"Circularity Talk" - the topic has become more and more famous within the academic world as well as the business world. Companies are taking steps, sometimes slow, small ones, to reach circularity - where they reduce their impact on the environment by increasing resource efficiency or circulating, keeping products and materials within the economic loop.
This is the Idea, this is the Talk. But in reality, the road is not that simple or clear. Depending on the company's capability and resources, the strategy for circularity quite varies. Choosing the wrong one will cost the company a pretty penny.
What are Circular economy, Recycling economy and Material economy?
Features of the Circular economy
Story of waste. Where do our wastes go?
Unpuzzle the business model in Circular economy
Although there are many ways for companies to start, it can be summarized into 3 main strategies.
Product life extension. This strategy focuses on making products last longer, which could be in the primary market or in the secondary market for used products. Depend on the nature of the product, only some can be applied with this strategy.
"It is easier to recover products if you own them"
Product ownership retaining. This approach means that producers retain their ownership of products, so instead of selling, they rent and lease products (products as a service) to customers. Since product ownership belongs to producers, it is also their responsibility to take care of the product after the use phase. This strategy often works for only some kinds of products, for example, products with high embedded values and/or expensive. It is easier to recover products if you own them.
Does this mean circularity only works for high-value embedded products?
Not exactly. But it is true that it is easier for a high-value product to enter the circular loop, which explains why now, when we are at the beginning stage of the circular economy, most of the successful examples we see are high-value, expensive products.
Design for recycling. Producers who use this strategy will need to concentrate on the ability of material recovery, which means that make it as easy and cheap as possible for the downstream line process.
Still, there is a way for low-value, cheap products to be circulated.
The big question companies need to answer before implementing any approach.
Is it easy to get your products back?
Is it easy to recover value from your products?
Combing the answers of these questions will define the best approach for your company.
The circularity matrix
Easy to take back and easy to process product.
Low-value products like bottles and cans are examples of products that fall into this quadrant. Many common raw materials also belong to this group. Entrepreneurial citizens/ informal sector frequently fill the void in areas without a formal framework for recovering and returning the metal to producers by gathering cans and other abandoned aluminum objects to trade for small sums of money.
Ideally, Circularity works well with high-value items that are simple to get and process since they don't need a major overhaul of the business model or special efforts to speed up material recovery. This category consists of relatively light items whose brand appeal outweighs their intended application or material composition. There is a lot of room here for businesses that aren't presently participating in the circular economy to think about doing so.
Easy to take back but hard to process product.
Products with a low embedded value, such as carpets, beds, and sports footwear, are found in the bottom right quadrant. On the one hand, these items have a good chance of being recovered from the user due to their mobility and the lack of a rich secondary market. On the other hand, they are difficult to remove components and difficult to refurbish.
Numerous compact high-tech products, like cell phones that have a lot of intricately connected or hazardous parts that are hard to remove and have extremely short life cycles, are also included in this quadrant. These items often have active secondary markets, which is advantageous for the environment overall but restricts access for the original makers.
Hard to take back but easy to process product.
Products in the upper left quadrant are harder to recover. For instance, takeout food packaging may be made of easily recyclable materials, but because of the expense of removing its food residue, it frequently ends up in landfills. Design for recycling approach should be used in this situation, with an emphasis on the infrastructure for recovery.
Secondary markets frequently emerge as embedded value rises, which can make it more challenging for the original producer to get items. Retaining product ownership solves the access issue, but it frequently presents difficulties, especially in logistics, even for businesses whose products may first appear well suited for this approach.
Combinations of product life extension and retaining product ownership is a practical approach for the higher embedded value products since retaining product ownership both makes it possible to access parts that would be very expensive to construct from scratch and improves customer confidence, which increases consumer involvement in trade-in and remanufacturing programs.
Hard to take back and hard to process product.
In this upper right quadrant, items with relatively little value locked in them may face a level of wear and tear that makes simple repair and remanufacturing impossible, eliminating the possibility of product life extension. In addition to having a high resale value in customer-to-customer secondary marketplaces, those that are still in excellent shape and useful may be more difficult for the manufacturer to reach for reconditioning. Even though manufacturers should take into account a mix of designs for recycling and preserve product ownership to prevent the loss of the value embodied in them.
Companies may be able to transition to a product-as-a-service model by making investments in durability and modularity that will make goods last longer and be easier to maintain. In the further future, they could be able to implement a design for recycling approach, which would reduce the dependence of these items on non-recyclable components and facilitate their disassembly.