Over the last two years, the notion of ‘a circular economy’ has gained rapid grounds worldwide. Not only policy makers, thought leaders and researchers but also NGOs, manufacturing companies and the media are increasingly embracing the concept and its principles. Thus not surprisingly, circular economy was a key topic at the “Sustainable Brands conference” in San Diego in June 5-7 (2014) and also a special issue at the “World Economic Forum Annual meeting” in Davos (January, Switzerland). Similarly, international policy makers and top scientists (for example Anders Wijkman and prof. Johan Rockström in Sweden) have brought the concept of circular economy new urgency and political weight as a key strategy to advance society towards increased sustainability.
The central advocator and educator of circular economy however is the Ellen MacArthur Foundation. Within only a few years, the foundation has succeeded in bringing the concept and its framework to the center of the international political, economic and sustainability agenda. Also over the last couple of years, fashion companies and retail stores have awakened to the call for circularity. Some companies, such as H&M and IKEA, have shown particular interest in learning, developing and implementing circular approaches as part of their businesses. According to a recent report by the World Economic Forum, “linear consumption is reaching its limits. A circular economy has benefits that are operational as well as strategic, on both a micro- and macroeconomic level”.
However, simply creating circular flows by ‘closing the loop’ on different materials (e.g. textile fibers) is not enough to ensure sustainable businesses and societies. In fact, the Ellen MacArthur Foundation not only advocates reuse, redesign and recycling but also other essential strategies and practices, which need to be put into place by businesses and societies in order to ensure a sustainable global economy. These strategies and practices include:
- To design products that can be disassembled (separated) into their sub-components in order to facilitate repair, remake, reuse and recycling at their end-of-life;
- To adopt renewable energy sources and gradually abandoning the use of fossil fuels;
- To prioritize the use of high quality, non-toxic and preferably biodegradable (natural) materials, and gradually phasing out the use of toxic and low-quality materials;
- To use energy, water and other natural resources and raw materials more efficiently, in all phases of products’ life cycles (from design, manufacturing, transport and use to reuse, remake and recycling);
- To increase the extent to which products, components and materials are reused, repaired, remade, recycled, reclaimed and restored, within and across all sectors of society, in order to reduce the extraction and use of virgin materials;
- To develop new innovative business models that enable companies to offer customers functional services such as leasing and sharing, as opposed to purchase and ownership, in order to enable customers to “rent, share and return” as opposed to “buy, own and dispose” of commodities; and
- To develop new cross-sector agreements and business-to-business collaborations at systems level, in order to enable efficient reuse and recycling of natural and man-made components (separately) through new solutions for collection, transport, sorting, reuse and recycling.
All the above strategies and practices are fundamental elements of a circular economy and are well communicated by the EllenMacArthur Foundation. (Also read more in a recent report by the World Economic Forum).
A seven-step guide to a circular mindset
To reduce the risk for implementing a simplified or incomplete circular approach, Green Strategy here proposes a “seven-step guide to a circular mindset”. The guide contains seven key questions to help companies better understand and address circularity of material flows in their business models (see also Figure 1 below):
- The PURPOSE of the flows: “For WHAT purposes are the flows created? What interests, values and visions are they meant to address?”
- The INPUTS and FUELS of the flows: “What RESOURCES were required to create the flows originally? What resources are required to keep the flows going?” Both human (labor) and natural resources (energy, water and raw materials) are required to some extent to keep the flows turning.
- The THICKNESS of the flows: “HOW MUCH materials or components are circulated in the flows, by individuals, companies and societies?”
- The BENEFICIARIES of the flows: “WHO will benefit from the flows, e.g. different consumer groups, sectors, and other stakeholders?”
- The CONTENTS of the flows: “WHAT materials are actually flowing in the circles, through use, reuse, remake, and recycling? Are they natural or man-made, toxic or non-toxic, essential or substitutable etc.?”
- The IMPACT of the flows: “What INDIRECT effects, DIRECT-effects and HIGHER ORDER-effects will be generated due to the flows?” Flows of materials will always generate some sort of impact on humans and natural environments, positive and/or negative.
- The RATE of the flows: “How FAST are the flows turning, in quantity per time unit (e.g. ton/year of conventional cotton fiber)?”
Clearly, creating circular flows in society are not only about creating the actual loops of materials, through reuse, remake and recycling. Also, consideration should be given to the volumes, rate and contents of the flows, i.e. how much materials are flowing in society (as generated by a certain business) and of what quality, in terms of type, toxicity, biodegradability etc. Also, attention should be given to what societal groups are actually benefiting from the material flows and how (read: equality, rights, etc.), as well as the purpose of the flows, i.e. whose needs, demands and interests are they intended to serve. Finally, the environmental and human resources required to create and fuel the flows, and the impacts generated on societies and ecosystems, must also be considered in planning and operation.
All manufacturing companies have a corporate responsibility to consider all such aspects of their businesses, as we are facing immense societal challenges at global scale (such as climate change, biodiversity loss, natural resources scarcity, population growth etc.). This seven-step guide may hopefully help companies better address “circular flows” in theory and practice, to achieving a more successful circular business model for sustainability (see Figure 1 below).
A circular economy compass for the apparel industry
In addition to the “Seven-step guide to a circular mindset”, Green Strategy has also developed an overarching conceptual framework for a circular business model (see Figure 2 below). The framework, called “A Circular Compass for the Apparel Industry”, builds on the fundamental principles of a circular economy as defined by the Ellen MacArthur Foundation. Green Strategy however goes one step further by dividing these principles into twelve focal points, which are phrased as questions and arranged logically along a circular timeline (from 1 to 12). The image thus resembles a clock with 12 hours and also mirrors the standard lifecycle of a product (from design, manufacturing and use to recycling). By addressing these twelve focal points and their key questions, preferably in the order given, companies may more effectively understand and adopt the essence of a fully circular approach to business. For a more detailed description of each focal point, please see the Ellen MacArthur Foundations homepage. (If slightly adopted, the circular compass may in fact be used for any type of manufacturing company.)
To conclude, when adopting a circular approach, companies may risk overlooking some key aspects of circularity. Some valuable lessons have already been learned from previous attempts to put the principles of sustainability and circularity into practice (see for example an article on H&M).
To support companies in implementing a more circular approach to business, two conceptual frameworks are here proposed:
- A seven-step guide to a circular mindset, which acknowledges not only the circularity of the flows but other essential aspects, i.e. the purpose, contents, thickness, rate, beneficiaries, required resource inputs (including labor, material and energy), and potential social and environmental impacts (such as indirect, direct and higher-order effects) of the flows.
- A circular economy compass with 12 focal points, to acknowledge and incorporate the essentials of circular economic thinking in business models, as advocated by the Ellen MacArthur Foundation.
In other words, for a fashion company or any manufacturing company, adopting a circular approach to business is not only about “closing the loop” on materials and components, but also about addressing other essential aspects of circularity at strategic and operational level. Unless these other aspects are included, the circular approach as a sustainability strategy will not be consistent and trustworthy, nor effective and successful, in the long run.