Exponential - Sept 6th 2015

Exponential the Skillbridge Magazine
What’s driving the circular economy?
In the US the economic advantages around cost and carbon
efficiency are making companies like Ford embrace this model.
The Michigan based auto giant cites insulation from oil price
volatility as a driver. Dell in implementing a ‘closed loop plastic
recovery’ system, points to cost savings given their use of 10m kg of
plastic a year. Environmental certifications such as LEED
advocate practices harmonious to the principles of a circular
economy and are helping drive the movement. However, questions
remain over how easy it will be to push businesses to take on extra
costs by changing processes, even if promised long-term savings.
Both Startups and Corporates are driving innovation.
Examples of companies starting to embrace this model are
visible today. Leasing and take-back schemes or in-store
collection programs are common. Swedish chain H&M’s
‘Garment Collecting Scheme’ puts old clothes out for “rewear,
reuse or recycling”. Designing products using the purest
materials, as Dutch carpet manufacturer Decco does, facilitates
reuse. More aggressive initiatives include the work of US startup
Evocative, which makes packaging out of bio-waste and the
fabric of mushroom root networks and is working on mushroombased
insulation and grow-it-yourself kits. The ‘internet of
things’ trend is seen as a boon to the circular economy movement,
by making it easier to monitor and track components in use.
What the brains think…
The potential benefits of getting away from a linear conception
of industry are massive, as McKinsey’s Markus Zils argues. In
2014, McKinsey estimated global savings on materials alone
from a circular economy at scale to be $1 trillion. However,
maximising circularity requires huge changes in business
culture – better reverse network management capabilities;
companies co-operating in the pre-competitive sphere. It also
needs "a lot of players to change simultaneously" (and ideally
governments to take the lead with procurement) writes Philips
CEO Frans van Houten. And that, he admits, is "a chicken-andegg
problem".
Key Reading
• McKinsey: Europe's
circular-economy
opportunity
• FT: Sustainable
innovation: shaped
for a circular
economy
• The Guardian: How
the circular economy
is taking off in the US
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