Circular Economy Myths

Circular Economy Myths

Circular Economy Myths

It is commonly accepted among more neo-liberal thinkers, that products have one and only life. Its durability will determine, consequently, its existence. Let’s take an example of a smartphone. Its life cycle would be something like this: in some part of the world, natural resources such minerals, metals, water, oil, etc. are collected from the earth itself. Those raw elements are sent to factories elsewhere, where they are transformed into electronic pieces. After that, they are all assembled following previous designs. At last, the final product, the smartphone is delivered all around the world. One year later, a brand new design is presented and the wheel begins again. The former smartphone, has by then reached its purpose in life and it is, therefore, disposed. And with him all the components, natural resources, pollution generated, time and effort invested.

Linear Economy vs Circular Economy in Five Myths

The former example is paramount of what is called linear economy, as we follow the life cycle of a product going through its various stages. Paradoxically, it reflects as well the first big myth against the circular economy. Unfortunately, the most powerful companies in the world tend to follow that idea of making, that by using and disposing materials is the only way of getting the highest profit at the lowest price invested. The circular economy, instead, looks at all the options across the chain in order to use as few resources as possible in the first place, keep resources in circulation for as long as possible, extract the maximum value from them while in use, then recover and regenerate products at the end of service life. It is focused, then, in the durability and repairability of the products instead of just making a new one with harvested resources. It is not just recycling, as critics says, since economy could be beneficially affected thanks to new alternative business models.

1x1.trans - Circular Economy Myths

Circular Economy Myths

These ‘dinosaur companies’ fear that by promoting the circular economy profit will drop, because customers will not be encouraged to buy new products. This ‘slumped profit myth’ is easily dismantled. There is business along the service life of a product. Devices will surely get broken, smashed, malfunctioned… and instead of throwing them away, the circular economy encourages people to keep products in circulation for longer, which creates business opportunities for service packages that include repairs and maintenance services and drives customer loyalty. Customers are still right, right to keep their products longer.

Linear economy followers also disagree about the likely-to-happen manufacturers bankruptcy. As it has been said before, earth has a limit on providing raw resources and actually, by the end of August all the resources are used for the year. So it is probable that natural resources used by these producers will be kept going up in the near future. This ‘manufacturers bust myth’ represents, in fact, an opportunity. Refurbishment and remanufacturing become an essential part of the production chain, and a greater circularity can also benefit existing manufacturers: there are a huge amount of materials already in circulation, they just need to be taken back into circulation. A great example about this is what Jaguar Land Rover is doing with their new cars and the aluminium used in them.

This myth is absolutely related to the next one: ‘the jobs in danger myth’.
Companies and governments are deeply concern about job growth. The linear economy is sort of stabilized, it is predictable due to years of analysis and data collected from it behaviour. Circular economy is seen as new and uncertain. Again, though, there is a new possibility here that has to be listened. According to a recent report, the World Economic Forum and the Ellen MacArthur Foundation also identified that a shift in reusing, remanufacturing and recycling products could lead to more than half a million jobs being created in the recycling industry across Europe.

Finally, the last great myth: the ‘climate change first’ myth. Critics say that if the environment is crucial, governments and companies should focus on trying to stop climate change, not the production process. In fact, all their production chains and factories around the world use the whole amount of resources that the earth can provide in one year, in just eight months. To keep up the current rhythm of production, we need 1.6 similar planet earths every natural year. According to a report from the Carbon Trust UK, the circular economy could be key in helping to reduce carbon emissions as remanufacturing typically uses 85% less energy than manufacturing, and on a global scale has the potential to offset more than 800,000 tonnes of CO2 emissions per annum.

Thought leadership series on the collaborative economy, sharing economy and blockchain, powered by Humaniq

Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience. 

how to map who you are