Home Digitalisation 5 Key Areas where circularity creates value from waste

5 Key Areas where circularity creates value from waste

The food we eat, the clothes we wear, our plastics and electronics, and the machines that make it all contribute to the biggest modern challenge for humanity – climate change. These sectors produce exorbitant amounts of waste, and when waste decomposes, it emits the greenhouse gases creating global warming and climate change.

A shift from the current linear take-make-waste approach to a circular model would create the necessary framework to halt these destructive trends and lay the foundation for a regenerative system that eliminates waste. In a circular economy, resources and products stay in use for as long as possible before being recycled or regenerated into new products. To speed up the pace of change, the Platform for Accelerating the Circular Economy (PACE) launched the Circular Economy Action Agenda, which helps businesses and government agencies think of waste as a valuable resource, find different business models to reduce dependence on scarce resources, and generate innovative services that grow revenues.

The PACE Action Agenda details five key areas where businesses, governments, and society can drive a faster transition to circularity:

The food we eat

Food is a very intimate thing. We put it inside our bodies, yet we seldom think about where it came from or how it got to our tables. The industrialization of agriculture has led to 75% of food coming from just 12 plant and 5 animal species, greatly reducing biodiversity. At the same time, climate change and other factors are leading to mass extinctions of animals and insects around the globe, which also impacts food crops.

The first challenge is to change what we grow and how we grow it. The second is to reduce the mountains of food wasted at all stages from field to fork. If all of the current food loss and waste was collected and compared with that of the countries of the world, it would be the third largest greenhouse gas emitter in the world.

The PACE Action Agenda for Food includes transitioning to healthier diets rich in fruit and vegetables, ramping up regenerative agricultural practices, and integrating food loss and waste more broadly into the UN Sustainable Development Goals.

Technology plays a key role in implementing the agenda. Digital farming practices, for example, can lead to better decision-making. But perhaps the greatest role of technology is to use data and information to ensure transparent supply chains and shift consumer behavior. The good news: people are becoming passionate about food waste and are actively driving change in the industry.

The clothes we wear

Who doesn’t love a new outfit? But it seems the thrill is fleeting for many: the average consumer throws away 31 kilograms of clothing per year, most of which ends up in landfills. That is a lot of waste. According to the Ellen MacArthur Foundation, the textile industry will account for 26% of the world’s carbon footprint by 2050.

Circularity for fashion and textiles starts with resources – reducing the use of water, energy, raw materials like cotton, and toxic substances – and ends with recycling, reducing, and reusing textiles to prolong their lifecycle.

The PACE Action Agenda for Textiles highlights the need to design for longevity and recyclability. After all, waste and pollution are the result of design flaws in either the production system or the product itself (or both) – 90% of environmental impact can be eliminated during the design phase of a product. A circular model would also impact employment through a shift from farming and manufacturing to more jobs focused on repair, resale, sorting, and recycling. This provides an opportunity to improve the working conditions of people working outside formally controlled environments.

Fortunately, consumers are becoming more and more knowledgeable and passionate about this topic. But change won’t happen automatically. Targeted efforts are needed from governments, companies, and civil society. The Circular Clothing Action Plan, for example, is an initiative in the UK and Denmark that develops “blueprints” to help national agencies and enterprises join forces to use resources more sustainably by evaluating the entire lifecycle of products and services.

The plastics around us

The problems caused by the proliferation of plastics are well known. To make matters worse, COVID-19 exacerbated the magnitude and urgency of this challenge, with items like take-out food containers and personal protective gear increasing the use of single-use plastic products by up to 300%.

The PACE Action Agenda for Plastics suggests eliminating plastics that can’t be recycled and designing plastic packaging for reuse and recycling. Consumers need to understand why reuse is important and communities must invest in better collection systems and recycling facilities. And the market must become more competitive to stimulate the recycled plastics supply chain.

There are many groups working towards circularity in this area, such as the Global Plastic Action Partnership launched by the World Economic Forum. Enterprises around the world are joining in on the action:

  • Adidas is selling shoes that are made from ocean plastic and are 100% recyclable.
  • Grocery stores are moving away from single use plastic bags and allowing shoppers to fill their own reusable containers with refillable items, reducing the impact of single-use packaging.
  • The Coca-Cola Company is teaming up with competitors to speed up the recovery and recycling of plastic and reduce the amount of new plastic in the market.
  • As part of its Plastic Cloud program, SAP is connecting buyers with suppliers of recycled plastics and plastic alternatives through a global marketplace based on its Ariba Network, the world’s largest business-to-business network. This came about through a collaborative engagement at the Ocean Plastics Leadership Summit between SAP and brands like The Coca-Cola Company, Nestlé S.A., and the Proctor & Gamble Company.

The electronics we use

Everyone loves their electronic gadgets, but e-waste represents the fastest growing waste stream in the world. Less than 20% of electronic products are collected and recycled, and raw materials like iron, copper, and gold valued at US$57 billion were lost through e-waste globally in 2019.

As with textiles and plastics, about 90% of the total environmental impact of a product is determined in the design phase. Electronics must be designed for durability and ease of upgrade, repair, and disassembly to facilitate recycling.

The action plan in this area suggests effective collection systems and greater investments in recycling technology and facilities. More importantly, consumers must be educated about the hazards of e-waste and the importance of recycling. Apple is an exemplar in this area, informing customers and taking back products for recycling. The company plans to become carbon neutral across its entire business by 2030.

Batteries can power sustainable development. However, the way materials are sourced and how this technology is produced and used must change. One exciting project is the Global Battery Alliance, a public-private partnership with over 60 member organizations. It aims to reduce emissions in the transport and power sectors by 30%, create 10 million jobs, and provide 600 million people with access to electricity as part of the Paris Agreement.

The capital equipment we need

One sector is well ahead of the pack in terms of embracing circularity. Producing 7.2 million tons of raw materials every year from high-value metal and mineral resources, capital equipment includes the buildings, machines, and infrastructure that keep society running. It includes everything from computer servers to medical scanners, power plants to agricultural equipment. These products are expensive to produce and purchase, and are designed to stay in use for decades. Because of the higher value at stake, this sector is leading the way in its transition to a circular company and has many lessons to offer.

Once again, the action agenda in the sector begins with design, with a special emphasis on materials. Concrete, for example, is the most destructive material on earth, yet it is the foundation of modern development, destroying natural habitats. By some estimates it outweighs the combined carbon mass of every tree, bush, and shrub on the planet. Durable, yet sustainable, materials can help extend the use of buildings without harming the environment. And machines, cars, and appliances should be refurbished, remanufactured, or repurposed rather than incinerated or discarded in landfills.

Digital technology can transform the way components and products are made and managed. Technology can be used for monitoring and optimizing a product’s life and managing reverse logistics (recovering items for reuse or recycling) while sharing information across the value chain. Subscription models that offer products as a service – leasing cars or machinery, for example – are excellent examples of circularity in action. Firms are paid for the service they deliver, which decouples material use from value creation. This means the provider designs, produces, and maintains the product, offering more opportunities for going circular.

One noteworthy initiative in this area is the Capital Equipment Coalition for Europe and North America, a partnership between companies like Philips, Microsoft, SAP, and others to share best practices and create solutions that help drive a circular economy.

For the Ellen MacArthur Foundation, which aims to accelerate the transition to a circular economy, this is the decisive decade for changing the world. Thanks to the efforts of the foundation and its network of partners like PACE, in just one decade, circularity morphed into a bigger idea than just sustainability or going green; it is now the guiding narrative for the economy of the future. As these examples demonstrate, when we adopt a circular economic model, we can create value and new opportunities from waste and help minimize the existential threat climate change poses to humanity.

By Judith Magyar

Source: SAP Insights Portal, the home of SAP peers, experts, and leading thinkers from around the world for sharing compelling insights about business and technology.