Last week, the government announced new funding of £22.5 million to support the research that will make a circular economy possible. This will be an important step towards meeting our net zero goals, and hopefully reversing climate change. We explore the nature of circular economies and their benefits to businesses.
What is a circular economy?
A circular economy is designed to make each resource and its use as sustainable and efficient as possible. Instead of continuing to mine the earth for fresh resources, it asks what more could we do with what’s already available to us?
The main ideas behind a circular economy are as follows:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems
Compared to our current linear system of make, use, dispose, it’s obvious how a circular economy can benefit the UK from an environmental perspective. However, the pros of this transformation aren’t reserved for the birds and bees. UK businesses stand to gain as well.
A 2015 study has shown that, in Europe alone, a circular economic approach could offer cost savings of over half a billion euros by 2030. When taken together, the total gains circularity would be in excess of €1.8 trillion
How can I prepare my business for a circular economy?
The first questions to ask are what are the critical resources your business uses and how can you improve their value through increased efficiency.
Utilities are an excellent starting point since almost every business uses water, electricity, and heating. Consider investing in metering and sub-metering technology across your sites in order to track these resources and how you use them.
In addition, you’ll be aware and able to take advantage of reduced tariffs by timing usage during off-peak hours.
The government’s current rollout aims to equip all small businesses with advanced metering technology by the end of next year. However, there’s no reason to wait, especially if utility costs factor heavily into your outgoings. The sooner you install a meter, the sooner it starts paying for itself and making savings for you.
A recent study from the non-profit Club of Rome concluded that installation services for these kinds of improvements would be central to realising a circular economy in Europe.
Design for value first and profit second
Next look to the products you create. Designing them with circularity in mind means shifting the conversation from cost vs profit. Instead, it focuses on the overall value of the product and its individual components throughout its entire lifespan.
Designing products and services to last is one thing, but we should also consider the environmental impact at the end of their lifespan and how easily or safely they can be disposed of.
Landfill taxes have increased by 11.4% over the last four years and this has partly been triggered by increased demand in that time. Creating products that don’t need to go to landfill not only helps your green reputation in the short term, it will also contribute to lower taxation on the materials you can’t recycle.
Sustainable design and disposal principles are at the heart of the government’s new funding scheme. The £22.5m worth of funding will back the construction and maintenance of 5 new research and development centres. The aim of these centres is to explore and improve the processes of several heavily polluting sectors in the UK.
The sectors under the microscope include textiles, metals, construction, chemical production and electronics waste. Construction alone produces a shocking 154m tonnes of mineral waste per year – enough to fill 30,000 Olympic swimming pools.
If your business is a part of one of these sectors, it would be wise to start thinking circular now so that your practices are above scrutiny further down the line.
What’s the total cost?
Consider the embedded resource costs of materials you directly produce. Using local materials has already become a marketing strategy in many sectors for its association with sustainability. This is most notably in the restaurant industry. The interest in artisan goods in the past two decades demonstrates a desire to shop locally and from small-scale producers. People want lasting value and are willing to pay extra for it.
But this doesn’t just benefit your green reputation, it will also boost your organisations future resilience. Simplifying supply chains and reducing the number of connections and distance guarantees this.
Carbon budgets will draw sharper focus in the lead up to 2050. Understanding and reducing embedded carbon sources like unnecessary transport in favour of local materials will serve you well as a result.
Thinking locally doesn’t just apply to materials either and there are ways to apply it to intangibles like energy. You can adopt a similar approach regarding your utilities by investing in an on-site renewable energy generation scheme.
The beauty is that you make money on the same energy twice. First by avoiding non-commodity costs and second by selling it back to the grid during times of peak consumption. A passive, green income stream that will continue to serve you long after breaking even on its set-up costs.
At ESS, we believe that moving to a circular economy is an essential step to our green future. Our passion is reflected in the services that we offer which include metering and monitoring expertise and guidance on installing your own on-site generation equipment. For more information about these services, get in touch.