The circular economy creates value for businesses
Posted on March, 9th 2017.
The circular economy doesn’t just help preserve the environment. It also gives companies the opportunity to reduce their costs and create new, virtuous economic models.
Ever scarcer resources, more greenhouse gas emissions, and plastic polluting our oceans... these environmental concerns are no longer compatible with our so-called "linear" economic model based on extract - make - use - throw. The circular economy, on the contrary, turns our waste into new resources to create an extract – make - use – reuse loop. A paradigm shift that is encouraging businesses to completely rethink both their strategies and their production processes. The issue is not only environmental, it is also economic.
For businesses, the first impact of the circular economy is a reduction in their costs. A report by the Ellen MacArthur Foundation states that raw materials make up 40 to 60% of the basic costs borne by manufacturing companies. Costs are high because most of these resources are imported and scarce - including fossil fuels.
The circular economy can greatly reduce costs by recycling waste. The Ellen MacArthur Foundation report estimates that in Europe 600 billion dollars could be saved on primary resources by 2030.
In addition, businesses could significantly reduce their waste disposal costs – especially in countries with strict regulations such as Belgium or the United Kingdom where companies pay a heavy landfill tax.
Creating wealth and jobs
The circular economy also has a positive impact in terms of creating value and jobs. Transforming waste into resources means developing new functions in order to rethink the production chain, and eco-designed products. It also encourages new sectors that repair, reuse and recycle to flourish.
Finally, the circular economy has the effect of relocating production within the national territory. Our current model outsources production. But when waste is recovered locally, it offers a direct and low cost source of supply for our industries.
The Ellen MacArthur Foundation estimates that in total the circular economy could generate a 7 percentage point increase in Europe's GDP by 2030.