Inspiring Capital recently hosted a panel discussion on the hot topic of the circular economy. Increasingly this concept is gaining traction as big corporates like Nike and Unilever endorse it. However, for many, it is still an unfamiliar concept. Basically, the circular economy minimizes the use of virgin stock resources and the production of unrecoverable wastes. It’s based on systems thinking where the “waste” of one manufacturer can become the food for another. A fuller introduction to the concept can be found here on the Ellen Macarthur Foundation's website.
At our event we had some great speakers:
- Eric Hudson - Founder & CEO, Preserve (Manufacturer)
- Ron Gonen - Co-founder & CEO, Closed Loop Fund (Private Sector)
- Kate Daly - Senior Vice President, Center for Urban Innovation, NYC Economic Development Corporation (Public Sector)
- Kevin Eckerle - Senior Research Scholar and Director of Corporate Research and Engagement Center for Sustainable Business, NYU Stern (Academia)
Together these speakers provided the perfect cross section of subject areas and the result was an awesome, dynamic conversation. This article covers the various topics highlighted by our speakers and their calls to action! We also live streamed the event so you can check out the full panel discussion here, and if you want to skip to certain topic areas, the exact minutes are noted in this article.
Business Case for the Circular Economy (see 5.10 mins)
Often when initiatives are seen through an environmental lens, it’s as though they are detached from economics. The two fields are viewed separately, ignoring the fact that they are innately interlinked with the latter relying on the former for raw materials. The consequences of this are detrimental. It puts the topic in a subjective, almost moral realm where people choose an environmental initiative because they feel like it’s the right thing to do rather than because it’s good for the economy.
Yet what’s clear about the circular economy is that environmental responsibility benefits the economy; in fact, it’s estimated that it unlocks a $2 trillion opportunity. Ultimately, it should be cheaper to manufacture using recycled materials than using virgin materials. This is precisely what Ron Gonen’s investors are interested in; for them the benefits of the circular economy are predominantly financial. In addition to cost reduction, there’s also risk mitigation – resource constraints are a reality and they result in price volatility. So if you’re thinking about the future, you need to be thinking circular. This mindset results in new revenue streams. People start seeing “waste” as opportunity, resulting in innovation and entrepreneurial (and intrapreneurial) ventures.
An added bonus comes from a reputational standpoint. With more and more people (aspirational consumers) caring about the subject, getting involved becomes great PR!
Engagement on a Consumer, Individual, Stakeholder Level (see 14.45 mins)
Be an enlightened consumer and take steps to lighten your footprint by choosing where your dollars go. A growing tide of conscious consumers, particularly millennials (but also the ‘ageless’ segment of consumers called aspirationals) vote with their wallet.
Ask questions. Where did this product come from? Where will it go when I’m finished with it? A lot of this is invisible to us, yet when you throw something away, try to remember there is no “away”! The more people ask these questions, the more corporations are forced to respond – it takes far fewer consumers than often thought to make corporations sit up and take note.
Don’t just read the physical label on products, read the digital label. Companies are increasingly investing in radical transparency, and telling the story of their products from the beginning of their supply chain to the end. You can now scan digital logos or labels on apps like GoodGuide and get the full story.
Extended Producer Responsibility (see 22 mins onwards)
Everybody in the supply chain has responsibilities, but in particular producers should be responsible for two things:
Understanding the current technologies that exist in recycling facilities
Knowing if there’s a market for these materials once they’re recycled
This way they can make better decisions about the production of their products.
Interesting fact: any product that is black cannot be recycled because the optical sorting eye at recycling facilities cannot distinguish it from the black conveyor belt!
Breakdown of Silos, Communication & Human Talent (see 32.30 mins onwards)
Right now if you talk to people at design schools across the country, they’ll jump at the idea of sustainability. They care. They want to design things that won’t leave us with more plastic in the oceans than fish by 2050. Yet, if you ask them if they know what a MRF (Materials Recovery Facility) is, for the most part they can’t answer. So it begs the question – how can they be interested in this stuff and not know what a recycling facility is?
On the other side of the equation, if you ask people at recycling facilities what’s their biggest problem they say it’s how products are being designed. Yet, if you ask them if they’ve been to talk to design schools like Pratt, they’ll generally respond saying, “What? Where?”
People need to talk to each other more, but the challenge is that this isn’t the status quo. There’s a legacy of how things have always been done and this doesn’t include designers talking to those people dealing with their products at their end-of-life.
We need more CEOs engaged with the subject. They can foster conversations across departments and even industries. We also need internal influencers and champions to help shape the new direction that companies should be going in. If the CEOs aren’t engaged, maybe these people can help get them there. Building the capacity for this kind of corporate advocacy is crucial but challenging (see 48.12 mins). The Big Four (and other large, influential companies in corporate America) need to integrate education on the technical side of waste management in more areas. Renewable energy gets a lot of attention, but there’s often a gap when it comes to waste & recycling.
Fortunately, looking to the future, we might be in luck. Given the rising tide of people interested in the subject, and the growing segment of conscious consumers, we know people care. If you’re a company and you’re not paying attention to this fact, you’re going to miss out on the best and the brightest talent! Now is the time for you to get circular!