November through January is a unique time of the year. It’s a time to reflect, connect, celebrate, and set intentions moving forward.
It’s also a season about stuff.
Venturing into town, logging onto social media, and even opening my email inbox over the past two months meant navigating even more messages about the best new items to buy.
The days after the holiday celebrations were spent dealing with packaging waste and excess food. Figuring out where to store the new gifts we acquired.
Now new year energy has shifted to fresh starts, new resolutions (which may require more stuff), decluttering, and organizing.
It’s been estimated that American household waste increases by 25% between Thanksgiving and New Years.
With so much emphasis on physical items and change this time of year, it’s the perfect time to reflect on alternative ways of living and doing business. How might we meet our changing needs and desires throughout our lives, and build businesses that create value, while protecting and revitalizing ecosystems?
The circular economy provides one answer.
Declutter and fight climate change at the same time
In the last post, we talked about the climate crisis and how the most important goal in the near term to slow and reverse climate change is to reduce sources of new greenhouse gas emissions.
If your state is moving toward clean energy, you’ve electrified as much as possible, and you’ve evaluated and changed your food sources and waste, another place to look at are the goods that we own.
If we lean more into a circular economy, we can reduce the overall emissions and resources required to maintain a high quality of life. And we may be surprised to find that our quality of life is even better after adopting these principles.
A circular vs. linear economy
A version of a circular economy has been used by humans for thousands of years, by design and necessity. But to best understand the circular economy, it’s helpful to compare it to what we currently have: a linear economy.
In a linear industrial economy, resources are extracted from the Earth, further processed into more complex materials, and then manufactured into goods, which are sold to an end user, used for a duration of time, and then discarded at the end of their life instead of repurposed. This linear process is often simply referred to as a “take-make-waste” and plays out over all industries, from buildings, to consumer and enterprise products, to agriculture.
What’s wrong with the linear economy?
The linear economy is problematic for humans and the planet at each stage of a product’s life cycle.
Mining and processing new materials can destroy ecosystems, air, and water quality for people living near the facilities. Without regenerative or sustainable practices, to meet the demand for new virgin materials, some companies need to buy up more land to continue operating, destroying more landscapes and communities in the process. Communities closest to the facilities suffer the most, but we are all impacted by the effects of unsustainable industrial practices.
Creating and shipping products requires additional materials, chemicals, energy, water, and transportation to build and assemble the parts and transport the products to their final user.
Some items can last generations if well taken care of, but single-use products and packaging, and items that are difficult to repair or go out of fashion quickly are the most problematic.
Reselling, gifting, or donating an item are some ways to try to extend its life before it goes to landfill. However, some organizations are inundated with items while others are lacking. Finding the right next owner of the product or component parts and navigating the secondhand market can be time-consuming.
For some items that cannot be donated as-is, removing stains or repairing the item may be enough to give it new life. However, cleaning and/or repairing items often requires special knowledge or products. In some cases, when time and money are factored in, it is cheaper to purchase a new item than to repair an old one, which I encountered when the motor in our stove vent stopped working.
At the end of an object’s useful life, the materials might be recyclable. But many products are made of composite materials that are difficult to separate.
Recycling options vary across communities depending on the local economics of waste management. And the environmental impact of waste management tactics varies. Some communities recycle paper, while others burn it. Certain plastics are recyclable if sold to specific buyers, others aren’t, and most “recycled” plastics are actually downcycled. Some communities offer curbside compost pickup but most don’t. Some offer glass or electronics recycling, some don’t.
Trash may go to a landfill, or be incinerated, and a surprising amount of trash and pollution ends up in our air, waterways, oceans, parks, and lawns. Every time I walk around my suburban community or a local park I find trash, and sometimes it blows into our yard on trash pickup days.
A linear system isn’t working for people and the planet. Raw resources are finite. The Earth cannot sustain current resource consumption, much less growth. Beyond the moral implications, relying on raw material extraction and the linear economy is a risky business strategy.
What’s different about the circular economy?
In the linear economy, the throughput of goods and growth of consumption drive decisions. However, in a circular economy, materials and people take center stage.
Rather than focusing on the throughput of items (aka speeding up the take-make-waste cycle), the goals of a circular economy are to maximize the time an item is in use, ensuring high quality of materials in a system, and minimizing waste.
If the item outlives its usefulness, then the next goal is to reuse its materials to create new products or parts, or decompose the materials further through natural or industrial processes.
The goal is to eliminate as much waste and pollution (another form of waste) in the process as possible. In the words of the Ellen MacArthur Foundation, “treat waste as a design flaw.”
This means that the responsibility of producers changes, and local repair, trade or sharing, services, and upgrades become more prominent.
Producers of goods no longer end their service at the point of sale. They accept returns at all points of the lifecycle and repurpose the items or materials. They also design products that produce less waste throughout their lifecyle. That are easier to repair and improve, whether by their own business or by providing information to local businesses so they can provide the service.
Locally, items are reused once they are no longer needed, repaired where possible, and repurposed when the item has served the end of its useful life. Local businesses may also choose to purchase products and rent them out, benefiting consumers who have access to items without needing to store them.
Beyond eliminating waste, in this type of economy, there are also opportunities for humans to have a net positive impact, by regenerating rather than degrading ecosystems and communities.
What are the benefits of a circular economy?
In a circular economy, the scope of new resource extraction goes down significantly because materials already in the system are reused. That means that land currently or planned to be used for resource extraction can be used for other purposes.
Since the physical products (or at least components or materials) already exist, fewer materials and energy need to go into creating new products from scratch, saving money and emissions.
Businesses can worry less about global supply chain issues because there is a high likelihood that the materials they need exist locally. Consumers are less impacted by global disruptions as well when they can repair their existing items and find new items locally.
Since the circular economy requires more local craftspeople, services, and repair shops, it will transfer more economic power back to communities. Items can be repaired and upgraded locally, customized to their local region’s needs and tastes.
The circular economy also benefits end users, by taking the burden of managing items off their plate when businesses sell performance instead of items, and producers offer take back programs.
And new business opportunities will emerge for companies to help other producers to revitalize and reuse materials.
Finally, with a lower amount of waste to manage, municipalities can free up resources for other services that add more value to their communities.
Why is it sometimes hard to participate in the circular economy?
The circular economy sounds great, but putting it into practice can be more difficult than ordering a new item online or driving to the nearest big box store. Producers are also working within systems and incentives that work against the circular economy, but we’re starting to see some shifts in the industry and governmental policy.
Some of the challenges to participating in the circular economy include:
Ease of access
Access includes how easy it is to find and evaluate items that fit what you’re looking for, and ease of acquiring them and bringing them into your home or business.
Compared to big box stores that are organized and have everything you would need, thrifting stores and apps can feel more like a treasure hunt. You might find what you need when you need it, but it can take more time. And your local community or library likely does not have the scale of inventory of Amazon.
For some people, they may decide to purchase new items not necessarily because of the item itself, but because of the ease of home delivery and assembly vs. local pickup.
Lopsided information, influenced by gatekeepers
Millions of households and micro businesses are competing with the reach of a few consolidated superstores like Amazon, Target, and Walmart. As the systems are set up to favor the bigger stores (corporations can invest more in Google advertising, TV ads, and physical storefronts), it can take extra effort to shift purchasing habits to secondhand sources.
Knowledge required
Specialty knowledge may be needed to clean, repair, and reuse items, or find the best home with the highest likelihood of reuse.
In the case of industrial and commercial reuse, new technologies and methods may be needed to fully extract the value of materials in existing products.
Time required
Finding and acquiring the items, learning how to maintain them and repair them, and finally finding a better home for them all take time.
Planned obsolescence
In some cases, companies are deliberately designing products to fail or be un-upgradeable, even if users would like to lengthen their useful lifetime.
Cultural influences
Depending on where you get information, it can seem like buying something new is the default and preferred choice. When I explicitly search for secondhand furniture online, I’m offered ads and results for new items. Companies that offer refurbished items highlight them on a secondary page on their website, not the front page. Amazon lists used options below the new options and on other more hidden pages.
We never see as many ads for used items as we do for new items. Influencer culture can result in additional promotions and hauls of new items, which perpetuates the idea that new is desired and better. And it can be difficult to be the only one opting out of a family gift exchange of brand-new store-bought items.
Misaligned business incentives and policies
Is it cheaper to purchase more raw materials and manufacture new products or refurbish older items? For businesses, the costs of new materials and manufacturing are often subsidized or artificially lowered. This is due to a combination of government subsidies and discounts to certain industries, poor worker conditions, and the fact that producers do not currently pay for the waste they produce. Communities, individuals, and wildlife do.
What could this mean for your portfolio?
Yes, our collective greenhouse gas emissions were much lower before the industrial revolution, globalization, and the internet, but moving toward a circular economy doesn’t mean sacrificing all of the benefits we’ve realized over the past 200 years. I think some of the most interesting business model opportunities are ones that blend traditions of the past with new modern-day opportunities and desires.
Here are a few aspects to consider when you look at your business model and products, including the products you purchase and the vendors you hire. Most of these can be applied to personal purchases as well. Finally, I included a few policy options to track and advocate for.
Options for Individuals & Businesses
Think Services First
Does each household need to own its own equipment for a job that is done rarely? Service companies could own the items needed to complete the job and sell the labor required to do it.
Companies could promote the same with vendors if there’s equipment you need for your business. Is there something your business owns that makes more sense to purchase as a service?
Buy and sell performance instead of products
We buy products for the outcomes they create in our lives, so I think this is a great business model and purchasing shift. Instead of selling a heater, think of selling “a warm home.” What kinds of products, services, and monitoring would be required to maintain that result? How much would the result be worth to customers?
Rent or borrow items you won’t use for a long period of time
Some items can last much longer than the period of time we personally gain value from them. Renting or borrowing is a way to fulfill our desire for novelty and function without owning an item that we’re not using. It is especially useful for children’s items like clothes and toys that will be used for a short period of time before they are outgrown, or even items for adults like books, special event outfits, and hobby equipment.
Some of the best business models include an easy way to return the items when you are done with them (sometimes recouping some of the cost of your investment). Others also forgive wear and tear or go as far as to accept and deal with items that cannot be resold to another customer in their current form. Rent-a-Romper is a great example of a circular economy business model. For non-profits, a library of things model can be beneficial to help more people with limited physical inventory.
Better match customers to products to reduce the rate of returns
Returns are a key element of a circular economy but contribute to additional transportation emissions and costs. One way to reduce the rate of returns is to help customers make better purchasing decisions up front by providing more information to help them evaluate products and match them to the products that will best fit their needs.
Design for reuse
User-centered design is still key, but also consider the needs of the second, third, and fourth user of the item. Did you choose materials that are easy to clean? Will the materials and finish last over the years? Is the design timeless? Changeable?
Rather than disposable or even recyclable packaging, consider ways to use reusable packaging that is returned to your company or can be reused by the consumer. I’ve seen some companies do the latter, but provide reusable bags with their branding, which is not a full solution since people usually have too many bags and don’t want to advertise brands in their homes.
Don’t forget to include user research in your packaging decisions as well to determine if reuse, compostable, or reusable options make the most sense for your customer base and business model. Always design with the lowest level of access in mind as industrial composting is not widely available.
Design for repair
Most items will need to be repaired eventually, so the easier it is for the owner, producer, or a third party to repair it, the better. One key design aspect of designing for repair is making it simpler and easier to disassemble in the first place.
Design for upgrades
Technology will improve and preferences will change so why not add the additional value without replacing all of the original resources? Car manufacturers providing software updates are a good example of how products can be improved after they are purchased.
Design for end-of-life & educate customers on what to do
There will always be items that cannot be reused as-is. Make it clear to customers at the point of sale, in your product packaging, and on your website what they should do when they no longer have a need for the item (which needs to go beyond “donate it”). Make sure all materials are safe to degrade biologically or provide a method to return them to the producer for proper handling.
Create items as close to the consumer as possible
Decentralized (re-)manufacturing (where possible and practical) can allow for just-in-time resource use based on local needs and preferences. This approach can dramatically reduce the amount of materials and items sitting in inventory or sent to landfill before they are even used once.
Build, extend, or improve the user experience of secondhand marketplaces
While secondhand has become a lot more popular in recent years, I think that there are still a lot of opportunities to address user concerns and needs when participating in the circular economy.
Make relevant secondhand items easier to find. The secondhand economy is often hidden and fragmented so if you’re looking for a particular item, it can be difficult to know where to look and you may have to sort through a lot of irrelevant items. This means in a time crunch you might lean on a big box store because you know you’ll find what you need there.
Make it easier to declutter in a responsible way. From providing information about where to take the items to making it easier to add your items to the secondhand market or transport them, there are a lot of ways to address the lack of time or knowledge issue when it comes to making the transfer of items to a new owner more seamless.
Normalize the circular economy
To change consumer preferences, I think the best thing we can do is counterbalance the “new is better” messages. When secondhand is seen as just as desirable as new, if not more, we’ve helped people see the opportunities in the secondhand market. The same can be done with local repair shops and services.
That could look like supporting online and local thrift hauls, anti-hauls, and neighborhood swaps.
In the wake of economic challenges and environmental issues, we’re also starting to see more individuals, content creators, non-profits, and smaller businesses across the political spectrum advocate for community-sharing, low-carbon, simpler, secondhand, or homemade lifestyles as a counterpoint to mainstream consumption messages.
Policies to Advocate For
Extended Producer Responsibility
There’s so much we can do individually and as businesses, but policy changes can have a much wider and faster impact.
For example, Extended Producer Responsibility will help level the playing field between responsible businesses that are already taking some of the actions listed above, and others that are profiting while communities and ecosystems continue to pay for their actions.
Policy approaches for EPR vary, but essentially they shift the burden for post-consumer waste management back to the original producers of the item. Policies have been discussed for plastic packaging in particular and other products more broadly.
In some cases, coalitions of environmentalists and businesses are already petitioning the government to take action to implement EPR policies. And some U.S. states are pursuing their own policies.
Plastic packaging is especially concerning, and the Break Free from Plastic Pollution Act is one to watch and advocate for at the federal level.
Taxes on resources instead of labor
Policies that lower the cost of hiring people and increase the cost of extracting and disposing of materials may also provide more economic incentives for businesses to shift to the circular economy.
Setting production limits or bans
Another policy lever would be setting limits for how much virgin material can be produced, gradually lowering the limit over the course of a few years. Outright bans could also be possible for some materials or products to force the use of alternative solutions.
Right-to-repair bills
New York state just signed a right-to-repair bill that would allow consumers and repair shops access to parts and information in order to fix certain electronics. You can find more information about Right to Repair bills in your state here.
Humans have operated within a circular economy for thousands of years, and our switch to a linear economy is recent. I am very excited about the trends that we’re seeing, the new business ideas, truly compostable materials, community bonds and relationships, and ecosystems that could be regenerated as we move back to a circular economy.
If you’re interested in this topic, I encourage you to check out the books “The Circular Economy: A User’s Guide” by Walter R. Stahel, and “Doughnut Economics” by Kate Raworth, as well as resources from the Ellen MacArthur Foundation.
How are you planning to participate in the circular economy?