Circular Economy Business Models Flashcards
What is the circular flow of income?
Flow of FOPs used to create products that are launched back into the market. Money given to use products and services.
Money gained for the use of our factors of production - labour, used to buy their products
What are linear economy economic models?
No mention of natural resource protection.
Take resources to make products and dispose of waste
How is consumption expected to have increased between 2010-2025?
Calorific consumption +24%
Food spending +57%
Packaging +47%
End-of-life materials +41%
Intensifies pressure on natural resources
What is resource efficiency according to the European Commission (2017)?
Using the limited resources in a sustainable manner while minimising impacts on the environment.
Allowing use to create more with less and deliver greater value with less input.
What is the circular economy?
Restorative and regenerative by design.
Relying on system-wide innovation to minimise carbon footprint
Aims to design waste out while minimising negative impacts.
Underpinned by transition to renewable energy sources.
Builds economic, natural and social capital
How does the circular economy work?
Biological materials are reused where possible e.g extraction of biogas from food waste can be reused and reintroduced in production processes
What is an example of a circular economy focused business?
UoB repair cafe in line with principle of maintaining a product and using it as much as possible
What is the redistribution principle?
Reusing something that has reached the end of its life for other purposes
Recycling supposed to be the last option so that we minimise what goes in landfill.
What is the business rationale for circular economy?
- Increased price volatility
- Increased resource scarcity
- Supply chain risks
- Cost reduction
- Respond to stakeholder concerns
- Movement from short term profit maximisation to long term sustainability
What is the economic opportunity in terms of CE (for nations)?
- Improved economic growth
- Substantial net material cost savings: waste can be an input for the production of something else
- Creation of employment opportunities: R&D
- Increased innovation
What are the opportunities for companies in terms of CE
- New and bigger profit pools
- Greater security in supply
- New demand for business services
- Building greater resilience as a result
What are some examples of opportunities for CE?
Cost of remanufacturing mobile phones could be reduced by 50% per device if easier to take apart and reverse cycle
UK could generate $1.5bn pa if mixed food waste was processed by households and hospitality sector
Cost of packaging, processing and distribution of beer could be reduced by 20% by shifting to reusable glass bottles
How can technology enable new business models?
Internet - further growth of sharing economy
Internet of things - facilitate cloud computing, big data and predictive analytics for efficiency gains and smart monitoring
Advanced materials - smart self healing/cleaning materials, better products, help extend lifecycle, faster product design
Renewable energy - inexhaustible energy supply
Energy storage - missing link in CE due lack of storage of solar and wind. Batteries = increased performance and price reductions
What are the new business models that will arise as a result of the circular economy?
- Future oriented
- Maximise environmental and social values as well as financial
- Co-operate within complex social networks instead of linear buyer-supplier relationships
- Focus on accessibility rather than ownership
- incorporate social benefits and costs into profit and costs
How does the linear economy need to be changed to move to a circular economy?
Attitude towards nature: doing more with what it can produce
Attitude towards production: reuse, recycle
Closing loops: infinite flow of materials in economy, move from one lifetime use
Product life expansion: new applications or inputs into other products
Performance economy: accessibility instead of ownership
Earnings model: charge for the use of a product
Values: multiple values e.g societal
Supply chain: work together to increase value, share risk and benefit up and downstream
