Earlier this year, the UAE established a federal circular economy council to generate new economic opportunities, reduce the use of natural resources and protect the environment. In this piece, Nour Sleiman, co-founder and chief marketing officer at UAE-based Cartlow, a re-commerce website explains the impact and importance of the circular economy.
Transitioning into a circular economy is not solely aimed at minimising the negative impact of a linear economy, but also on the overall health system of the economic activity. Shifting from a ‘take, make, use, dispose’ to a ‘make, use, return, re-use’ model would require the dedicated contribution of organisations, individuals, and businesses together – large and small – to work effectively at all scales. This model shift will generate new business and create economic opportunities while contributing positively to the environment as a whole.
Nowadays, the earth’s raw materials are increasingly consumed at a large scale to generate the products that we use on a daily basis. According to a report by the OECD, approximately 50 per cent of greenhouse gas emissions are generated through this process. Furthermore, GCC countries generate about nine million tonnes of scrap metal per year, with plastic and metal waste rising at far faster rates than the global average according to Strategy&. We have seen many global initiatives shift towards a circular economy. A prime example is the UAE, where it recently adopted the Circular Economic Policy to regulate the use of natural resources and its approach to achieve sustainable governance.
Beyond the environmental benefits, where economies can reduce carbon dioxide emissions by 10 to 12 million tonnes per year, resulting in significant environmental benefits, a circular economy presents a large potential for economic growth. According to a McKinsey report, businesses can witness an increase in revenues through adopting circular activities, such as dissembling already functional product parts and re-using them to make new products; which can increase gross domestic product (GDP). It is also vital to note that as the world population grows, the demand for raw materials grows along with it, and unlike a linear economy, a circular economy’s need for materials is lower, therefore, it is likely to save up to 70 per cent of raw materials.
Through development, regulation, and organisational contribution, the potential for new job creation increases with a circular economy model. If GCC businesses prioritise recycling at 40 per cent, it is estimated that 50,000 new jobs and 15 per cent higher operating margins can be achieved, especially through specific value chains according to Strategy&. Although the UAE is widely known as an innovation and startup hub, adopting a circular economy mindset will further encourage new businesses to discover and invent new ideas, methods and processes that will reduce costs (operationally) and increase revenues (for products). As new businesses open to the prospect of supporting a circular process, a new strategy will have to be implemented. That is, a new process involving re-using, repairing, refurbishing, and remanufacturing practices, requiring employment of new manpower with various skill sets.
The circular economy model does not only rely on recycling. It is important to note that today, due to the exponential population growth, there are billions of tonnes of waste which are generated every year, and it is starting to surpass the global recycling industry’s capacity. Recycling products involve transporting, sorting and recycling, all of which exert immense pressure on the environment’s sustainability. Vast amounts of energy are consumed throughout the process which create a carbon footprint. Moreover, a large amount of waste ends up in landfills and is not recycled, further contributing to environmental pollution. On the other hand, a circular economy promotes a longer life cycle for products through efficient re-using, repairing, and refurbishing processes. If the aforementioned is not possible, then the product parts will be harvested and remanufactured, after which, whatever is remaining, will move to be recycled with the aim of diverting the waste away from landfills. Through this sustainable process, no waste is dumped and less energy is consumed.
There is a massive potential for adopting a circular economy model in the long-run, where we should look at generating capital from our waste rather than focusing on reducing it. By rethinking and reproducing the products and components of everyday consumer needs, we can create safe and helpful materials to replenish the earth’s raw materials. When it comes to electronics, the metals do not biodegrade over time, as such we ought to find a way to recycle valuable metals and alloys to maintain their quality, and make them more useful beyond the products’ shelf life.
However, a circular economy has its own set of challenges as well, since consumers have become very accustomed to a linear economy nowadays, it can be challenging to switch to a circular economy. To tackle this issue, businesses and organisations can conduct initiatives to encourage consumers to participate in various circular-based activities, which include purchasing used products and materials.
Alongside promoting a change in consumer behavior, another challenge lies within this region’s ecosystem gap. Many companies lack the processing capabilities to commit to reselling an already sold item, and as such, they will have to implement new processes and commit to taking extra measures to enhance the overall cycle and prospect of bridging this gap. Cartlow was launched with the aim to empower a circular economy through a full reverse logistics solution that will bridge this market gap within the region. Through various programmes and channels, it is set to tackle the challenges arising for retailers, distributors and leading e-commerce players while benefiting consumers and the environment. Cartlow is partnering with retailers and leading e-commerce players to manage their returns, helping them maximise their retrieval rates while diverting waste away from landfills and leaving a positive impact on the planet.
Today’s goods can become the resources of tomorrow. Instead of discarding products, we should adopt to return, renew, refurbish, regenerate and resell them. The UAE government has started taking measures to divert 75 per cent of municipal solid waste away from landfills by 2021, which is outlined in the National Agenda of UAE’s Vision 2021. It may seem as if the most significant commitments to achieve these goals lie within governments and big corporations; however, there is also an opportunity for every individual and business to contribute to the shift towards a circular economy. It is all about reconceptualising the operating model by uniting companies that set up our economy and foundational infrastructure to envision a new roadmap for a circular economy.
Originally Appeared On: https://www.wamda.com/2021/05/importance-potential-impact-circular-economy