eLECTURE 4 – STUDENT COPY
Sustainability & Business Agility Syllabus (BBS3015)
CIRCULAR ECONOMY PRACTICES (PART 1)
Explain the core concepts and practices related to sustainability and business agility in a business
environment.
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Explain the principles of a circular economy and their benefits to businesses.
Compare the differences between the traditional linear economy and circular economy
models.
Explain the impact of different circular economy strategies that organisations can use to
minimise waste and promote resource efficiency.
Apply circular economy practices for organisations to align with principles of the circular
economy.
Overview
In our current economy, we take materials from the Earth, make products from them, and
eventually throw them away as waste – the process is linear.
In a circular economy, by contrast, we stop waste being produced in the first place.
Can we transform our buy-and-throw economy into one where waste is eliminated, resources are
circulated, and nature is protected and regenerated?
By shifting our mindset, we
Linear Economy (LE)
The LE model has improved economic status and contributed to our society’s incredible success
throughout technological advancements. It has offered opportunities to maximise revenue and
mimic economies of scale to expand globally, contributing to the growing consumption of products
and services in the marketplace. Technological advances related to the economic demands of
developing and sustaining economies have culminated in product manufacturing, governed by a LE
model of production in which products are made from raw materials, distributed, consumed and
either landfilled or incinerated as waste as depicted below. This drives the modern era of business,
which allows the mind to discard the products after use – a practice that is recognised as linear
consumption.
However, at what cost are we pursuing the LE model? Lets consider the LE model that can be found
in the plastic manufacturing industry and the associated waste generated by the system. The service
life of plastic bags is usually only a few hours. Raw materials used to manufacture plastic bags are
derived from natural materials such as crude oil or gas that took millions of years to form. Using
state-of-art manufacturing technology, the internal structure of the natural materials is modified
eLECTURE 4 – STUDENT COPY
Sustainability & Business Agility Syllabus (BBS3015)
and transformed into useful items such as plastic bags for our consumption using state-of-art
manufacturing technology. Subsequently, the plastic bags are shipped to the marketplace, used and
disposed of by consumers. Creating social knowledge to change social behaviour is an ongoing
process that requires time, and this is crucial when it comes to plastic usage reduction considering
the impact we create on natural systems.
From 2016 to 2040, if we do not respond, more than 1.3 billion tonnes of plastics will be discarded
on land and seas, according to a team of 18 global experts. The bulk of this plastic waste discarded
on the ground is then swept into seas via water channels. Marine animals often ingest consume a
huge volume of plastics as food resulting in death. People unknowingly take in plastics via this food
chain. The plastic waste disrupts the food chain of aquatic animals and may also harm our wellbeing
because of the make-use-dispose LE model. The whole supply chain represents the LE or cradlegrave model.
Our current linear paradigm is not sustainable as generating massive unhealthy waste and rising CO2
emissions pose threats to the planet, humans and biodiversity. We need an economic system that is
sustainable, resuable, recyclable and environmentally friendly to stimulate new business
opportunities and research directions. In this direction, the transition from the current LE (take,
make, waste) to a circular model is necessary.
Circular Economy (CE)
Circular Economy is a closed-loop mechanism where raw materials, components, and products are
reused and recycled continuously within the system unless the product or component lacks
sustainability and reusability.
The CE refers to an industrial economy that is restorative by intention; aims to reply on renewable
energy; minimises, tracks and eliminates the use of toxic materials; and eradicates waste through
careful design.
CE represents a development strategy that entails economic growth without increasing consumption
of resources, deeply transform production chains and consumption habits and redesign industrial
systems at the system level.
The CE seeks to optimise resource efficiency, which implies less waste generation and less reliance
on virgin materials. This approach introduces a new paradigm in the way that resources are handled;
for example, waste produced by one industry may be used as a feedstock for others.
Repair, Recycle and Reuse are the key foundational rules of the CE concept, in which
materials/products are used in such a way as to capture more value instead of getting tossed out.
eLECTURE 4 – STUDENT COPY
Sustainability & Business Agility Syllabus (BBS3015)
The CE increases the utility and value of the products by maximising the material resource,
converting it into a high-value product and ensuring the material and energy continue to circulate
across the system, thereby reducing waste generation.
In summary, Circular Economy is based on below principles driven by design:
1. Closed Loops: Refers to ongoing cycles of input and output, such as repurposing biowaste
for food production.
2. Systems Thinking: Highlights the interdependence among various participants, including
individuals, ecosystems, and businesses, fostering a holistic perspective.
3. Renewable Energy Integration: The Circular Economy's energy requirements are met
through naturally renewable sources like solar, wind, and hydroelectricity.
4. Maximizing Resource Utilization: Emphasizes the significance of prolonging the presence of
products, components, and materials within the economy. This entails practices like
refurbishing, rejuvenating, and discovering new applications for existing resources.
5. Designing for Longevity: Focuses on creating products engineered to withstand the test of
time. This approach involves making items repairable, upgradable, and reusable, which in
turn reduces the constant demand for fresh resources.
6. Waste and Emission Reduction: Centers on minimizing both waste generation and pollution
across the complete lifecycle of a product. This involves optimizing manufacturing methods,
curbing harmful emissions, and embracing recycling and repurposing techniques.
7. Restoring Natural Ecosystems: Encourages the renewal of ecosystems affected by
production procedures. Strategies may include reforestation, the rehabilitation of habitats,
and the implementation of sustainable agricultural practices.
Advantages and Opportunities of the Circular Economy
The tangible outcome of Circular Economy’s global acceptance has been recognised widely, and a
shift to a resource-efficient society is growing.
Potential advantages of CE in economic and environmental aspects:
a) Resource Extraction: Circular Economy ensures effective resource utilisation by improving
the recycling process and encouraging continuous usage of resources within the closelooped system. This will limit the requirement of new virgin raw materials and less reliance
on natural resources.
b) Economic Growth: The economy should be less dependent on natural resources and should
not be hindered by the scarcity of raw materials to expand. It is possible to raise GDP
through increasing income from modern circular operations coupled with inexpensive
manufacturing processes, resulting in goods and materials that are more usable and simpler
to refurbish and reuse.
c) Stimulate Innovation: Circular Economy embraces innovation; it implements system thinking
and aligns architects, engineers, entrepreneurs and other stakeholders to identify
sustainable solutions through creative business models. This is unlike the traditional linear
economy where productivity is the priority and thus the value of creativity takes less
priority.
eLECTURE 4 – STUDENT COPY
Sustainability & Business Agility Syllabus (BBS3015)
d) Reduce Emissions: Renewable energy is at the forefront of the Circular Economy and will
dramatically mitigate pollution by encouraging renewable energy for the manufacturing and
recycling processes. Industries such as power plants and manufacturing industries depend
mainly on fossil energy, responsible for more than 30% of global greenhouse gas emissions.
e) Employment Growth: A Circular Economy will generate more employment than the linear
model because of the aggregation of multiple stakeholders. As it embraces innovations, it
widens business boundaries and creates new jobs.
Conclusion:
A CE is more sustainable and appears to be more supportive for sustainable development. CE is a
contrast to the conventional LE production method as it identifies business opportunities, supports
environmental preservation, and utilises innovative concepts to develop values. Moving toward the
CE model requires all the economic players to recognise the importance of circular thought.
Governments need to implement the CE policy framework; businesses need to incorporate CE
principles in their product design; financial institutions should invest in CE business ideas; and
individual s need to recognise the consequences of the LE system and foster CE practice.
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