We Need to Move to a Circular Economy Right Now
Why are we writing about the need to move from a linear to a circular economy right now? Global trends are referring to shortage of raw materials and exploitation of scarce resources. In addition, waste islands floating in the oceans and humongous garbage mountains is not the way we should treat our planet.
Traditional way of how we produce and consume has to change.
Circular Economy Reduces Excessive Waste
Each year, our 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 partly because 99% of the stuff we buy is thrown away within 6 months. Hiding our head in the sand and reallocating waste from one corner of the world to another is not the solution. We must find a sustainable alternative.
That alternative is a circular economy.
Circular economy is a model of production and consumption, which endorses sharing, reusing, repairing, refurbishing, and recycling raw materials and products as long as possible. This is achieved through pushing products back into circularity and reducing the chance of these ending up in a landfill.
Drivers of a Circular Economy
What are the main drivers that encourage a circular economy? A huge driver is the industrial aspect - poor availability of raw materials and components, and shortages in the supply chain. The following reasons show clearly why we need to shift to a circular economy right now.
Raw materials shortage urges the need for a 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, which is why companies and consumers are not getting the products they need.
Many spare parts of old products are unused to create new ones. Using more old products can increase product availability to customers.
The demand for consumer electronics is higher than the supply. This causes remarkable inflation and price increase, and impacts macro economics worldwide.
International rules and regulations, for example, European Green Deal urge towards carbon neutrality and sustainability.
Carbon credits limit anti-environmental production and companies must find new innovative ways of production and distribution.
Sustainable and responsible green business models are becoming more and more important. ESGs and SDGs are at the top of business executives’ agenda.
Current payment models don’t support future plans of merchants, they don’t allow the shift towards greener production and distribution.
Conscious consumption and green movements pressure companies to use sustainable materials and ways of production to reduce the ecological footprint.
From buying products to buying solutions - studies show that 74% of consumers prefer experience and using products over ownership.
Great Potential for a Circular Economy
Global market trends show no signs of decline in linear production. Let’s take the smartphone industry as an example. According to International Data Corporation (IDC), global shipments of smartphones were forecasted to reach 1.38 billion units in 2021, an increase of 7.7% over 2020. The trend is expected to continue into 2022, with a yearly growth of 3.8% and shipments totaling 1.43 billion units.
The market is saturated with new products, but how much of these are actually reused? The IDC expected worldwide shipments of used smartphones, including officially refurbished and used ones, to reach a total of 225.4 million units in 2020. This represents an increase of 9.2% over the 206.5 million units shipped in 2019. 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, which is a good sign. Though, compared to the market size of smartphones sold, refurbished and used devices make up only 17%.
This is huge potential for a circular economy.
Each new product leaves a footprint on the environment. The production phase has the biggest impact on the environment, climbing up to 85-95%. That’s why it’s important to maximise the value of products already produced. By extending products’ useful life cycle, we are able to reduce CO2 emissions. An iPhone 12 might not be an attractive product in developed countries in a few years, but it can still create a lot of value in less developed regions. So, instead of buying a new smartphone, people can extract more value out of second-hand devices.
Your Business Can Become Green
A circular economy is also the mission and business of Fairown. We have created the tools for businesses to become green and circular. Our unique financing platform helps brands, retailers, and banks offer products as a service.
Combined with a sustainable renewal cycle, we reduce waste and make sure that products don’t end up in a landfill. 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 for used products or a recycling point - this is conveniently handled by Fairown.
It’s important to act right now and start moving towards a circular economy, together.
Fairown can help you on this journey. If you are curious about how to go green, we’d be happy to discuss and help.