Disruptive weather conditions including thunderstorms have hit India, UK, US and other regions recently, resulting in a loss of lives and property. The influence of global warming is unmistakable in the erratic weather patterns and the catastrophic weather events of recent years and may worsen in the coming days, if the right measures are not put in place along with immediate action. The good news is that governments and companies are cognisant of the situation and are aligning their business goals, vision and mission towards containing and reversing climate change. Adoption of a circular, regenerative and sustainable business model is one such option which we can exercise.
It is important for us to acknowledge that unplanned, unbridled urbanisation and industrialisation may push the Earth faster towards doomsday. Modern business requires the understanding that resources are finite, and that to avoid disruption and other risks, companies must adopt new, circular ways of thinking about how to produce goods and services that are truly sustainable. The need of the hour is to realise that efficient deployment of resources, as well as maintaining systems and components at their highest levels of utility are well worth the time and effort to achieve sustainable growth.
Moving to a circular economic model requires a tremendous shift in thinking, away from a sole focus on the financial implications of business to one that considers long-term sustainability. In a circular economic model, systems, procedures, facilities, and practices are created and managed in such a way that they can continue indefinitely, without exhausting the natural resources upon which they depend. At the same time, achieving positive ROI (return on investment) remains important in this model, but it is joined by the imperative to use natural resources responsibly. The model advocates the 5R approach — repair, reuse, refurbish, remanufacture and recycle — that goes beyond the traditional 3R’s (reduce, recycle and reuse) of linear economic thinking.
Sustainability and savings
Striving to ensure that resources are used as efficiently as possible, and ensuring that anything of value is put back into the larger cycle rather than being prematurely discarded, is logical on almost any level and in almost any time frame.
Analysts estimate there could be savings of more than $1 trillion annually, globally, by adopting circular economy practices. This model is especially important because while all resources are limited, demand rises exponentially. Going by the prediction of the World Business Council for Sustainable Development, against the 50-billion-tonne demand for resources in 2014, total demand will touch 130 billion tons by 2050 — overexploiting the Earth’s total capacity more than 400 per cent.
When Ellen MacArthur established a new world record in 2005 for the fastest nonstop solo sailing trip around the world, it opened Ellen’s eyes about what it means to manage with limited resources. The wanton waste she witnessed worldwide ignited Ellen’s passion to work for weaning the global economy away from a flawed operating system of mindless consumption to one that drives the regeneration of natural capital.
Ellen realised the traditional linear economy relying on using and then discarding raw materials was doomed. Instead, she has, since, been espousing a circular economy, mimicking complex environmental systems, which is restorative as well as regenerative in design, based upon resource constraints. Today, companies, cities, universities, innovators and other entities are aligned to her part of the Foundation’s Circular Economy 100, which works with diverse stakeholders in developing collaborative solutions to address severe economic and resource constraints.
Opportunities in transition
The transition to circular economy now represents a $4.5 trillion opportunity. But this cannot happen overnight, the process requires patience and perseverance. Although achieving positive ROI is significant in the model, it is helmed by the need to deploy natural resources judiciously and eliminate waste. There is also a clear differentiation between renewable resources, for example, wood, and ones with finite supply, such as minerals.
The importance of avoiding waste is highlighted by an European automaker, which has been using remanufactured parts. Consequently, ‘waste’ such as gearboxes, injectors, injection pumps and turbo-compressors are remanufactured at up to 50 per cent less cost than newly-manufactured parts. Moreover, no material is sent to landfills and far fewer resources are used in remanufacturing as against new production: 80 per cent less energy, 88 per cent less water and 92 per cent less chemical products.
Given such successful examples, it is up to corporations across the globe to embrace circular economy and positively influence other companies in adopting comprehensive product life-cycle sustainability best practices. Sustainability and ROI are enhanced with the sharing of methodologies for making a longer-life product that can be refurbished and remanufactured when required and by preserving the inherent value of waste materials. For instance, US carpet manufacturers are using innovative design systems to simplify the manufacturing process and material inputs, whereby recycling later becomes economically viable.
As a global specialist in energy management, Schneider Electric too has taken multiple steps towards circularity including implementing a system for recycling sulphur hexafluoride from equipment at the end of its useful life, both protecting the atmosphere and ensuring an ongoing supply of this useful dielectric material. We are also converting older manufacturing units into a central hub for repairing/refurbishing uninterruptible power supplies, which are prime candidates for periodic refurbishment and offering industrial repair services for different brands of electrical distribution equipment 40 years or older, extending the equipment’s useful life and reducing the risks linked to equipment failure.
The circular economy model allows forward-thinking organisations to act as valued partners in guiding like-minded companies in joining the movement towards a sustainable future. Being part of the circular economy makes great business sense as it can help in meeting global development goals sustainably. As a country we have demonstrated tremendous commitment to addressing the climate change and the need to shift to a low carbon economy — the circular model helps us take our commitment towards fulfilment.
(The writer is zone president and managing director, Schneider Electric India)