by Elisabeth Schoch, CEO & Founder at Invenio Rocks.
Is there a reliable way for manufacturing industries to increase profitability while reducing their dependence on natural resources?
In recent years, research has shown that the circular economy is part of the answer. The circular economy is the efficient use and reuse of natural resources and the creation of value throughout the life cycle of finished products. In 2015, a major study by McKinsey and the Ellen MacArthur Foundation showed that such an approach could increase productivity in Europe by 3 percent by 2030 and generate cost savings of €600 billion per year and other economic benefits of €1.8 trillion.
The study shows that most of the industries studied could adopt three to four of the six potential circular economy activities, improving their performance and reducing their costs. These are switching to renewable energy and materials (Regenerate), sharing products or extending product life through maintenance and design (Share), improving product efficiency and eliminating waste in supply chains (Optimize), keeping components and materials in “closed loops” through remanufacturing and recycling (Loop), providing goods and services virtually (Virtualize), and replacing conventional materials with advanced renewable materials or applying new technologies such as 3D printing (Exchange). Most industries already have profitable approaches in each area.
Waste in the linear economy
The current «take-make-dispose» system generates a vast amount of waste, which is a lost asset from a circular economy perspective. In total, about 65 billion tons of raw materials entered the global ecosystem in 2010. According to the Circularity Gap Report 2020, the amount entering the global economy annually will more than double to over 100 billion tons of raw materials by 2020. Humanity’s resource use is currently only 8.6% «circular» – meaning that over 90% of our primary resources do not return to the resource cycle.
The majority of this value destruction comes from discarded materials and the consumption of primary resources in the food, mobility, housing, and commercial construction industries (e.g., new car and building materials).
These «lost assets» represent a major opportunity for cost reduction through a circular economy. Based on detailed product-level modeling, a report by the Ellen MacArthur Foundation estimates that the circular economy offers potential material cost savings of $340 billion to $380 billion per year for a “transition scenario” at the EU level.
The opportunity of the circular economy
The lifespan of consumer goods in Europe is consistently declining. A study by the European Environmental Bureau (2019) estimates that extending the lifespan of all washing machines, notebooks, vacuum cleaners, and smartphones in the EU by just one year would save about 4 million tons of CO2 emissions annually by 2030, equivalent to taking more than 2 million cars off the road for one year. The OECD estimates that more than 50% of global greenhouse gas emissions are due to the material management of resources.
Products such as cell phones and clothing are increasingly seen as “disposable” items that are quickly replaced. Systems to manage increasing amounts of waste are inadequate. In addition, 77% of EU consumers would prefer products to be manufactured in a more robust and repairable way, reducing product turnover and its negative impacts. The increasing willingness of consumers to take environmental considerations into account shows that there are many opportunities for a circular economy.
How can we support you?
Take advantage of these opportunities and become part of the solution. We would be happy to support you on this exciting path to sustainable products for the circular economy. We will be happy to take you on our interactive, agile journey. We know that big goals can be achieved with small steps. We would be happy to show you how you can introduce transformation and responsibility step by step.