Innovation & Technology

Growth Models: The Circular Economy Imperative

Over the last 150 years the industrial economy has been dominated by a linear growth model of production in which goods are manufactured from raw materials, sold, used then disposed of as waste. This ‘‘take, make and waste’’ model now belongs to the past. According to a study published by McKinsey, the circular economy provides an alternative to the linear model. It aims to eradicate waste – not just from manufacturing processes, but systematically, throughout the life cycles and uses of products and their components.

Over the last 150 years the industrial economy has been dominated by a linear growth model of production in which goods are manufactured from raw materials, sold, used then disposed of as waste. This ‘‘take, make and waste’’ model now belongs to the past. According to a study published by McKinsey, the circular economy provides an alternative to the linear model. It aims to eradicate waste – not just from manufacturing processes, but systematically, throughout the life cycles and uses of products and their components.


An epochal paradigm


The circular economy is an efficient alternative resource to this wasteful linear economy and nature is a perfect example of the principles of the circular economy in action. Interconnected usage and waste cycles complement and continually sustain life. Waste is a foreign concept in natural cycles. Human exploitation of nature’s resources over the last two hundred years of rapid industrialization has meant that the natural cycles of the Earth are increasingly imbalanced. Waste, in all its dimensions, has become the defining feature of the current linear model. It is clear that we need to find and implement solutions to reduce waste across all our systems and return to a more sustainable path.


Technology, digital and the Internet of Things


This ‘‘Fourth Industrial Revolution’’, characterized by increasing digital connectivity between people, products, and systems, driven by the internet and mobile technology, has been a direct catalyst in unlocking an array of opportunities that can drive social, economic and environmental benefits.


An Ellen MacArthur Foundation report on circular economy investment opportunities estimates that in Europe, $600 billion could be saved in primary resources by 2030. The new paradigm also has a positive impact in terms of creating value and jobs.


As an example of new business based on the circular economy’s model, consider Stuffstr – a mobile application which allows users to upload and then resell, give, share or recycle any item they own. This app, enabled by digital and mobile technology, provides a secondary marketplace for goods by connecting businesses to consumers and consumers to other consumers, thus increasing a product’s life cycle and ensuring components remain at their highest utility value for longer.


Sharing businesses, such as BlaBlaCar and Lyft, have only become possible through the mobile platforms they are based on and the digital connectivity of their members and drivers. This has enabled a concomitant reduction in the need for individual car ownership and an increase in usage of existing motor vehicles. These examples represent the future, a digitally connected world that, through collaboration and connectivity, can challenge the normal linear structure on which our economy has depended. Technology, when combined with the principles of the circular economy and applied to businesses across industries, represents a real opportunity to redefine our relationship with resources and to shape a society that is environmentally and economically sustainable.

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