Rethinking Profit
- Flaura Shukla
- Feb 2, 2020
- 3 min read
We currently live in a society where everything is disposable, from plastic packaging to clothing, to electronics and office furniture. Think about how often humans go through the cycle of throwing away goods as waste in exchange for new disposable goods. Our ecosystems can no longer keep up with the 'take, make, and waste' model, in which natural resources are extracted, turned into products, sold to consumers, and used until they are discarded as waste (Bell, 2020). Since the industrial revolution, the rapid pace of technological progress has continued. The resulting innovations mean that many now have access to products from all over the world at affordable prices (ellenmacarthurfoundation, 2015).
We call this a linear economy and it has enabled companies to produce and sell more and more inexpensive products. Unfortunately, it is not sustainable at all.
For a long time, our economy has been linear, but in order to preserve natural resources and reduce the amount of waste we generate, our economy must become responsible. We must transform all the elements of the take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards (Bell, 2020). Only then can we create a thriving economy that can benefit everyone within the limits of our planet. To do that a new economic model is designed taking inspiration from nature itself. Nature works in a loop system and nothing is ever wasted. Every natural being eventually becomes food for something else. Keeping this circular model in mind the circular economy is devised.
The circular economy is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.
In a circular economy, manufacturers design products to be durable and can be easily repaired so that they last long. For example, electrical devices are designed in such a way that they are easier to repair. The product is sold as a service and can be reused by multiple users. For example, a rental service of furniture, clothes or cars. Products are designed in a way that they can be disassembled and re-manufactured. Products and raw materials are also reused as much as possible. For example, by recycling plastic into pellets for making new plastic products. In a circular economy, we treat our surroundings responsibly. For example, by reducing the disposal of post-consumer waste (ellenmacarthurfoundation, 2015).
The intention is to produce no waste or pollution. Instead, products, parts and materials are used, cared for, repaired, reused and recycled as much as possible. This requires new and innovative approaches to business that can provide opportunities for implementing the idea of circularity at a practical level.
Business strategies to slow and close resource loops
Access and perform - Providing the capability or services to satisfy user needs without needing to own physical products, also known as “Functionality” economy. The value proposition includes the offering of Product-Service-Systems, a combination of products and services that seek to provide functionality for customers.
Extend product value - Extending product value focuses on exploiting the residual value of products and delivering high-quality, long-lasting products supported by design for durability, reparability, upgradability, and modularity. Values that would otherwise be lost through wasted materials are instead maintained or even improved by repairing, upgrading, refurbishing, remanufacturing or remarketing products.
Long-life - Business models focused on delivering long-product life, supported by design for durability, guarantees and trusted repair services.
Encourage sufficiency - Solutions that actively seek to reduce end-user consumption through principles such as durability, upgradability, service, warranties, reparability and a non-consumerist approach to marketing and sales.
Extend resource value - Exploiting the residual value of resources: collection and sourcing of otherwise “wasted” materials or resources to turn these into new forms of value.
Industrial symbiosis - A process-oriented solution, concerned with using residual outputs from one process as feedstock for another process, which benefits from the geographical proximity of businesses. Relative to classical recycling, there is more of an emphasis on commercial and industrial waste streams and, at the same time, having fewer intermediate actors involved in the material transformation (Florian Hofmann, 2017).
Profitability would typically result from premium pricing, customer loyalty, and gaining market share from better (e.g. longer-lasting) products. Societal and environmental benefits of sufficiency-based business models include reuse of products and resources across generations, reductions in product use, and societal education. - Ellen Macarthur Foundation
Shortly, our demands and needs will be about three times the current resources. At this time challenges will accelerate for the deficiencies of resources and enormous production of waste. Circular Economy can be the solution for not only improving resource management and decreasing waste production but also reducing costs and expanding business performance (Mostaghel, 2017).
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