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Elen Macarthur Foundation

 

In depth - case examples of circular products

It is evident that reuse and better design can significantly reduce the material bill and the expense of waste disposal and that they can create new enterprises and more useful products—meeting needs of new customers as the population grows. But—from an economics perspective—can these advantages match the advantages of products designed for mass production based on low labour costs and economies of scale?

From a business and consumer perspective—can producing, selling, and consuming less material be a more attractive proposition? Our treatment of these questions in the in-depth analyses that follow is in many ways a ‘sixteenth century map’ of the circular economy, a rough chart of its potential. It is our hope that this analysis will entice companies to embark on this journey, and, in that process, refine it with an ever-more solid base of evidence—not only by demonstrating its terrific potential, but also by testifying to the trials and tribulations of a transformation into the circular economy.

To demonstrate the economic opportunity of such a model, The Foundation and its partners have analysed the options for several different categories of resource-intensive products—from fast- moving consumer goods such as food and fashion, to longer-lasting products such as phones, washing machines, and light- commercial vehicles, and including single- family houses as an example of a long-life product. Because the service sector is not a converter of materials, services as such are not directly affected by the adoption of circularity principles.

Thus we do not cover services in our analysis—although it is worth noting that as a purchaser of products, the sector could have a considerable impact in bringing about change, and of course the circular economy would greatly expand the need for services. While the shift towards renewable energy is a key principle of the circular economy, a full assessment of the impact of a circular transition on the energy sector is also outside the scope of this study, and the analysis excludes energy and other utilities as producing sectors.

Instead, we have selected a broad range of manufactured products to illustrate the various design choices and business model changes that may help companies reap the benefits of a more circular product and service portfolio. For some complex products, we go into more detail, because it is here where the case is most difficult to make. The sector focus of these analyses is on manufacturing and, here, the final production stage of the value chain. In other words, we do not analyse the economic effects on upstream participants in the market. Within manufacturing, we examined an intentionally wide range of product types. Given the starkly different characteristics of short-lived manufactured goods (such as, say, food packaging) versus long-lived manufactured goods (e.g., material used in housing construction), we intentionally chose products in both categories, as well as a mid- range, medium-lived category.

Our analysis leads us to believe that this final category, medium-lived products—and specifically, complex medium-lived products—is a sweet-spot segment for circularity. These, then, are the products we examine in full depth with our circularity calculator. The eight sectors that produce these and similar types of products represent 48.6%, or nearly half, of the GDP contribution of the manufacturing sector within the EU economy, demonstrating that circular business activities have the potential to outgrow its their ‘niche’ status and become relevant in the mainstream economy.

In the in-depth case studies that follow, we describe at length our analysis of products in our ‘sweet spot’ sectors, namely mobile phones, smartphones, light commercial vehicles, washing machines—for which we applied the circularity calculator—and power tools. We also discuss the potential for circularity across the broader economy, from the long-lived (e.g., buildings) to consumables (e.g., packaging and food products), parts of the manufacturing sector, and calculate a cascade for textiles as an example of short- lived products.

Lead image by flickr user Danny Clark

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