As the EU waits for the latest draft of the circular economy legislation what does the term mean, and hoe might it affect the IT sector? Richard Rawcliffe explains.
Richard Rawcliffe is executive director and general manager at Dell UK.
Today, how many of us don’t think twice about throwing away a plastic bottle or cardboard box rather than walking an extra few metres to a recycling bin. With our natural resources dwindling, this behavior has to change and it has to change both quickly and on a global scale. In its recent Living Planet Report, the Global Footprint Network estimates that we have far exceeded the Earth’s capacity to sustain our current levels of consumption. Now it is time for companies to step-up and break through the biggest barrier to a cradle-to-cradle sustainable system – the mindset of ‘take, make, waste.’
So what does a cradle-to-cradle system look like? The circular economy model allows the maximum value to be extracted from resources by enabling them to be used and reused to their full potential through company partnerships and new services. The idea is so simple and logical that if we were to start from scratch, we would build it into everything we do. Elements of a more circular economy are already emerging today. By taking a systems approach to find efficiencies and eliminate waste, pioneers of the circular economy are on their way to realising what could be a multi-trillion-dollar opportunity.
This approach is more than just old-fashioned recycling – it is a business model that puts the design of products at its centre, with reclamation in mind. It uses materials that can be reduced to their smallest components after they’ve been used, with the parts re-inserted into the production chain instead of being discarded. Just as we try to reduce our use of plastic bottles, which take 450 years to decompose, the concept of circular economy needs to apply to all products.
In 2014, the Ellen MacArthur Foundation and McKinsey & Company estimated that shifting to a circular economy model could add over $1 trillion a year to the global economy by 2025 and create 100,000 new jobs within the next five years. But if we are to adopt a circular approach to the economy, we need an infrastructure capable of collecting and processing material appropriately. And I’m more convinced than ever that three simple suggestions can help us all make this transition from end-of-life to end-of-use, sustainably and profitably:
To produce virtually no waste, all materials must be re-used and recycled to form a closed loop, global recycling infrastructure. Aluminum is a great example: according to Alcoa, 75 percent of aluminum produced since 1888 is still in circulation today. We need more examples like this.
Meanwhile, the tech sector only recovers about 15% of its products. We need to drive more robust e-waste collection efforts globally – and that means we need to work together as an industry and with governments and local communities to build out the infrastructure. Businesses and consumers need to do more, but it needs to be easy. That’s why we’ve partnered with the U.N. Industrial Development Organization (UNIDO) to create awareness and encourage new recycling facilities in the developing world.
We’re already seeing how innovative business models that take advantage of “spare capacity” are transforming the economy. Airbnb, Uber and other sharing sites turn us into entrepreneurs, getting more out of the unused time in our house, car, and more. In these cases, mobile computing, cloud services and other powerful technology solutions are making these new business models both practical and scalable.
In fact, technology is the backbone of this innovation and entrepreneurism. By way of example, the treasure-trove of data created by the Internet of Things will reveal hidden potentials, while increased access to the compute power needed to analyse the data will make it easier for entrepreneurs to innovate
Transitioning to a more circular economy won’t happen in silos. It will only happen with significant collaboration. Within industries, across sectors and across borders, we need to look at how collaboration can create shared value so all participants benefit. This will mean re-examining what we consider “waste” and re-thinking existing business processes.
For instance, is your waste someone else’s treasure? How do we create an ecosystem where similar and different industries are trading waste? As an example, Dell and its suppliers are already buying wheat straw – the waste after the harvest – from Chinese farmers and turning that into packaging in a process that uses less water and energy than traditional cardboard.
Transitioning to a circular economy is not possible if we do not have a little trust in each other and a willingness to look at how we can all benefit. We need to put a new lens on our approach to business processes and production – a lens that helps us remember that materials are an investment, not a waste product.