What will it take to create a Circular Economy?

Kanika Ahuja
Designer and Entrepreneur of a brand creating designer products from plastic waste by developing proprietary upcycling technologies with a focus to improve livelihoods for low income communities. Kanika is passionate towards creating a Circular Economy and building social impact initiatives that can be launched as independent micro-enterprises eventually.
Kanika’s work has received accreditations from Lakme Fashion Week, Atal Tinkering lab- Niti Aayog, UNHCR, Nexus @the American Center etc.

What will it take to create a Circular Economy?

The transition to a low-carbon, circular economy will deliver significant economic, social and environmental benefits. Globally, Accenture Strategy predicts a $US4.5 trillion reward for circular economy businesses models by 2030.
The concept of a Circular Economy focuses on creating new opportunities and jobs especially for MSMEs based on resource efficiency, use of biological materials which can be returned as such to nature, eco-design techniques and other innovative tools. Since products are kept in use, the embedded energy, materials and labour are preserved.
Social and green entrepreneurship is considered as one of the main engines playing a relevant role within the complex systemic process enabling a more Circular Economy. Its key drivers, the social and green entrepreneurs, accelerate the transition anytime they convert their ideas into feasible and viable enterprises. The core business of their enterprises is mostly environmentally and socially oriented rather than purely economic. They offer products or services to reduce environmental impacts and create social values through the use of innovative, effective and efficient business models and natural resources. Their work concentrates on sustainable sectors such as renewable energy, waste management, recycling, organic food or eco-tourism while resale, repair and rental are the future for Retail.
MSME’s are building new innovations and business models but large organizations are needed to adopt those practices to create widespread impact. “Innovation will provide the solutions but the main point is connecting knowledge, across industries. Its about partnerships.” Says Roberto Canevari, Chief Supply Chain Officer at Burberry, at the Copenhagen Fashion Summit 2019.
The idea of a circular economy may seem very “pie in the sky,” but some companies are already putting circular principles to use—and profiting from it. For example, the fashion industry is the second largest polluter in the world after oil, but new business models are renting out the latest trends; instead of buying a new dress, wearing it once, and then getting rid of it, you can borrow it from a company such as Rent the Runway and send it back when you’re done so that someone else can enjoy it. It’s also a lot cheaper than buying high-end fashion.
LIFAFFA is another example of a fashion brand that is utilizing cross-industry Circular Economy principles to generate profit. LIFAFFA has developed a proprietary process to convert the common plastic bag, chips packets and biscuit wrappers into a new fabric that they call “Handmade Recycled Plastic”, which can be used as a type of vegan leather, for home furnishings and even to create low-cost housing tiles. LIFAFFA’s design team- led by an acclaimed Green Designer, Anita Ahuja, works rigourously to first create attractive patterns within the fabric. Majority of people are not even able to identify that its made from plastic! “Its like creating a water-colour painting. The diverse colours of the plastic bags blend together to create prints and textures that are both-attractive and easily repairable.”-says Anita. Contemporary upcycled product designs made with upcycled fabrics that extend the value chain of a difficult material like Plastic is just the kind of innovation we need to evolve to a Circular Economy. LIFAFFA is now focusing on creating Partnerships to share their patented technology – to create and train interested organizations and communities and building micro-enterprises that use waste as a resource. (www.lifaffa.com)
Challenges in achieving a Circular Economy
There are four potential drivers for the circular economy: altruism (doing it because it’s the right thing to do); shareholders (because there’s money to be made from it); market demands; and government.
There are several challenges on these fronts that we must first address before we can realise a true Circular Economy. First, to consumers the circular economy brings psychological and ethical value. Yet, despite the expressed willingness of many to be more environmentally friendly, in actual purchasing decisions most shoppers hesitate to pay more. Potentially, however, consumers can generate enough pressure to ignite the circular economy with their wallets. If companies win or lose market share because of consumer purchases (“votes”) in favour of sustainable products, producers would have an incentive to respond.
Second, the producers of consumer goods typically describe themselves as open to the circular economy. However, most action is short term and premised on managers’ assumption that going ecological sacrifices margins. Recycling is perceived in risk terms: new regulation would require expensive compliance or costly lobbying to contain or rid regulation. The principle is that only if a circular economy project makes economic sense it stands a chance. In other words, the circular economy is evaluated from a traditional ROI perspective.
Third, the public sector is often seen as provider of new regulation that is critical to ignite the circular economy. Much like changing consumer behaviour, regulation and associated costs of non-compliance can pressure producers to reduce waste.
Fourth, recycling businesses supply the technical solutions and factories where actual waste recycling happens. The cost of the delivered input materials plus their recycling process must be less than the sales price of outputs, that is products made of recycled materials, commonly termed as “Upcycling”.
A slight rebranding of “sustainability” could help to make the circular economy more appealing. For too long, ‘sustainability’ has meant ‘reduction,’ while a few are hopping on to the Minimalist/Zero waste lifestyle, there are many who just don’t want to use less. Thus, its imperative that we make changes holistically to create a sustainable economy. “It’s like trying to choose between going on a diet or choosing a healthy lifestyle. A diet is all about cutting back on what you’re eating—eating less all the time. Whereas a healthy lifestyle you’re looking holistically at what you’re doing and making improvements to your life system.”-says Stephanie Kersten-Johnston, adjunct professor in Columbia’s Sustainability Management program and director of Sustainable Business at Heineken USA
So the end goal may be sustainability of a planet and even our industries and our companies and so on, but it’s just a reframing of how we think about that sustainability approach.
To develop a global circular economy, changes are desired at an international level and countries are taking part in the transition—various mature economies have put forth similar legislations. Taking the lead is the European Union (EU)’s Circular Economy Package, which broadly deals with transforming the way plastics and plastics products are designed, produced, used and recycled. Further, Sweden is giving tax breaks (50 percent cut on VAT) on repairs of washing machines, bicycles, or simply any broken item. It passed a law that directs retailers selling electronic goods to accept the same quantity of products they had sold, for recycling or reuse. The Netherlands and Japan have also promoted intensive circular economy legislation. The Dutch government has introduced several programmes to attain a circular economy such as the Green Growth, From Waste to Resource (VANG) and the Biobased Economy.

Circularity – a traditional way of life in India
A multitude of circular activities is inherently practiced by Indian society. As a people, it is bred in the bone in us to reuse and recycle to the maximum possible extent. As a matter of fact, the collection and recovery rate for a slew of scrap materials as also the re-use rate of goods is relatively higher than most developed countries. We are always striving for novel ways to squeeze the extended value out of forsaken objects, revamping our old T-shirts into dusters, washcloths, and mops, disposing of them only when they are too tattered to be used, reusing jam bottles to store home-made pickles, recycling old saris to make lehengas and anarkalis. Sadly, with increasing disposable income, we are losing are environmentally-rich practices with the abundance of cheap and disposable products available in the market. Most of the time, this recycling takes place at the far end of the value chain by the poorest sections of society. This part of the society treats the reusing activity as a scarcity management approach instead of making it an essential part of the economic construct. An obvious result of this is value loss, in addition to health risks for those who obtain value from waste such as the garbage processors and rag pickers. In addition to that, as the people belonging to the lower strata of the society and the population, in general, is reducing, we are losing touch with our innate circular habits.

India knows how to manage resources when it comes to sorting, separating, and the other low hanging fruits. India’s network of ragpickers, though an unrecognised force, is the backbone of our strong (but non-compliant) waste management system. But, when it comes to advanced technologies, there is scope for India to incorporate some expertise. This can be done by creating a nexus between research institutions and industry, between micro-enterprises and large organizations and creating awareness about Circularity principles from the primary education level. There is a need for a coherent roadmap that ushers mutually complementary platforms and policies to boost the transition towards a circular economy. This is an opportunity which India should harness, to take the lead in a circular model of development—sans sacrificing economic growth.

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