INTRODUCTION TO THE CIRCULAR ECONOMY Circular economy booklet

INTRODUCTION TO THE CIRCULAR ECONOMY Circular economy booklet © Ellen MacArthur Foundation

Linear ECONOMY Today's linear ‘take, make, dispose’ economic model relies on large quantities of cheap, easily accessible materials and energy, and is a model that is reaching its physical limits.

CIRCULAR ECONOMY A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.

CIRCULAR ECONOMY SYSTEM DIAGRAM

CHARATERISTICS OF A CIRCULAR ECONOMY Waste is “designed out” Waste does not exist. Products are designed and optimised for disassembly and reuse. Biological material can be safely returned to the soil.  Diversity builds strength In an uncertain and fast-evolving world, the ability to adapt to changing conditions is essential to thrive. Diversity can provide this adaptability. Economies need a diverse range of businesses of various scales, and organisations need a range of roles and skills. Businesses, society and the natural environment are all part of complex systems. Such systems cannot be managed in the conventional, 'linear' sense. They require more flexibility and the ability to adapt to changing circumstances, seeing the big picture macro view alongside the specialised and micro detail. Renewable energy sources power the economy Energy required for a regenerative economy should be provided by renewable sources, decreasing resource dependence and increasing systems resilience. Think in systems Many real-world elements, such as businesses, people or plants, are part of complex systems where different parts are strongly linked to each other, leading to some surprising consequences. In order to manage the economy well, these links and consequences must be taken into consideration at all times. Prices reflect real costs Prices act as messages, and therefore in a circular economy they need to reflect full costs in order to be effective.

ReSOLVE – WHAT BUSINESSES CAN DO Regenerate and restore natural capital: Reclaiming, retaining and restoring the health of ecosystems Returning valuable biological nutrients safely to the biosphere (e.g. through anaerobic digestion or composting and enabled by the separation of technical and biological nutrients) Regenerate Share Maximise product utilisation: Sharing the usage of assets (e.g. through sharing schemes or exchange platforms) Reusing assets (e.g. through resell, redistribution) Optimise Optimise system performance: Prolonging the time products are used (e.g. through maintenance, design for durability and upgradability) Decreasing resource usage (e.g. increasing efficiency, designing out waste) Optimising the logistics system through implementation of reverse logistics

ReSOLVE – WHAT BUSINESSES CAN DO Keeping products and materials in cycles: Remanufacturing and refurbishing products and components (e.g. through design for disassembly) Recycling materials (e.g. through making the right material choices in the design process) Loop Virtualise Dematerialising resource use and delivering utility virtually: Replacing physical products with virtual services (e.g. e-books instead of books) Replacing physical stores with virtual locations (e.g. online shopping, virtual travel) Delivering services remotely (e.g. cloud computing and storage) Selecting resources and technologies wisely: Shifting to renewable energy and material sources Using alternative material inputs (e.g. cascading by using by-products or extracting biochemical feedstock from biological nutrients) Replacing old with advanced technical solutions (e.g. 3D printing) Replacing product-centric with new service-centric delivery models Exchange

CASE 1: REPLACING TECHNICAL WITH BIOLOGICAL ECOVATIVE DESIGN Ecovative Design created a mushroom-based materials – a compostable, bio-based alternative to petroleum-based expanded plastics. Agricultural material used as feedstock, bonded together with mycelium, the ‘roots’ of mushrooms Key figures Founded in 2007 Raised $14 million funding since launch 65 employees Manufacture a number of products including protective packaging, insulation and even surfboards Packaging components are supplied to Dell, Steelcase and a growing number of Fortune 500 companies A second manufacturing plant, in New York, will become operational mid-2015

CASE 2: FROM OWNERSHIP TO ACCESS MUD JEANS Mud Jeans is pioneering a lease model for its organic cotton jeans, in order to ensure raw materials supply and explore new business opportunities. The leasing system allow for recovery of old Jeans which are then rebranded as vintage Jeans beyond repair are send to the denim manufacturer to be recycled By giving more than one life to a jean the brand is preventing a number of environmental impacts Cotton culture is demanding for the environment: 2,4% of the world’s cropland is planted with cotton, yet it accounts for 6,2% of the global sales of insecticide and pesticides Key figures Started in 2013 €7 / month for one Mud Jeans Buy back old jeans for a €10 voucher 8,000 litres of water per pair of jeans

CASE 3: CREATING VALUE THROUGH REMANUFACTURE CHOISY-LE-ROI: RENAULT Renault’s remanufacturing plant, reengineers different mechanical subassemblies, from water pumps to engines (gearboxes, fuel injection systems) The parts are 30-50% less expensive than new ones with the same guarantee and quality standards The process is more labour intensive and requires a skilled workforce The plan is profitable because it is less capital intensive and requires less input Key figures Remanufacturing from 1949 Turnover: €100 million 325 employees 0% of the raw material is headed to landfill Compare to a new component the process use: 80% less energy 88% less water 92% less chemicals 70% less waste

CASE 4: B2B ASSETS SHARING FLOOW2 FLOOW2 is the first business-to-business sharing marketplace that enables companies and institutions to share overcapacity of equipment, knowledge and skills of personnel. Users can register on the platform for free and participants pay a subscription to advertise their equipment on the platform, providing a revenue stream for FLOOW2 The company also provide additional services, like online payments services, credit checks, tracking and trace service on assets and insurance through partnerships with other businesses  Advances in ICT have contributed to the collaborative consumption’s viability and FLOOW2’s offering enables businesses to take advantage of this trend FLOOW2’s 6 steps of asset sharing: See the opportunities: Financial, sustainable & social Acknowledge underutilized equipment and personnel Form policy an appoint manager Take inventory of supply & demand Use FLOOW2 sharing marketplace Ensure commitment to culture in daily business

CIRCULAR ECONOMY EVIDENCE BASE Reports Giving a collected overview Towards a Circular Economy: Business rationale for an accelerated transition (2016) 20-page summary of the Ellen MacArthur Foundation's analysis to date. It is relevant to all with an interest in the opportunities presented by the circular economy. Analyses outlining a trillion dollar opportunity Towards the Circular Economy Vol. 1: an economic and business rationale for an accelerated transition (2012) Focus on the medium lived complex goods and detailed a USD 630 billion of net material cost savings per year in the EU. Towards the Circular Economy Vol. 2: opportunities for the consumer goods sector (2013) Focus on the fast-moving consumers good and detailed a USD 706 billion of net material cost savings per year, globally. Towards the Circular Economy Vol. 3: Accelerating the scale-up across global supply chains (2014) Focus on actions to accelerate the scale up across global supply chains. The report was written partnership with the World Economic Forum  

CIRCULAR ECONOMY EVIDENCE BASE Reports Analyses showcasing EU GDP growth potential Growth Within – A circular economy vision for a competitive Europe (2015) Outlining opportunities for three core human needs (housing, mobility, food), with a potential of 7% additional GDP growth by 2030 vs current development path and a reduction of CO2 emissions by 48% vs 2012 levels. A methodology for sector based analysis Delivering the Circular Economy: A toolkit for policymakers Provides a set of tools for policymakers who wish to embark on a circular economy transformation, and a concrete example for a pilot country (Denmark). Addressing systemic stalemates in global material flows and enablers of the circular economy A New Plastics Economy: Rethinking the future of plastics (2016) This new report provides, for the first time, the vision for a global economy in which plastics never become waste, and outlines concrete steps towards achieving the systemic shift needed.   Intelligent Assets: Unlocking the circular economy potential - With up to 50 billion connected devices predicted by 2020, the 'Internet of Things' is transforming the economy. This report provides the first vision for how a digitally enhanced, prosperous circular economy could look.

WANT TO KNOW MORE? Useful links to open and free resources Watch more: The circular economy: from consumer to user www.tinyurl.com/circulareconomy1 Re-thinking Progress: The Circular Economy www.tinyurl.com/circulareconomy2 Ellen MacArthur, TED Talk: www.tinyurl.com/circulareconomy3 Read more: The circular economy overview: www.tinyurl.com/circulareconomy4 Find all case studies: www.tinyurl.com/circulareconomy5 All publications: www.tinyurl.com/circulareconomy6 Stay updated: Circulate - online hub for news, editorial and insight on the circular economy and related subjects: www.circulatenews.org Sign up to the Ellen MacArthur Foundation newsletter: www.ellenmacarthurfoundation.org Free educational resources, courses & webinars: The Disruptive Innovation Festival (DIF) – online global circular economy knowledge festival www.thinkdif.co Collection of online educational resources: www.tinyurl.com/circulareconomy7 Introduction to the circular economy – online course led by the Technical University Delft www.tinyurl.com/circulareconomy8

ABOUT THE ELLEN MACARTHUR FOUNDATION The Ellen MacArthur Foundation was established in 2010 with the aim of accelerating the transition to the circular economy. Since its creation the Foundation has emerged as a global thought leader, establishing circular economy on the agenda of decision makers across business, government and academia. The Foundation’s work focuses on four interlinking areas: Education & Training, Business & Government, Insight & Analysis and Communications & Publishing   Watch introduction to the Ellen MacArthur Foundation: www.ellenmacarthurfoundation.org/about

NOTES

NOTES

Core Philanthropic Partner: Global Partners: