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The Circular Economy

Updated: Aug 20, 2021

What is the gold standard?

The ultimate sustainability success story?

The end goal?

The Circular Economy is an economic model where everything that is produced is reused. It is a closed loop system. Think about a glass bottle, glass can be melted down and reformed use, after use, after use.

Most businesses operate in a "take, make, waste" model - a linear economy. We extract a resource, produce something and then it is disposed of later.

I think it is pretty clear to see which one is the long term sustainable option...

Transitioning your business to a circular model will no doubt be a challenge. Luckily, we are able to see what other organizations and industries have done and learn from their success.

When considering how to close your production loop, think about:

Where are your inputs coming from?

Where are your products going once the customer is finished with them?

What waste biproducts are created from your production process?

And where are you disposing of that waste?

The textile industry's fast fashion trend is particularly devastating to the planet. Producers are continually trying to find ways to reuse materials from old clothes that would have ended up in landfill.

When they are not able to fully close their production loop, they are sourcing their materials from sustainable producers to minimize their environmental impact.

Like most sustainability initiatives businesses use a combination of strategies. A great example in the textile world is Patagonia. The majority of their fabrics are made with recycled materials, and their raw materials (down and cotton) are sourced from producers that achieve a quality standard that aligns with their environmental and social values.

Another innovative option is to never sell your product to the consumer. Instead sell the rights to use the product through a lease or licensing agreement. Structure the length of the contract to be the expected life of the product. Once that period is up, take it back to be either fixed, repurposed, or parts reused.

Whichever strategy you decide to pursue the circular economic model, you will very likely have to change the way you interact with your suppliers, distributors, customers and other stakeholders as your goals shift towards sustainability.

This may lead to new opportunities for your business. See my other post on the aligning values of profitability and sustainability.

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