 1: keep products and materials in use

Circulating products and materials means keeping them in use at their highest value. It avoids the costs of extracting and creating materials, and of disposing of waste.

A circular product is one that consumers can use for as long as possible (e.g. it is easy to repair). When the product wears out, its parts can be reused, or the product remanufactured (remade). At the end of the product’s life, its raw materials can be fully recycled.

Principle 2: design out waste and pollution

CE sees waste as a design flaw that causes us to use more resources than we need. Overusing resources results in volatile prices, shortages, and ecological damage. By designing out waste, CE lets businesses create value without using up finite resources.

Principle 3: regenerate natural systems

A circular economy supports natural processes and lets nature flourish. CE encourages regenerative systems as well as economic gains. Positive side effects include regenerating soil, well-managed water resources and thriving biodiversity.

Circular manufacturing processes (and why recycling is the last resort)

There are several circular manufacturing processes. They involve making products from material that is safe, renewable, and already in use, and designing them to be shared, repaired, reused, and recycled. Every circular manufacturing process achieves one or more of the three principles above. However, some are more circular than others.

Highly circular: sharing products, ‘building to last’, reusing products

• Sharing. The ‘sharing economy’ (one product, many users) is ‘gold star’ CE. It moves economies from ‘owning’ products to ‘accessing’ the services those products provide. For a business, sharing achieves the same economic outcomes with fewer resources and generates many streams of income. Examples include car-sharing schemes.
• Building to last and repairing. Blunt™ Umbrellas designs its product to withstand extreme weather. The company offers replacement parts for simple fixes plus repair centres across New Zealand. This strategy helps Blunt build a premium product and continue to engage with its customers over time.
• Reusing. Medsalv collects medical devices that health providers would otherwise discard after one use. It cleans, inspects, and repackages them and sells them back to hospitals. This strategy helps Medsalv reduce the cost of its materials and keeps high-value materials in use. (In practice, reuse involves some ‘losses’ from the circular system. For example, some medical devices will be damaged before Medsalv can reuse them. This makes ‘reusing’ a little less circular than ‘building to last’.)

Moderately circular: remanufacturing products and materials

• Remanufacturing. AB Industries remanufactures, repairs, and maintains mechanical equipment like diesel engines and compressors. This strategy helps the company keep high-value components in use without incurring the full costs of manufacturing.

Slightly circular: recycling products and materials

Yes, recycling features low on the list. This is because a recycled product is much less valuable than the original product. The value of intangible assets like a product’s branding and warranties is often far greater than the value recovered from recycling materials. (Think of the effort that goes into building your product’s brand!) Remanufacture your product and you retain much of this value. 

Recycling begins at a product’s end-of-life. CE focuses on the beginning of life: it prevents waste from being created in the first place. About 80% of the environmental impact of a product is locked in when it is designed. Creating circular products involves changing the way we choose materials and design, produce, and distribute products.

Recycling still matters: it lets us reuse materials. Product stewardship goes further: it makes manufacturers, importers, and retailers responsible for what happens with products, rather than the products’ users. Tyrewise is New Zealand’s first regulated product stewardship scheme for recycling tyres. It will keep used tyres away from landfill and reduce stockpiling and illegal dumping.

In next month’s issue, we’ll look more closely at the business benefits of CE and show you how to get started.

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