Ahead of the Curve – Closing the Loop on a Circular Economy

Can business really be a force for good? Can it restore society and the environment? Can it provide solutions that genuinely elevate humanity and our planet? Our firm belief is that business must be striving for much more than simply minimising harm. The prevailing business paradigm of maximisation, monoculture, self-interest and short-termism is crippling its own resilience – sowing the seeds of its own demise. 

Our business concepts, values, perceptions and practices are being disrupted and systemically challenged from every angle. This ‘perfect storm’ of crises brings individuals and organisations all over the globe to a choice point: Retrench (cling fearfully to outdated mindsets) or Transform (embrace new ways of operating). For those able to adapt in these volatile times, the shift to a new business paradigm that seeks to enhance life on Earth rather than destroy it will be the experience of a lifetime! All choice is with you.

Our prevailing reductionist approach to science, technology and business has encouraged us to see ourselves as separate from nature. We view the world around us as something to be analysed and exploited for our own desires, with scant regard for the consequences. Herein lies the root cause of the problems facing us today in business and beyond. The sobering fact of the matter is that our current business approach is neither balanced nor life-encompassing; it is reductionist and anthropocentric in its belief and behaviour. This separated thinking and reductionist view of our world alienates us from nature, leaving us unbalanced in our understanding of reality. Our focus is skewed to stock market trends and commodity prices, rather than soil and sea, cycles and seasons, ecosystems and environments.

“We have been, and still are, in the grips of a flawed view of reality – a flawed paradigm, a flawed world view – and it pervades our culture putting us on biological collision course with collapse.  It is the paradigm that is reflected in our culture’s infatuation with stuff and our willful ignorance of nature.”

— Ray Anderson

Mother (Nature) Knows Best

Our world has a surplus of those who will tell you to play it safe, follow the rules, do as you’re told, don’t be too loud or too much, keep your day job, and on and on. Now, we stand at an unprecedented threshold, with an incredible opportunity to live a life of passion, purpose, freedom and vision. We can see clearly that limiting principles have only created separation, illusion, and denial of our vital creative life force, all the while ignoring our interconnectedness with nature.

Over the last 3.8 billion years, nature has flourished through times of radical change by dynamically networking and collaborating among species and within ecosystems. Diversity, flexibility and collaboration are central to the interwoven evolutionary journey of life – the driving forces that provide resilience and regeneration within species and ecosystems. So how does business go about shifting from a prevalent mind-set of reductionism and short term profit maximisation (viewing the world as a collection of things to be consumed – nature’s capital) to a world-view that has an energetic relationship with life, which is symbiotic? 

Forward thinking businesses look to nature for inspiration.  Collaborative, innovative, networking, emergent, dynamic firms of the future gain great inspiration from how nature builds resilience to thrive within dynamic change.

  • Nature has been dealing with dynamic change for over 3.8bn years
  • Successful species and ecosystems are resilient, collaborative, and form niches within diversity. Systems within systems.
  • The strongest man-made material is Kevlar which is produced at around 1000 centigrade in a complex chemical and energy-intensive process. Spiders make webs that are stronger than Kevlar at room temperature, with no pollution.
  • Waste and pollution are an immense problem for our planet. Nature does not have waste – waste for one part of the ecosystem is food for another.

“As the ‘circular’ approach to sustainability begins to gather ground, we humans are finding ourselves within the circle, not without.”
― Michiel Schwarz

Rethinking Progess

Looking beyond the current take-make-waste extractive industrial model, a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Are you ready to start engaging with nature for the answers to our many pressing challenges? A framework for a business and an economy that is restorative and regenerative by design begins with the three Rs:

1. Redesigning

New ways of operating and innovating beyond ‘less bad’ into ‘doing good’ – shifting from the take/make/waste economic paradigm to a regenerative approach that heals society and the web of life rather than destroying life in the name of short-term gain). An example here is the Kingfisher Group aiming to be a ‘net positive’ force for good in the world.

2. Reconnecting

Reconciling our human relationship with life and our own authentic human nature – reestablishing our vital bond with ourselves, our neighbours, and the web of life within which we are a part of. (Education, conscious leadership and eco-psychology). An example here is the co-founder of Natura, Pedro Passo, who instills a business culture that understands our interrelatedness with nature and community.

3. Rekindling Wisdom

Working with the grain of nature and operating within the rules of life on Earth – enabling businesses and societies not merely to ‘sustain’ but to thrive by practicing wise approaches to life. Drawing on, for instance: symbiosis, ecological thinking, permaculture, systems-thinking, and systems-being. An example here would be Weleda with its bio-dynamic philosophy and its holistic approach to all aspects of its business.

“He who is in harmony with nature hits the mark without effort

and apprehends the truth without thinking.”

— Confucius

3 Principles of the Circular Economy – Restorative by Design

The linear economy is poorly positioned to handle the challenges presented by a rapidly growing human population on a planet with finite resources. With Earth approaching a population of nine billion, it’s time to think circular. Instead of today’s take–make–waste linear model of production, the circular economy is restorative by design—using and reusing natural capital as efficiently as possible and finding value throughout the life cycles of finished products. The primary aim of a circular economy is to redefine what is meant by growth, focusing on positive society-wide benefits rather than narrower and purely economic metrics. 

It is about attention to how we design, manufacture, use and dispose of all the physical things in our world. We need to shift our mindset to thinking in cycles for both our biological things, such as coffee, and our technological things, such as mobile phones. All of this can be improved through innovation. There are three primary principles associated with this transition to a circular economy according to the Ellen MacArthur Foundation. Only by integrating all three in a concerted approach can a fully circular economy be achieved.

1. Design out waste and pollution

Around 80 per cent of environmental impacts are determined at the design stage, meaning transitioning this area towards greater circularity can have amplified impacts throughout production cycles. By changing our mindset to view waste as a design flaw and by harnessing new materials and technologies, we can ensure that waste and pollution are not even created in the first place.

2. Keep products and materials in use

On a planet with finite resources, the products and materials we construct from must be kept in the economy for as long as possible. We can design some products and components so they can be reused, repaired, and remanufactured.

3. Regenerate natural systems

In nature, there is no concept of waste; everything is cyclical. All the great natural cycles – carbon, oxygen, nitrogen, water etc. – work in closed loops with little to no loss of resources throughout their cycle. The circular economy aims to mimic these natural cycles, creating an economic model that protects, supports, and actively improves our environment.

“If we are going to start calling industrial corn sustainable, then we might as well say that petroleum is a renewable resource if you’re willing to wait long enough.”
― Catherine Friend

The Impact of the Pandemic on the Health of Our Planet

It doesn’t take a business genius to see that humanity is moving in every aspect of society to life-affirming systems of living, working, and being. 21st-century businesses — including oil and gas companies — are seeking ways to participate in the environmental and climate revolution. In short, the big boys are on board. We are moving toward the circular economy, and it’s necessary to ensure that your business is ready for it. 

While job and business losses occurred during the pandemic, something fascinating happened concerning climate change — fewer contributions. As a result, the world’s experience propelled business leaders to reposition their companies toward the circular economy. We know that global travel contracted considerably in 2020 due to the pandemic. There were fewer planes in the sky, fewer people using their vehicles, and fewer carbon emissions generated. As a result, the planet saw the most significant drop in CO2 emissions since the 1940s. In terms of a percentage, it was a fall of approximately 7%. 

In the Innovation Age, we are each the leader so it starts with us – each individual. Here’s how we can demonstrate this paradigm shift in our own lives and businesses:

  • Think of problems as opportunities.
  • Think circular. Develop products with their end of life in mind, so they can be recycled or repurposed completely, with no residual waste. Think about how much profit or cost savings you could make out of a future second life of your product.
  • Collaborate. Build on different skill sets from different disciplines. Go out and find partners with skills you don’t have.
  • Think in systems. Draw pictures on a big piece of paper with lots arrows pointing out how things affect other things.

“Entrepreneurs don’t usually fail from circumstance, they fail from what I call entrepreneurial rigidity—a fixed mindset and unwillingness to change the business model.”
― Richie Norton

New Business Models for a New Economy

Disruption is an opportunity long before it becomes a threat – an opportunity to re-invent and emerge stronger with new business models relevant for this new economy. From a recent survey by SAP-Oxford Economics with 300 senior executives from professional services firms, we see three key business models emerging.

1. Knowledge-as-a-Service

Packaging expertise as a product, in the form of digital services and solutions, can provide a highly resilient and ongoing revenue stream. 

2. Talent Marketplaces

Technology driven talent marketplaces comprising independent consultants and on-demand top talent allow firms to access expertise beyond the traditional boundaries of the organisation. Talent networks present an opportunity to access scarce skills and flexibly scale resources as needed.

3. Outcome-Based Models

Increasingly customers are expecting organisations to replace the traditional ‘time and material’ based engagements with more result oriented, outcome-based engagements. Organisations like Accenture have been pioneering this with ‘skin-in-the-game’, value-based engagements that are linked to performance and business outcomes over effort involved. 

“At some point, something or someone is going to disrupt your entire life. Shouldn’t it be you?
The ability to disrupt yourself is critical in today’s volatile economic environment that’s changing faster and more furiously than ever.”
― Nicky Verd

Imagination at Work

Embracing the very digital technologies that present a threat of disruption is the first step towards business model innovations and the underlying operating models needed to deliver them. Organisations everywhere must recognise the importance of becoming far more data-driven across their various business processes and functions to stay in the game.

For those looking to get into the circular economy: look at the waste cycle of any product. Find the weak links in the circle and identify cost-effective solutions. Customers love this kind of behaviour! Every business has to address sustainability in its operations in some way. Consumers and workers, especially top performers, are acutely aware that addressing sustainability is a global effort that involves every government, company, organisation, and drills down to every family and individual. There’s no going back to sleep and ignoring our home – our planet.

Consumer Awareness and Brand Protection

Business owners now need to protect their brands. The digital age is global, immediate, and calling out companies that do not adhere to today’s sustainability norms. Moreover, as younger generations push older generations to change, brands will only receive more heat if they don’t participate in the circular economy in one or more aspects of their businesses.

People Willing to Pay More for Innovation

One of the arguments against leaning toward sustainable solutions is cost. However, that point does not consider that many consumers are prepared to do their bit in saving our planet. In a survey from a packaging company, 74% of respondents say they’re willing to pay more for sustainable packaging. Also, 25% said they would pay 10% or more of the costs to ensure that packaging is recyclable and sustainable. And 73% are willing to change consumer habits in support of the environment. 

“Cradle to Cradle is like good gardening; it is not about “saving” the planet

but about learning to thrive on it.”

― Michael Braungart

Isn't This the Realm of Hippies and Tree-Huggers?

Our entire planet stands to benefit from the circular economy. Every human being, enterprise, plant, and creature will benefit from an economic system that generates less waste and pollution, keeps products and materials in use longer, and regenerates natural ecosystems. A circular economy has huge potential to improve business, societal, and environmental spheres and is the only way to ensure a sustainable lifestyle that allows us to meet our current needs without compromising the ability of future generations to meet theirs.

Enormous Environmental Benefits

A study by the Ellen MacArthur Foundation indicates that a circular economy development path could halve carbon dioxide emissions by 2030. In this model, the use of land, soil, water, and raw materials is better managed while the release of toxic pollutants and chemicals into the environment is monitored and reduced. A circular economy preserves natural habitats and biodiversity and helps halt mass extinctions of species suffering from the effects of climate change.

Extensive Benefits to Society

First and foremost is the reduction of health hazards caused by waste and pollution. At the same time, improved design enables producers and consumers to reuse and recycle more. Keeping valuable resources circulating in the economy supports the market for secondary products and materials across all regions. Not only does this create new jobs, it also satisfies consumer demand for better, longer-lasting products. And additional job opportunities are created to remanufacture, maintain, and repair products that are part of a product-as-a-service business model.

Massive Economic Benefits for All

The circular economy makes businesses more resilient and better prepared to deal with unexpected changes. Companies are less dependent on the volatile prices of raw materials, protecting them from geopolitical crises and safeguarding supply chains already threatened by climate change events, such as natural disasters. Another advantage to this model is that it fosters scenarios where products are rented or leased. This allows businesses to learn about customer usage patterns and behaviours as well as improve customer satisfaction and loyalty.

“If it can’t be reduced, repaired, rebuilt, refurbished, refinished, resold, recycled or composted, then it should be restricted, redesigned or removed from production.”

– Peter Seeger

The Future is Circular

Today we find ourselves in a world out of balance. Our planet is hurting. Our institutions are crumbling. Our stress levels are rising, there are escalating levels of social dissonance, depression, anxiety, obesity and political polarisation across our society. However, through the cracks of the old systems shines a light. The light of a new era. A new way of living, being, and working is illuminated. To heal the systemic challenges we now face – of which COVID and sustainability are but two on a long list – we must first become conscious of the illness that created these systemic imbalances. Our current worldview warps how we relate to ourselves, each other, and the world around us. It is this way of thinking that creates system frailties. It is this outdated worldview that creates the symptoms of the day. To deal only with symptoms while leaving underlying causes gapping is a recipe for disaster, not a prescription for the wise or urgent.

A paradigm shift leaves those stuck in their old mental framework at a loss; what had been common sense can no longer be trusted. At the same time, the commonsense notions of the new paradigm may seem fanciful. The current failing paradigm was established by the Industrial Revolution; it is one marked by the concentration of production, long supply, and distribution chains, and a refusal to acknowledge “negative externalities.” Business-as-usual approaches are not robust to paradigm shifts, and those clinging to old economy models will be disappointed in the outcome over the next few years. The only way to build and maintain intergenerational wealth in this century will be by using a new playbook. 

“In the spirit of the Alpha and the Omega, in the way the Alpha was the
Omega, and vice versa, he knew the beginning was also the end—and that the end was just another beginning.”
― Sol Luckman

The Point of No Return

Justice starts with crossing the threshold and opening up into a way of knowing that is founded in love. There is a key leadership dynamic to embodying this next stage of conscious leadership.  It’s an unlocking, a peeling back of our innate human capacities. It is an opening up to the emergence inherent within life, rather than a grasping tight to power-and-control habits of yesterday. We unlock the brilliance inside ourselves as leaders, and in so doing unlock the brilliance inside our teams and wider stakeholder ecosystem.  It’s this fundamental step that will activate life-affirming futures for our leaders and organisations.

“In the end, the term ‘circularity’ may just be one way to make us aware that we need a more encompassing, integrated and restorative sustainability path that includes people as much as technology and nature.”
― Michiel Schwarz

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