Do you preserve pickles in an old honey jar? Do you eat lunch from your own lunchbox? Do you do composting, grind breadcrumbs from hard bread, or reuse bathwater for watering or flushing the toilet? If some of these activities ring a bell to you, and you find nothing revolutionary about them, then rest assured that you are no stranger to the principles of the circular economy (CE).
The meaning of this abstract term in everyday life is a return to the principles that have guided people for centuries, although mostly out of necessity rather than intentional modesty. These consisted of reusing things, acquiring something new only once the old had stopped being useful, and handling resources in an economical way. Thus, people unwittingly maintained the product’s value in circulation for as long as possible and generated significantly less waste than now, fulfilling the basic principles of the circular economy.
Commodity Crisis and Climate Change
It was only our modern consumer society that came up with the exploit-produce-consume-fast-and-throw-away scheme. The evermore present linear economy has led the world to the brink of a resource crisis, with more than 90% of all extracted raw materials ending up degraded as waste. In just 50 years, global material use has almost quadrupled, outstripping population growth. In 1972, when the Limits to Growth report was published, the world consumed 28.6 billion tonnes of resources. By the year 2000, consumption had risen to 54.9 billion tonnes and by 2019, it exceeded a staggering 100 billion tonnes. Moreover, the rate of our consumption is steadily increasing, as are waste production, carbon emissions (70% of all global greenhouse gas emissions are related to the processing of materials, manufacture, and use of products), and overall negative environmental impacts. As humanity, we find ourselves on an edge where activities such as preserving food in already-used jars will no longer salvage us. The only way forward is to transform the whole economic model.
Although the global share of circularity has even worsened (from 9.1% in 2018 to 8.6% in 2020), the desired mental shift towards the circular economy is already starting to take place in many parts of the planet. A positive example is the Czech Republic, where the rate of material recovery is an impressive 14%, driven by alarming reports from experts warning about the scarcity of natural resources, climate change, and disappearing biodiversity. Rising material and energy prices and, in particular, the interest of the younger generation in environmental issues are also playing a role. Last but not least, local and European legislation is driving change, along with global commitments such as the Paris Agreement and the objective of keeping the increase in global average temperature well below 2°C compared to pre-industrial levels, and of trying to keep the temperature rise below 1.5°C compared to pre-industrial levels.
When it comes to waste prevention, up to 90% of the environmental impact of products is determined by the design itself. That is why eco-design was born ‒ a systematic process of product design and development that, in addition to its traditional functions, emphasises minimising the product’s environmental impact throughout its life cycle.
Circulation of products and materials denotes trying to keep the highest possible quality of materials in a closed cycle, whether in the form of the product itself (reuse), its components, or raw material (recycling/upcycling), which can be reused in production and thus save “virgin” material. There are two types of closed cycles: technical and biological. Technical cycles circulate materials that are not consumed by their users during use, e.g. metal, wood, or plastic, that can be reused, repaired, or recycled. In contrast, only biodegradable material circulates in biological cycles, ideally through composting or anaerobic digestion.
Last but not least, the third pillar belongs to nature restoration. The transition to the circular economy will require fewer natural raw materials and therefore less land for mines and quarries. The circular economy strives for land to be used for regenerative agriculture and renewable energy rather than for resource extraction.
Nonetheless, the circular economy is also delivering promising results at the macroeconomic level. The shift from linear to circular means strengthening Europe’s competitiveness, reducing dependence on imports of primary raw materials, saving costs, and creating new jobs, which is a fact clearly evident to the responsible EU institutions; key documents have, therefore, been introduced in support of this economic transformation ‒ most notably the Circular Economy Action Plan and above that, the overarching Green Deal, which are subsequently being translated into local jurisdictions.
Circular Economy in Practise
The Czech Republic is one of the most industrial EU countries (up to 65% of CO2 emissions in the EU industry come from the processing of the four basic materials ‒ steel, plastics, aluminium, and cement. Not least of all, there is also plastics production) and thus one of the largest CO2 emitters. However, the high-emitting sectors also include agriculture, construction, the fashion industry, etc. By applying the CE concept in the industry, emissions can be reduced by up to half, resulting in potentially significant financial savings.
One way to get closer to achieving these goals is through circular procurement.
Compared to conventional public procurement, circular procurement does not focus solely on the price of the supply, but on cost savings in the long term through:
- Efficient resource management via pre-demolition audits, LCA (Life Cycle Assessment), use of certified materials and recyclates, supply chain analysis, etc.
- Closing of technical and biological material loops through waste scanning or circular strategy applications, etc.
- Introducing innovative solutions in the form of eco-design, digitalisation, etc.
Although the implementation of these solutions can do without circular or otherwise responsible procurement, it must be carried out correctly in order to avoid greenwashing, which is something we greatly emphasise at Deloitte. Contact us to help you with a Life Cycle Assessment, waste scanning, supply chain mapping or setting up a circular strategy. You will not only aid the planet, but also your business by saving costs on resources, materials and energy.
The Circularity Gap Report 2022. Circle Economy, 2022. Available at CGR 2022 (circularity-gap.world)
The Role of the Circular Economy in Decarbonisation of Industry. INCIEN, 2022. Available at INCIEN_DIGI.pdf