There is no doubt our current social-economical structure is under growing pressure from multiple directions: scarcity of raw earth materials, increased negative impact on climate and the environment, fluctuating economies, and continuous population growth with a rising consumerist middle class. These pressures continue to accumulate, putting into question the ability of our system to continue to operate while risking social and environmental wellbeing worldwide. Within this reality the need to act towards a sustainable social-economic transformation is no longer a matter of a trend or a marketing strategy, it’s an urgent necessity.

Despite the greatness of the challenge ahead, there are not that many solutions that offer meaningful and effective potential change. One model that stands out as particularly feasible, and offers tangible solutions for change is the circular economy model. Though circular economy seems to be the new buzzword these days, it’s actually far from being a new concept. When looking back on traditional economies, the principles of circular economy were an integral part of those systems, namely minimizing waste and maximizing resource efficiency.

LINEAR MODEL IS FAILING

These basic principles, which guided human activities for thousands of years, were spoiled by the economical drivers of the industrial evolution and the culture of abundance it brought along. Over the past 150 years our economy has been ruled by the one-way linear model of production and consumption, where materials are extracted for goods to be manufactured, which are in turn sold, used, and then discarded as waste.

The linear model proved successful in providing material prosperity to billions, and supported the economic development of the modern Western middle class, but it is also based on the false notion of endless supply of raw materials and fails to account for the enormous social, environmental, and financial impact generated by its activity. Additionally, the linear model carries a great deal of financial loss by producing over 80% of waste. From consumer goods alone, resources such as fabrics, metals, foods, and packaging end up disposed as waste into landfills or incinerators. This is a daily loss of $3-4bn worth of materials, which could be recovered and reused. In light of the above, we are forced to rethink our ways and to consider the principles that proved worthy for thousands of years - the principles of circular economy.

THE CONCEPT OF A CIRCULAR ECONOMY

The concept of circular economy encapsulates a whole world of both technological solutions and new business models, common among them is the notion of decoupling economic growth from environmental impact and on increasing positive social outcomes. They are also based on similar principles through which these goals can be achieved: maximum resource efficiency, reuse of waste and other by-products, building resilience through diversity, biomimicry, and cradle-to-cradle design.

Companies worldwide are becoming increasingly aware of the potentials in applying circular principles into their business model, where they can embrace and harvest the fruits of change.

Desso, a carpet and flooring manufacturer, is currently applying the Cradle to Cradle approach to their entire production process, and reconstructing its business model to support a leasing system. The notion of leasing services over selling products is prominent among other major manufacturers such as Rolls Royce leasing jet engines in their power-by-the-hour scheme, or Xerox charging its customers not for the printing device but instead per paper printed. All the examples above demonstrate business models that allow companies to keep ownership over their raw materials, maintain and reuse their products, ensure longevity, and cultivate long-term and loyal relationships with their customers.

So, there is already a growing number of business leaders who agree that the current system has to fundamentally change, and are actively searching for new partnerships and collaborations which will enable their businesses to change. Those companies already know that being at the frontier of the transition will have a commercial advantage, and that the absence of action will leave them behind.

Although the principles of circular economy are both sensible and profitable, the road is still long for mainstreaming circular economy. One of the main reasons for that is that the discourse on circular economy has been very centered on the expectations of businesses to do the responsible thing and embrace available technological solutions and transform their business on their own. However, the way our current economical, social, and political systems are so deeply intertwined the challenge of transformation cannot be put on the shoulders of businesses alone. If we truly wish to embrace, scale, and mainstream circular economy it will require joint collaborative action and support from all the actors in society: consumers, policy makers, educators, infrastructure planners, and the general public.

WILL DENMARK MEET THE PRINCIPLES OF A CIRCULAR ECONOMY?

The necessity for a holistic approach in searching for and implementing solutions becomes even more evident when looking closely at the challenges facing the Danish economy. Despite what we like to think Denmark is far from being a leader on the road towards circular based economy. Although the Danish resource strategy has an ambitious plan aiming to recycle 50% of household waste by 2022, the implication is that we will have to increase our current recycling efficiency by a full 100% within the next 7 years. In general the Danish incineration system seems to be one of the main barriers for a transition towards circular economy and a greater waste recovery, because the country’s heating systems rely heavily on burning the waste with as much as 20% of heat to Danish households coming from incinerators. This causes valuable raw materials to turn to ashes, and also increases pollution and generates toxic emissions. It’s a dependency that creates a strong reinforcing mechanism for greater waste generation, and provides poor incentives for recycling and recovery.

So, if Denmark is serious about its ambition to become a leader of EU’s Zero-Waste Programme and transition towards Circular Economy Framework, some radical changes must take place in dealing with the country’s waste recovery systems. The recently passed new law, forbidding construction of new incinerators, is a promising start, but there is a still a long way to go in transferring Denmark’s energy and recycling systems into sustainable ones, and suitable for circular economy.

This demonstrates the complexity of just one of many challenges Denmark will have to face on its path for transformation, tasks clearly too overwhelming to be dealt with by business actors alone. In order to successfully untangle such an elaborate puzzle we need cross-sectorial and multi-stakeholder collaboration, nothing else can build enough capacity for change, facilitate infrastructure, and establish new consumption patterns necessary to accommodate the circular business models.

TRANSFORMATION OF THE ECONOMY

Transformation towards a circular based society has great potential to benefit all stakeholders involved: For society at large it ensures a continuous ability to enjoy a high quality lifestyle in a safer environment and with a more stable economy, while for businesses it ensures the ability to remain profitable, strengthen relations with consumers, and reduce the risks associated with a shortage of raw materials.

Circular economy is not a magic word that solves all our problems, but so far it has been the only concept to offer tangible and practical approaches to mitigate and adapt to some of the main challenges ahead. However, in order to unlock these potential benefits stakeholder must act together to support and collaborate on overcoming the challenges this transformations holds, enabling businesses to live up to the full potential of these circular business models.