What Are 9 Huge Drivers of the Circular Economy?

The shortage of raw materials and exploitation of scarce resources cannot go unnoticed. But sometimes, bad can turn into good.

Let's take a look at what are 9 huge drivers of the circular economy, right now.

What is the Circular Economy?

Before we jump in...

Let's make sure that we are on the same page when it comes to the circular economy.

The circular economy is a model of production and consumption that endorses sharing, reusing, repairing, refurbishing, and recycling raw materials and products for as long as possible.

This is achieved by pushing products back to circularity, and reducing the chance of them ending up in a landfill.

Each year, the traditional buy-use-throw away aka linear economy dumps a massive 2.12 billion tons of waste. If all this waste was put on trucks, they would go around the world 24 times. This is largely because 99% of the stuff we buy is thrown away within 6 months.

We must find a sustainable alternative. That alternative is the circular economy.

9 Huge Drivers of the Circular Economy

The following reasons state clearly why we need to shift to a circular economy right now. A huge driver of the circular economy is the industrial aspect, that is poor availability of raw materials and components, and shortages in the supply chain.

Let's see it in more detail.

1. Raw Materials' Shortage

This urges the need for the circular economy. For example, there’s a shortage of rare earth elements needed to produce electronics. Due to chip shortage, there have been enormous delays in product delivery times. That is why companies and consumers are not getting the products they need.

2. Spare Parts of Old Products Go Unused

Spare parts of old products are not used to create new ones. We call it product mining, instead of resource mining. Using more old products in the process can increase product availability to consumers.

3. Demand Exceeds Supply

For instance, the consumer electronics space is a good example. This causes remarkable inflation and intolerable price increase all over the world. That can be solved by reusing and circulating more products.

4. Carbon Credits Limit Anti-Environmental Production

Companies must find new innovative ways of production and distribution, and the circular economy provides a great use case for that.

5. International Sustainability Rules and Regulations

International rules and initiatives, for example, the European Green Deal urge the shift towards carbon neutrality and sustainability.

6. Rise of Sustainable and Responsible Business Models

Such green business models are becoming more and more important. Frameworks such as Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDG) are at the top of business executives’ agenda.

7. Payment Models Lack in Circularity

Current payment models don't support merchants' future plans. They don’t allow the shift towards greener production and distribution. Mostly, because product reuse and recycling models are unorganised. This responsibility is often left on consumers' shoulders, which hasn't brought any long-term success.

8. Popularity of Conscious Consumption

These responsible and green movements pressure companies to use sustainable materials and ways of production to reduce the ecological footprint.

Here's proof that consumers are becoming more conscious: 70% of consumers are willing to pay more for sustainable products, and a whopping 73% of Millennials prefer to buy from sustainable brands.

9. Change in Consumer Buying Behaviour

There's clear evidence that consumers are shifting from buying products to buying solutions. Studies show that 74% of consumers prefer the experience and using products over ownership.

Untapped Potential of the Circular Economy

The market is saturated with new products, but how much of these are actually reused?

For instance, used smartphone shipments are projected to reach 351.6 million units in 2024, with a compound annual growth rate of 11.2% from 2019 to 2024. Out of all smartphones sold, new and used, refurbished and used devices made up only 14% in 2022.

Each new product leaves a footprint on the environment. That’s why it’s important to maximise the value of the products already in existance.

Production has the biggest impact on the environment, climbing up to 95% of a smartphone's ecological footprint.

How can we reduce that?

We can reduce the ecological footprint and CO2 emissions by extending products’ useful life cycle. For example, an iPhone 12 might not be an attractive product in developed countries at a certain point in time, but it can still create a lot of value in less developed regions. Product mobility and circulation is key.

Instead of buying new products, we must extract more value from second-hand devices.

What Can I Do to Drive the Circular Economy?

Let me tell you.

The circular economy is the mission and underlying principle of Fairown. We have created the tools for businesses to become green and launch circular payment modes that care about the environment. Our payment platform helps brands and retailers offer products as a service, and manage the entire product life cycle from purchase to recycling.

Combined with a sustainable product upgrade cycle, we reduce waste and make sure that products don’t end up in landfills. Instead, they get a new life in the secondary market, or are dismantled and recycled. Consumers or retailers don’t have to worry about finding a new owner or a recycling point for used products - this is conveniently handled by Fairown.

It’s important to act right now and start moving towards the circular economy, together.

If this sounds like something you'd like to tap into, we can help you on the journey. We’d be happy to chat and answer your questions!

Get in touch