What even is the circular economy?
“Circular economy” is a phrase that’s coming up with greater regularity in relation to brand’s business models and mission statements – but what does it mean?
If we want to beat climate change, we need to consume less stuff. That’s a widely accepted truth – but for companies that are in the business of selling that stuff, it poses an existential challenge. How can you keep selling new products to new customers, while also reducing your environmental impact?
In a response, an increasing number of direct-to-consumer businesses are embracing the circular economy and finding ways to reduce waste, reuse materials and recycle products at the end of their lifetime.
The “circular economy” refers to a model where products are kept in use for as long as possible and, once we are done with them, as much raw material as possible is extracted for reuse.
As we work towards this system, a number of businesses are pioneering certain elements of the circular philosophy. Each of these models has its challenges – creating new materials from waste products can guzzle energy, while scaling a “milkman” refill model beyond a small catchment area can be expensive – and it often falls on consumers to do the research and decide what form of “not quite perfect” they are happy to accept.
Here, we look at five ways brands are interpreting circularity, and ask: how much impact can these efforts really have?
Providing products that replace single-use items is an area of focus for a number of businesses: think Dame’s reusable tampon applicator, or Stasher Bag’s alternatives to sandwich bags and cling film. Worldwide, it’s estimated that as much as 180 million tons of plastic is produced every year for single-use purposes, so getting people to switch to reusable products could have a potentially huge impact.
Inspired by the neighbourhood milkmen who were prolific in the 1950s, several modern businesses are trying to rejig the model for today’s consumers. Enter oat milk, sparkling sodas and laundry products delivered to your door, with the packaging picked up and refilled when needed. In 2019, TerraCycle partnered with consumer goods conglomerates including P&G and Unilever to launch Loop, a refill service for brand-name grocery products.
Why buy new furniture and clothing when you can rent it? Particularly when it comes to clothing, rental, resale and other sharing-economy models for physical goods are hoping to tackle the issue of overconsumption by encouraging people to turn to second-hand, but still good quality, items instead of buying new.
In 2019, it was estimated that 32% of American household waste was recycled, falling short of the 75% that actually could have been. To help customers who are confused about recycling (or perhaps don’t have access to the facilities required to properly process some recyclable products), several brands are now taking it on themselves to offer these services. These programmes can range from small, like Everists’ cap collection service, to ambitious, like Thousand Fell’s promise to recycle its sneakers (a tricky business that we have previously covered).
According to Accenture, shifting to the circular economy could release as much as $4.5tn in economic potential by 2030, while converting 20% of the world’s single-use plastic packaging to reusable alternatives is thought to be a $10bn business opportunity.
The business case for pursuing these models is strong. But more to the point, what about their actual environmental impact? Compared to the “linear economy”, the current status quo where products are made, sold and thrown away, the Ellen MacArthur Foundation estimates that circular economy initiatives could save 7.4 million tonnes of greenhouse gasses per year in the UK alone, while also improving soil health and reducing the need for synthetic fertilisers and pesticides (used when new materials are grown).
To truly make the impact that is needed means getting to the point where products produced in this way are affordable and readily available, and not just an option for more affluent consumers. This will take serious scaling – and right now, the reality is that individual startups pioneering these models won’t be able to make the kind of impact our planet needs on their own.
Sometimes, it can be hard not to look at the 19 companies selling refillable cleaning products in the Thingtesting directory and think: “This is just more stuff.” But to end that thought there is perhaps too cynical.
Bringing these ideas to the fore and proving that consumers will actually part with their money for products made or sold in this way will help drive these models forward. The hope should be that they are soon picked up by those with enough financial and regulatory firepower to invest in, acquire or open doors for these businesses, in order to make a meaningful impact.
Thingtesting is a database of internet-born brands. We’re building the un-sponsored corner of the internet where consumers can come together to talk honestly about new things. Read more about Thingtesting here.
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