(Bloomberg) -- Take, make, use, dispose. For decades, this has been the standard approach to production and consumption. Companies take raw materials and transform them into products, which are purchased by consumers, who ultimately toss them out, creating waste that ends up in landfills and oceans. People who are worried about climate change and environmental degradation are challenging the sustainability of this linear model and urging a so-called circular economy of take, make, use, reuse and reuse again and again.
What’s wrong with the linear economy?
It can be inefficient and costly, and it depletes natural resources. The mining of commodities from gold to coal can spoil ecosystems and disrupt communities. Making steel from ore, for example, requires a large amount of energy, which produces Earth-warming carbon dioxide. A byproduct of the linear model is material waste, which takes up space and may include contaminants, threatening biodiversity. The trash can also end up in undesirable places. Microplastics have been found in food, water and throughout the human body, and some studies have shown they can increase the risk of a variety of health problems.
Is the circular economy the same thing as recycling?
The two ideas are related, but a circular economy is more systemic and ambitious. Most recyclable products in the linear economy can only be downcycled, meaning they lose quality for each new life cycle and ultimately become waste. A truly circular economy would involve no new material inputs at all, reducing emissions, waste and eventually costs. Some industries are already coming close to this — much of a car can be reclaimed, for example, and companies like Redwood Materials Inc. are working on electric vehicle battery recycling. Other industries, such as fashion, have far to go. Every second, the equivalent of a truck full of clothes is buried in a landfill or burned. In January, BASF SE and Zara-owner Inditex SA developed a 100% recyclable nylon fiber. But recycled textiles still make up less than 1% of the global fiber market. Beyond improving recycling systems, a circular economy would require people to change their habits, using what they buy for longer and shunning unnecessary consumption. This isn’t a new idea. The slogan “make do and mend” was popularized during World War II to encourage as little waste as possible.
Is there reason for skepticism?
Plenty. Making a production cycle fully self-sufficient is virtually impossible. Some new input will always be necessary; some waste will always be created. Critics say it’s difficult to measure the environmental impacts of a circular economy since the concept has a wide array of definitions, from improving recycling to reducing consumption to leasing goods so they can be used by multiple people. Building a circular economy requires high upfront costs, as organizations invest in more technology and in educating employees and consumers to adapt to new habits. Some companies have already scaled back their circular economy goals, including Unilever Plc, which reduced its recycled plastic targets in April to focus on profits. There’s concern that companies are developing circular systems in only parts of their operations, making it difficult to achieve long-term sustainability.
What is feasible?
Investing in more circular supply chains. This can mean changing to recycled materials, extending the life cycle of a product and improving recovery at the end of its life. Swancor Holding Co. has developed wind turbine blades made from recyclable carbon fiber, which are being tested by companies including Vestas Wind Systems A/S. Ikea is piloting an online marketplace for customers to buy and sell secondhand furniture made by the company. Colgate-Palmolive Co. has developed toothpaste tubes that can more easily be recycled. There are a few dozen funds that offer investors a circularity strategy, the largest being the BlackRock Inc. Circular Economy Fund, with almost $1.3 billion in assets under management as of August. Goldman Sachs Group Inc. allows investors to filter stocks according to how the companies perform in terms of recycling, waste management and re-use. But the biggest push to make organizations embrace a circular economy needs to come from governments acting on behalf of consumers.
What are governments doing?
They’re making cross-border commitments and developing action plans to nudge consumers and producers to move toward a more circular economy. The United Nations along with 175 nations is developing a Global Plastics Treaty to address plastic pollution, with the agreement planned to be completed by the end of 2024. In July, US President Joe Biden’s administration set a new goal to phase out federal procurement of single-use plastics by 2035. The Council of the European Union put in place new targets in May for at least 25% of the bloc’s annual critical raw materials demand to be met through recycling. In 2024, the US and EU have helped to fund new chemical recycling facilities like those of Eastman Chemical Co. and Itero Technologies Ltd. But environmental groups want governments to go further and insist that companies make their products re-usable and ensure that they are recycled.
- A BloombergNEF research report on the market outlook of the circular economy.
- A Bloomberg QuickTake on pollution from fast fashion.
- A Bloomberg Zero podcast on the UN plastic pollution treaty.
- The Ellen MacArthur Foundation’s website on the circular economy.
--With assistance from Ana Paula Barreto Pereira.
©2024 Bloomberg L.P.
