5 REASONS TO THINK ABOUT CIRCULAR ECONOMY IF YOU ARE AN ENTREPRENEUR


Circular economy vs linear economy graph
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Source WWF’s Living Planet Report 2016

Our planet has finite resources and 3 planets would be needed to satisfy the needs of an estimated population of 9.7 Billion people by 2050. The current linear economy system based on an unlimited exponential growth and a take-make-dispose model is not sustainable and cannot guarantee the survival of businesses whose supply comes from non-renewable resources.

It is in this context where the Circular Economy appears as a way of decoupling growth from resource constraints, in other words, an economy that optimizes the resources use and generates zero or minimal waste and whatever waste it generates can be used as an input for another business.

A Circular Economy could create 3 million jobs in the EU by 2030 

But a Circular Economy not just implies a more efficient use of resources, also a wide range of opportunities for entrepreneurship. Latest studies predict that 3 million jobs could be created in the EU by 2030.

Forecasts are so attractive that both, the public and the private sectors are firmly betting for this model. As proof of this, the European Commission has allocated EUR 6 Billion to support the Action Plan for a Circular Economy, as well as the big corporations are developing their circular economy strategies, such as Adidas or Dell, as examples among many

In this transition towards a Circular Economy, entrepreneurship is a key driving force and these are the five main reasons why you should consider circular business models if you are an entrepreneur.

  • Growing trend

Environmental economy graph

Many are the indicators that point towards a greener future: The growing trend of the environmental economy (Figure); the sustainable construction sector, which expects to duplicate the number of certificated housed by 2018; the electric vehicles market, with a 11% growth rate by 2022; or the organic food market, which increased a 7,6% last 2013 in the EU, etc.

In the same direction, the consumers’ concern about minimizing their consumption’s footprint is steady growing. A study from the EC revealed that 77% of European consumers are willing to pay higher prices for environmental friendly products or services. Trend that has also reached the Public Administrations, which are little by little implementing criteria of Green Public Procurement.

Although all these are good news, the green economy has a limit capacity to solve many of the social challenges our society is facing. It’s necessary to go one step beyond and to aspire not just to a greener future, but also a circular one.

  • Costs savings

By taking a circular approach, businesses from different industries can save up an average of 40% in material costs just recovering and reusing spent materials and products, achieving a final price up to 30% cheaper. For example, a refurbished washing machine could have a material cost reduction up to 60% and a mobile phone up to 50%.

  • New niche markets 

The Circular Economy creates many opportunities in the areas of Eco-design, waste revalorization, upgrading, recycling etc. but, even when the main purpose of this approach is closing the loop, not all the entrepreneurship possibilities are limited to the product/resource life cycle

Some other circular business chances include those which aims at a lower dependence on resources or minimizing the contaminant emissions. This includes renewable energies or energy efficiency, as well as the services economy like product renting or repair & maintenance services (Fairphone), collaborative economy (BlaBlaCar), marketplace platforms for second hand items or subproducts, selling and buy-back models etc.

  • A higher quality economy

Against the job quality loss that is affecting to the European Union, the Circular Economy promises high quality and long-lasting jobs that improve conditions for workers in groups where short term, unstable contracts are increasing, especially among the young population. A study about CE employment in 4 of Europe’s major manufacturing economies found that CE workers are less likely to be underemployed with higher job satisfaction and longer tenure (> 20 years).

  • Environmental value creation

Our planet will definitely be relieved with a circular economy. Experts state that apart from reducing waste generation and our dependence to energy and natural resources, this model could bring 70 percent cut in carbon emissions by 2030, contributing thus to achieve The Paris Agreement goals.

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