What is Circularity?
Many people associate circular economy with recycling, where a product is reused after having served its initial purpose. While these assumptions hold some truth, the idea of “Circular Economy” is more than just a trendy way to talk about how we manage our waste.
Circular economy, simply put, maximises the value and productivity of resources taken from the ecosystem. This can be done by either deriving value out of the waste value chain, or by designing out waste from the production process. It is a contrast to the existing linear economy, where the process is summarised as ‘take - make - waste.’ Value is created in this economic system by producing and selling as many products as possible. The traditional linear economy model and waste management systems were solely aimed at getting rid of the end products, thus fueling existing unsustainable consumption behaviours.
Circular economy can be broken down to 3 main principles:
Waste reduction
Closed-loop systems
Prolonging lifetime value
These pillars are not mutually exclusive, and can overlap with one another, allowing businesses to make an impact in as many spaces as possible.
Source: Locus research
Why is Circular Economy important?
A rising middle class is expected to reach 5 billion by 2030, translating to 1.3 billion more people with higher purchasing power - this means that billions of tonnes of products are consumed and at least as much is discarded as waste. According to The World Count, we are consuming more resources than the planet can provide - 1.79 times more, to be exact. By 2030, it is estimated that we will be consuming 2 planets' worth of resources.
Our global economy is more interconnected than ever before and consumption levels are reaching unprecedented levels. It is imperative that we no longer continue down this unsustainable linear economy model.
Corporate efforts to adopt Circular economy
We need organisations and governments to set an example and champion circularity from within, so that our society can be on a path to sustainable consumption. These can be done by:
Some corporates have already taken the much-needed and exemplary steps in the right direction:
1. Adidas
Adidas has committed to incorporating sustainability into their business philosophy. In 2021, they increased the composition of recycled polyester in all of their products, extending the lifetime value of the raw materials involved in shoe manufacturing. The raw materials are sourced from ocean plastic waste, depicting a successful “closed loop” or circular manufacturing model, where the raw materials can be repurposed again and again.
2. LEGO
The ‘LEGO Replay’ program, launched in 2019, is the brainchild of US$400M investment in LEGO’s sustainability initiative. Customers are encouraged to donate their pre-loved bricks to less-fortunate children, giving the products additional uses. This is a testament to the high quality, durability, and safety of the LEGO brick design, sustaining a prolonged use lifecycle when passed down from generation to generation.
3. Plug and Play x Litterati
Plug and Play’s corporate innovation programs matchmake organisations with startups innovating sustainable and carbon-neutral solutions. In partnership with the Alliance to End Plastic Waste (AEPW). A recent innovation partnership with startup Litterati led to remove 768,673 pieces of litter from the environment during the All Together Global Cleanup campaign.
Support for circular economy innovation still needs a big boost to get to where it needs to be. Stakeholders - both public and private, need to do their part in building the end market, investing and garnering interest for new and scalable solutions. This could mean that blended financing and impact investing might be the most promising approach to accelerate capital into these areas, helping to catalyse public funds while derisking private investments.
In the past, businesses’ commitment to climate was fickle. When budgets got tight, clean energy projects were the first to be dropped. What is interesting is that the opposite is the case in recent months. Although the COVID-19 crisis has led to corporates to reprioritise their interests and focus on core business activities, many organisations and governments are taking the threat of climate change more seriously than ever.
If you’re a startup with innovative solutions in circular economy and sustainability, click here to join our platform of startups and corporate partners working together to solve the climate change crisis.
The words of Bill Gates could not have encapsulated the scenario better:
“Almost every human activity releases greenhouse gases, so we need to change the way we do almost everything—and do it in a single generation.”
References:
ARTICLE WRITTEN BY: RYAN LEE Ryan Lee is a Ventures Analyst for Plug and Play APAC. As an in-house venture capital, our goal is to fund the teams that are building the defensible businesses of the future. By leveraging our capital, our network of VCs, and our corporate partners, we give our portfolio companies an added advantage. Find out more here!
Interested in joining our programs, click here.
To know more about our programs in Singapore, click here.
