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The Impact of Innovation in the Circular Economy

The term and concept of circular economies have been around for decades. In its simplest form, it's an economy where waste and pollution are eliminated, products and materials are circulated and nature is regenerated. It is a holistic approach to thinking about the life cycle of the goods you produce.

Once their purpose is fulfilled, raw materials are given numerous lives through recycling, repurposing and reusing, rather than disposing of. This economic model moves away from the previous linear model, forming loops and closing the circuit. "Reduce, reuse and recycle" are the cornerstones of this model.

"The circular economy is a compulsory choice for a sustainable world."

- UNECE Executive Secretary Olga Algayerova.

This economic model moves away from the traditional "take-make-waste" culture of a linear economy and attempts to uplift the economy from a social, economic and environmental standpoint.

A circular economy is vital to tackle the looming issues of climate change, dwindling finite resources, pollution, waste, and the need for sustainable energy.

The Circular Economy: How it Started and How it's Going

We cannot achieve a circular economy overnight with the cooperation of one sector alone. It requires help and collaboration from all industries, as well as governments. Some industries are trying to implement circularity in their production processes to make their products more sustainable while reducing waste and energy consumption.

The general shift towards more sustainability in production and consumption is undoubtedly helpful to establish and promote circular economies.

This shift is partly due to consumer and producer awareness of the current linear "take-make-dispose" model's environmental effects.

It is also partly due to governments and organisations such as The United Nations promoting more sustainable economic policies, guidelines and incentives.

Bertrand Piccard, UN Environment Goodwill Ambassador and solar aviation pioneer, warned that today's economic model is "leading us to environmental chaos, climate change and depletion of natural resources".

We can trace the emergence of the concept of circular economies back to the early 1960s. The idea of circularity has naturally been linked to ecological conservation and sustainability. Despite the concept and theory having been around for decades, the implementation has been far slower. We've seen tangible progress and initiative in circularity in the last 20 years. The reality of our current economic model appeared to be no longer sustainable, as evidenced by the global waste crisis and diminishing resources.

  • 1966: Mention of the circular flow of energy and materials made by leading American economist Kenneth E. Boulding. He explained we should be in a "cyclical" production system in his essay "The Economics of the Coming Spaceship Earth".

  • 1976: A paper was presented to the European Commission, "The Potential for Substituting Manpower for Energy", by Walter Stahel and Genevieve Reday. It outlined the vision of an economy in loops (circular economy) and the positive impact on job creation, economic competitiveness, resource savings and waste prevention.

  • 2008: China became one of the first countries to adopt a circular economy law and included the concept in its 14th Five Year Plan for 2021-2025.

  • 2015: The United Nations introduced 17 Sustainable Development Goals, which encompass elements that will lead to more circular economies while making the planet more sustainable.

  • 2019: The Japanese Presidency of the G20 and the current Italian Presidency pushed global action to move towards more circular economies.

  • 2020: The European Commission launched the Global Alliance on Circular Economy and Resource Efficiency. It promotes circular economy principles through global trade negotiations and in its partnerships with African countries.

Businesses and industries now realise that a circular economy is necessary. Not when, but how.

Innovation is the critical solution to rework existing systems and come up with new systems.

We need to reinvent and reconfigure systems to meet new models and demands of sustainable development while forging a circular economy.

Innovation in the circular economy is necessary to increase the lifespan of the raw materials used for production. If we find ways to repair, repurpose, recycle, upcycle or re-manufacture products, giving them a new lease of life, less raw materials will be needed in the future. Subsequently, there will also be less waste produced.

For example, one industry that can greatly benefit from a circular economy is the technology sector. As we become a more tech-savvy, tech-advanced society, the accumulation of e-waste has become a massive problem. The ability to repurpose and recycle this e-waste is paramount.

Many businesses are realising this need for innovation and seeing that there is still growth potential. There is a whole separate industry that can be grown up around innovation.

The Importance of Innovation in the Circular Economy

Our past is catching up with us. The focus has been on economic growth to create products, services and systems, pushing environmental and social considerations out of the picture.

As Roleen Sevillena, Programme Manager at Circular Cities Asia (CCAsia), commented, "If we stick to business as usual, we will only perpetuate the unsustainable systems existing in the world today."

“To fundamentally shift towards sustainability, we need to rethink how we do business. And this also requires new ways of doing things.”

Innovation education is critical in bringing these systems to sustainability and helping transition to a circular economy. Roleen continued, "To move away from business as usual, we need to think holistically and innovate with a circular mindset. We need to move beyond the take-make-use-waste economy and learn/teach different ways of doing business."

Roleen further went on to explain why this is important for entrepreneurs who want to create purpose-driven businesses. "Instead of focusing on just profit, entrepreneurs are now thinking about a triple bottom line: people, planet and profit."

Profit takes the forefront in traditional business education. Innovation education challenges entrepreneurs to think beyond the conventional framework of doing business. The Programme Manager added, "With a holistic perspective and a circular mindset, entrepreneurs can uncover new possibilities and opportunities to create a purpose-driven business."

CCAsia has been making headway in the innovation education space. Roleen explained that their new flagship programme, the Circular Campus Programme, introduces circular innovation to campuses across the Asia-Pacific region.

They present interactive learning opportunities with circular economy experts and industry leaders for participating university students, faculty, and staff.

Along with teaching participants about circular innovation via webinars, workshops and a toolkit, an innovation competition is held to encourage students to find scalable, circular solutions for problems on campus.

Roleen remarked that within the 7-week timeframe of the innovation education programme, the quality of circular ideas that the students submitted for the competition was impressive. Each team dug deep into the problems on campus they wished to solve and thoughtfully created solutions considering environmental, social and economic impacts.

"With this first offering of the Circular Campus Programme, we saw the positive impact of innovation education in action. Teaching circular innovation resulted in a shift in the mindset of doing business differently and more sustainably," shared Roleen.

How Circular Cities Asia Aims to Address Innovation and Investment in the Circular Economy

In conversation with CCAsia's Founder, Shiva Susarla, he gave some insight into what he sees as the current innovation trends in the circular economy.

He mentioned that interest in the circular economy has exploded globally in the last 2-3 years. "It is now being touted as the most likely development model that could help us battle climate change and problems associated with waste and pollution. The most prominent innovation trends in the circular economy seem to be in the areas of food, fashion and material recovery from urban waste streams," Shiva shared.

Shiva went on to give some invaluable advice for any innovators in the circular economy. He noted that circular economy innovation is not easy, adding, "Innovators have to be leaner, more collaborative, and agile than innovators from conventional sectors. This will require circular economy innovators to identify early adopter segments, validate their solutions creatively and think about scaling the business from the get-go."

“Innovation in the circular economy is interdisciplinary and ‘phy-gital’ and has deeper valleys of death. So innovators have to be cognizant of these factors."

Shiva commented on investment in the circular economy, observing that early-stage investment has exploded into all sectors in recent years. Funding is always available for business models and technologies with commercial potential, at least at the seed stage.

As an investment asset class, the circular economy is still not mainstream. "But many circular economy startups are getting funded by AgFood Tech, fashion, built environment and recycling technology investors."

As for CCAsia's future aims and hopes for this area, Shiva outlined, "We wish to instil key innovation models and approaches among young innovators around Asia-Pacific by designing a range of open innovation programmes and workshops to democratise access to innovation methods and foster a community of innovators and entrepreneurs."

He further went on to explain, "CCAsia's ultimate objective is to build a bottom-up innovation movement to redesign and reimagine every linear economic model as a sustainable circular economic product or solution."

What's next for the innovation journey in the circular economy, and how can you join?

If you would like to shift towards a more circular business model, Circular Cities Asia can help. Contact us to see how we can support you on your journey towards innovation in the circular economy.


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