CEO Insights: Can circular solutions save the environment?

written by former CEO / current Board Member, Wolfgang Orgeldinger, 15th January 2020, in CEO Insights

I often hear people talking about circular economy as solution for a more sustainable world, but most of them are primarily referring to recycling. Although recycling (and waste management) are integral to the system, they come in at a much later step. The circular economy aims to keep products in closed loops as long as possible, and then reclaim substances at the end of their product life, with the aim of producing zero waste.

More than recycling

Of course, recycling is good and ideally all materials should be recycled at the end of their life cycle. But recycling does not touch the root cause of waste. One shortfall of recycling is that it does not require change in product design, nor in linear production – particularly in the case of packaging, which is generally used only once and then thrown away. Material still needs to be reclaimed at every cycle, which is not an efficient use of resources. Within the food industry, recycling is also often associated with downgrading, as materials cannot be recycled to create new food packaging.

To prevent waste, we have to challenge the idea of "single-use" itself. Developing circular business models will lessen our dependency on single-use packaging. As businesses adopt this mindset, they begin moving from the linear "make-take-use" model to a circular model based on reuse.

Retain ownership and redesign for reuse

Currently, in the linear economy model, consumers buy products, including packaging. Because they then own these goods, they can do what they like with them – keep, resell, reuse or throw them away. In the circular economy model, companies retain "ownership" of their products and resources. And for anticipating what happens next, I agree with Tom Szaky, who has introduced Loop, a system of reusable delivery packaging in the US. "By shifting ownership, amazing things happen," Szaky told the World Economic Forum (WEF) in early 2019. "Products move from being disposable, where recycling is the very best option, to durable, where the key method of keeping products in the loop is reuse," Szaky said during a WEF panel discussion on sustainability.

The central principle of the circular economy is that businesses must design their products so that they can be reused again and again. Supporters such as Szaky believe that "unbelievable design innovation comes to life," along with new materials and features. Reuse pushes designers to focus on durability, instead of, for example, one-time production costs. As goods move away from being disposable objects, design facilitates their optimal handling and reuse.

When companies maintain ownership, this also creates an incentive to use materials that stand the test of time.

Developing circular business models

This idea of customer ownership supported by product (re)design are among those presented in the recent EU report: A circular economy for plastics. The authors explain that companies must rethink the role of the physical goods they produce. "Put in a wider perspective, materials – including plastics – are used to create products that serve the aims of a circular model," state the authors. By establishing pooling services – systems for deposit, transfer, collection and reuse – businesses add value to their products.

"In a circular economy, companies must rethink the role of the physical goods they produce"

Keeping materials in the loop

The report then outlines how businesses can harness the specific benefits of plastic itself, which brings us back to recycling. By maintaining ownership – or stewardship – of their products, manufacturers prevent core materials from being contaminated with other substances. When products are 100 percent recycled, zero waste is produced.

With our Reusable Plastic Containers (RPCs), IFCO demonstrates the circular economy 314 million times per day. In the fight against waste, our circular model has turned into an efficient and profitable business – and a holistic sustainability approach.

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