ANALYSIS: Time for a reality check on closing the loop

7 November 2012, source edie newsroom

Much discussion centred around navigating new models of circularity at WRAP's annual conference in London

Debate around the circular economy may have moved on significantly over the past 12 months, but for many it's still stuck in the realms of high level thinking with little counsel on how might it work in practice.

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One of the biggest practical challenges for corporations in achieving circularity is dreaming up new business models that decouple economic growth from environmental pressures and resource use. While brand leaders are perhaps best positioned to undertake research and innovation in this field, many freely admit that it's a bit like stumbling in the dark.

So far talk has centred around more service-based or leasing models, where consumers effectively become users and pay-per-use, but many businesses are mindful of the behavioural change barriers that would need to be surmounted first. According to Marks & Spencer's head of sustainable business, Mike Barry, big business needs to inspire before tackling such hurdles.

"We have to take the lead and break the back of this before we go knocking on people's doors asking them to change," he argues. And while there is a real business case for delivering a circular economy, he adds, companies like M&S must work out how to do that while still delivering what the consumer wants.

"Only 10% of consumers are passionately green and self-starting ... product knowledge is fairly low level in terms of consumer desire compared to quality and functionality," Barry points out.

Perhaps the best that M&S has come up with so far is its Shwopping initiative, which incentivises shoppers to hand back old clothes in-store in return for discounts on new ones. Fronted by Joanna Lumley, it has found some success and recently the retailer unveiled the first line of coats to be made completely from recycled items donated by customers.

But Barry acknowledges there is still a long way to go in engineering alternative consumption patterns - it's a view backed up by WRAP chief executive Liz Goodwin, who feels closed loop models will need to be built gradually as the level of willingness and buy-in just isn't there at the moment save for a handful of big players.

She also argues that the economic benefits of achieving circularity need greater recognition at government level - and that may require a different perception of waste materials.

"It struck me immediately when I saw reprocessing in action that closed loop recycling is not a waste management operation - it is clean and hi-tech. Waste enters the economy as new products, it has an economic value," she maintains.

Ironically, she states that one of the main challenges with a circular economy is the level of opportunity it presents.

"There are opportunities wherever you look, so we have to focus our efforts where we can deliver the biggest impacts. I think we have made progress in a number of areas, but it's not easy, it takes time and patience," she says.

Matthew Spencer, who heads up the Green Alliance - one of the thought leaders in this area - says that government policy has been critical in allowing new business models to work and that this direction of travel must continue.

"There are three critical factors for a circular economy - new business models, the right level of collection and infrastructure, and market or policy drivers. There isn't a magic solution but we do need strong internal activity and leadership from the top teams in government," he opines.

Cabinet committees have a clear role to play in delivering such leadership and also joining up policy strands between different departments such as DECC, BIS and Defra, but many observers feel senior politicians have still yet to take up the gauntlet on this front.

Meanwhile the UK economy travels on in a linear fashion - latest estimates put it as only 19% circular with materials for the most part exiting via landfill, exports, embedded energy or quite simply as 'unknowns' as the data capture isn't there. Even those showing most appetite for change admit that another 10 years may have to pass before these material flows alter their course in a more meaningful way.

Maxine Perella