In November 2018, the Italian Market Competition Protection Authority (AGCM for short in Italian) applied fines worth five and ten million Euros to both Samsung and Apple, respectively. The reason: the two big corporations were supposedly forcing customers to update software applications that caused mobile phones to run slower – what the AGCM called “unfair commercial practice.”
Interviewed by the Spanish newspaper El País, Benito Muros, CEO of The Non-Planned-Obsolescence-Free Sustainable Energy and Innovation Foundation (Feniss), says this is a common practice. “Currently, all mobile phone manufacturers – without exception – follow this practice. When a mobile phone gets slower, users think that’s normal,” he said. “Had planned obsolescence not existed, an ordinary mobile phone would last 12 to 15 years,” he added. Today, a smartphone’s average life is two years.
Planned obsolescence is not limited to the mobile device industry. The industry and consumption boom that took place in the 1950s ignited a fast-pace global production strategy in which new technologies quickly replaced traditional old ones.
The 2010 Spanish documentary “Comprar, Tirar, Comprar” (Buying, Taking Away, Buying) (The Light Bulb Conspiracy) reported those cases. On a movie directed by Cosima Dannoritzer, a printer manufacturing company sets their equipment to stop running after some time in use. An error message pops up telling consumers the printer is definitely down, but Dannoritzer shows one should only reset the machine to get it up and running again.
What’s wrong with this economic logic of selling more at any cost is that it results in greater waste and increased exploitation of natural inputs. Besides, this does not necessarily guarantee good medium and long-term economic results.
The relationship between humankind and the environment substantially deteriorated from the mid-20th century to our present. Hence, the concept of circular economy was conceived to replace our current system’s linearity, which “produces, consumes, and discards.” Circular economy bases itself on a different logic while ensuring great economic results.
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Circular economy vs. economic and environmental issues
The concept of circular economy started being shaped by the European academic community during the 1970s, but became more prominent throughout the industry and the market over the last 15 years, mainly after our planet’s environmental issues got worse.
In an article written for the scientific magazine Nature, architect Walter R. Stahel states that a circular economy should turn end-of-useful-life goods into resources for new products and close their cycles within industrial eco-systems, while mitigating waste. “This would change our current economic logic by replacing production with sufficiency, i.e., reusing whatever you can, recycling everything that cannot be reused, fixing what is broken, and “re-manufacturing” what cannot be fixed,” he explains.
He divides the circular economy business models in two distinct groups: one that supports the reuse of goods and extends their shelf lives by means of repairs, re-manufacturing, updates, and retrofits; and the other that turns old goods into new resources through recycling materials.
According to a study by European think tank Rome Club involving seven European nations, moving from a linear economy to a circular model would yield economic, social, and environmental benefits. The report suggests three major strategic matrixes for deploying a real-world circular economy model: renewable energy, energetic efficiency, and material efficiency. Findings show that if actions are taken towards this, all countries surveyed could reduce their carbon emissions by nearly 70%, increase their gross internal product by 1.5%, and create approximately 800 thousand new job openings.
“Businesses may not show interest in this upfront, but it is no longer a trend, rather a common sense: this is the only way of keeping the industry running in the future,” says designer Carla Tennebaum, co-creator of Ideia Circular (Circular Idea) Project, an education and communication initiative designed to address the subject. “We are currently running out of some industry inputs. Starting a transition now is getting ready for future economic issues,” she adds.
According to Unicamp’s agricultural and environmental economics professor, Ademar Ribeiro Romeiro, there is a critical mission that circular economy proposes to accomplish: increasing the eco-efficiency of production processes and then producing more with less material and energetic resources, which results in fewer residues.
“Companies will find a good reason for adhering to this: cost savings. Being more eco-efficient saves inputs, energy, and raw materials – your brand and products become environmentally appealing,” he says. “In addition to the economic reason, a second driver would be ecological awareness. Companies that fail to take some responsibilities are subject to regulatory penalties enforced by law and also by the market,” he explains.
China is the leading new circular economy player
At the end of 2011, reports showed that China alone consumed more raw material than all the combined volume of the 34 member countries of the Organization for Economic Cooperation and Development (OCDE): 25.2 billion tons. According to an article published by Nature Magazine, it is expected that by 2025 China will have produced nearly one-fourth of the world’s solid waste residues.
This can have disastrous consequences on the environment. For that reason, the Chinese government introduced an environmental policy (in effect since 2015) in which the circular economy plays a leading role in mitigating both economic and environmental risks resulting from China’s huge productive capacity. Tax, pricing, and industrial policies were also put into effect, and a fund was assigned to financially support the turning of industrial parks into eco-industrial conglomerates, which are nothing more than a set of industrial districts capable of housing small, medium, and large companies to produce smoothly and efficiently under the commitment of following a sustainable development approach to achieve an economic and socio-environmental balance.
This gave rise to ten other programs designed to manage and recycle industrial waste. In 2012, the Ministry of Finance required that 50% of national industrial parks and 30% of province ones completed the transition to circular energy models and reached near-zero emissions.
In 2013, waste management and efficiency had already improved by 34.7% and 46.5% respectively, while the pollution treatment rate increased by 74.6%. Chinese achievements were even greater than those of European countries together, which traditionally stand out as environmental program champions. In 2014, China generated 3.2 billion tons of solid industrial waste, but recovered 2 billion tons of that through recycling, composting, incineration or reuse; of 2.5 billion tons of waste generated by the European Union, only 1 billion was recovered.
“The economic benefits are clear. Recycled, regenerated, and locally-sourced raw materials are usually cheaper, which increases profits. The Chinese State involvement ends up becoming an advantage. This supports the idea of how [sustainable] growth depends on the ability countries have to deploy and deliver industrial policies,” concluded researchers John A. Mathews and Hao Tan for Nature Magazine.
Success depends on engaging society
Ademar Ribeiro Romeiro thinks the circular economy may take a three-step approach: economic engagement, regulation by law, and environmental awareness of society. Businesses should take the lead of this movement due to its potential long-term economic gains, and local states and major international agreements have been working for some time on strategies aimed at making the global economy even more sustainable. Besides, citizens/consumers also play a major role in this process.
“Ultimately, both the market and the public opinion make the greater difference. Not every new eco-efficient breakthrough is also economically efficient at first: it may take years to see any results,” he considers. “Reverse logistics cases involving Apple and Samsung are an example: it is more expensive to reuse materials than to manufacture something from scratch, but society demands that kind of action.”
“We should not make consumers carry this burden alone,” warns Carla Tennebaum. “Both industry and government play a major role in rising awareness. It is the businesses’ responsibility to give consumers alternatives. One should change perspectives and deliver products that are as good as or better than traditional ones for them to circulate; after all, this is not about just saving materials, but suggesting a cultural renewal,” he says.
Examples of successful circular economy-based businesses have already been put into place. “The recycling industry itself is an example. Brazil recycles a large volume of aluminum, but poverty accounts for part of this: without formal jobs, people create income generating alternatives,” explains the Unicamp professor.
Shared services and products are probably the clearest examples of how a circular economy should work. As stated by Walter Stahel, writing for Nature, we are entering a new era in which “being an owner will give place to managing things” and “shoppers will become creators and users.”
The idea is simple: what counts is the role or service, not the product. For example, more important than owning a car is being able to move from point A to point B. That way, traveling in a shared car is better than traveling in an individual vehicle. When sharing a car, all material, energetic, and labor resources used for manufacturing these vehicles will always be fulfilling their role – not only during those two or three daily hours this would happen if the car belonged to one single person.
This logic applies to any kind of product, such as air conditioning systems, computers, and even houses. Industry leader Xerox operates this way for decades. The company does not only sell photocopying machines, but provides copying services to businesses: delivers machines, provides technical assistance, and replaces equipment when required. “It is a system that already works,” concludes Walter Stahel.
According to Pensamento do Ciclo de Vida (Life Cycle Thinking), a journal published by Sebrae, the idea on which a business or product life cycle assessment logic is built requires taking all relevant steps: “from raw material extraction to processing, production, delivery, use, and all the way down to proper discharge, with the possibility of assimilating them into new productive cycles.” Therefore, the goal of a circular economy is to systemically introduce sustainable approaches for a product, business or material, and ensure it is economically balanced, while establishing social and environmental variables that yield positive effects.
Circular economy: Six deployment strategies
A report prepared by the Rome Club in Spain, Finland, France, the Netherlands, Poland, Czech Republic, and Sweden offers some recommendations on deploying and strengthening a few circular economy features. Check them out.
Strengthening renewable energy, green design, and emissions commerce policies.
Setting goals specific to resource efficiency for raw materials.
Focusing on recycling and reuse
Strengthening recycling and reusing goals to help reduce and process waste, and setting limits to their incineration.
Engaging the public sector
Using public agreements as a way of driving new business models.
Rethinking taxation: reducing taxes on labor and recycled materials, increasing taxes on the consumption of non-renewable resources.
Launching both national and international extensive circular economy investment programs.
Conheça o posicionamento da Braskem na íntegra acessando: http://www.braskem.com/economiacircular
Content published in February 20, 2019