04 Dec

An economic paradigm shift and new beginning: the Circular Economy

Introduction: a radical departure from the status quo

The Circular Economy is a different approach to the production and use of goods, deliberately designing individual production systems as well as whole economic systems to operate in closed loops. With this comes the virtual abolition of waste; losses of materials and energy become a matter of the past.

What may sound illusory is already being done already today by pioneers in the industry who achieve a degree of productivity that others don’t imagine in their wildest dreams.

If implemented consistently, circular economy is a radical departure from the linear „take, make, dispose“ model of production that has prevailed since industrialization. This model has contributed substantially to the fact that humankind is now using 1.6 times more natural resources than the earth can regenerate each year.  While there is no commonly agreed definition of the term „circular economy“, a common goal is to use limited resources as efficiently and effectively as possible.

Beyond recycling

Rather than being incinerated or dumped on landfills, what was once garbage becomes the raw material for value-creating production processes. In other words, one actor‘s garbage becomes another’s resource – the basic logic of successful circular models.  This goes well beyond optimized recycling. When the entire life cycle and supply chains are core consideration during product development, garbage can be eliminated by design.

Further considerations within the circular economy mindset include eco-friendly material innovations minimizing the dependence on non-renewables, modular design for ease of dismantling and facilitating the remanufacturing of used components.

Ecologically sound, economically attractive

Irrespective of the bare necessity to transform the current economic system to make the use of natural resources sustainable in the long term, the Circular Economy boasts compelling economic incentives. First, there are the obvious savings for primary raw materials that no longer need to be mined. Moreover, new service-based business models emerge from the circular economy’s approach of maximizing the use value of products rather than selling as many of them as possible. These business models described by the catch phrases “rent instead of sell” and “product as a service” show a close relationship to the ideas of the sharing economy. There are major incentives for extended usability and reparability of products that remain manufacturers’ property while consumers pay for their use. This in turn translates into resource savings with simultaneous increases in profit.

Orientation in a jungle of definitions

Rather than a clearly defined economic model, circular economy is still a collection of various approaches, instruments and principles based on closed cycles.

A literature review by Dutch researchers revealed 95 differing definitions of circular economy (Kirchherr, Reike and Hekkert, 2017. Conceptualizing the circular economy: An analysis of 114 definitions). One of the key concerns raised is that only few of these definitions underline the necessity of a systemic shift when it comes to the transition to the circular economy.

In our view, the circular economy must be grounded in a radically new understanding of consumption, a new understanding of equitable cooperation and the urgency at hand.

A systemic shift away from “take, make, dispose” and towards using and reusing everything requires awareness, maturity, transparency and strong social and combinatory skills.

Taking a step back in search of a consistent understanding of circular economy and looking at the broader picture beyond our current economic system, we find: Waste is unheard-of in nature.  In nature, all functional components of the system play an important role. Everything flows and is in constant renewal in biological cycles where the end products of one organism are another’s food. Take CO2 for example: this by-product of animals’ metabolism is an essential resource for plants to grow. Through photosynthesis, it is transformed into sugar, starch and cellulose that in turn serve as food to animals. Just like carbon, the other elements of life (nitrogen, phosphorus etc.) are in constant circulation without producing any waste.

An economy inspired by nature is therefore no longer guided by the imperative to minimize adverse effects or to go below a certain permissible value to obtain an environmental certificate. An economy inspired by nature is driven by productivity and renewable by design. All materials involved have a value in the overall process if it is designed according to the example of natural cycles.

Naturally, there are numerous technological challenges on the way towards a truly circular economy. Mental hurdles however play a key role, too, as a case study at Jaguar Land Rover reveals. A product development guided from the start by a “zero-waste”-mindset will produce creative solutions to any obstacle.

Circular economy and sustainability

The approaches of the circular economy allow committed companies to attain a greatly improved environmental record while simultaneously increasing long term profitability.

A system change true to the idea of sustainable development is achieved if social justice and human wellbeing become major parts of the equation, too.

What if companies that have long profited from cheap resources give back in the form of local value creation and employment through various forms of cooperation?

This would restore a balance between the giving and the taking also in social terms, and the global economies would thus co-create a world that works for everybody.

Evelyn Oberleiter

Evelyn Oberleiter

Menschen und Organisationen in tiefgehenden Entwicklungsprozessen zu begleiten, die die Wahlfreiheit und die Achtsamkeit füreinander sowie für die Umwelt erhöhen, ist die Triebfeder ihres Handelns.

Evelyn Oberleiter, Mitbegründerin des Terra Institute, begleitet und berät seit über zehn Jahren Unternehmen und Organisationen unterschiedlichster Branchen und Größen. Den Fokus setzt sie dabei auf Organisationsentwicklung, Restrukturierungen, Unternehmenskulturprozesse, Implementierung effizienter und strukturierter Kommunikationsräume und –abläufe, sowie partizipative Führungsansätze. Evelyn Oberleiter verfügt über ein breites Wissen, ein schnelles Auffassungsvermögen, hohe Prozesskompetenz und Ergebnisorientierung, eine ausgedehnte Analyse- und Reflexionsfähigkeit, hohe Kommunikationskompetenz, sowie ein ausgeprägtes Systemdenken, Eigenschaften, die es ihr ermöglichen Gruppen wie auch Individuen sicher und langfristig durch Höhen und Tiefen zu navigieren. Neben ihrer Tätigkeit als Beraterin und Trainerin ist sie Geschäftsführerin des Terra Institute, der Terra Mater (Herstellung biologisch-dynamischer Erde) und der Terra Energy (Windkraft-Projekte).
Evelyn Oberleiter