Pollution and climate change have become a pressing problem for our planet in recent years. If we do not start taking action quickly, life on Earth will not only become a lot less pleasant for all of us but we are also facing massive biodiversity losses and other major environmental impacts which may not be reversible.
Fortunately, there has been a lot of thought put into how we can help prevent some of these environmental problems and/or slow them down. If we want to prosper as a civilisation for centuries to come we need to figure out how to exist in a way that produces less waste and less emissions, and which creates efficiencies in the way we produce and use products.
Enter the Circular Economy, an important concept gaining worldwide momentum over the last few years.
What is a circular economy?
Unlike the traditionally linear economic model of “take-make-dispose” historically used in production industries, a Circular Economy is one that focuses on efficiencies centered around the use and re-use of resources with minimal inputs, leakage, and waste.
According to McKinsey, the three main principles of circular economies are:
- Preserve and enhance natural capital by controlling finite stocks and balancing the flow of renewable resources;
- Optimise resource yields by circulating products, components, and materials in use at the highest possible levels at all times; and
- Make the system more effective by eliminating negative externalities.
Investing in a circular economy can deliver both financial and environmental benefits due to increased resource efficiencies, innovation, and competitiveness. According to McKinsey analysis, moving to a circular economy approach across Europe could lead to a potential savings of 600 billion Euros, with a possible additional 1.2 trillion Euros in other benefits. Ultimately, circular economy could help save money while reducing pollution and production efforts required.
In South Africa and other emerging markets, waste management appears to be a significant challenge, with 20-50% of emerging country budgets spent on solid waste management. However, a fair bit of circular economy activity in South Africa is actually linked to informal waste collectors across the country, who do an incredible job of recycling waste. Even with the local challenges faced, thanks to this informal sector South Africa is achieving almost the same recycling results for plastics as some of the most advanced countries in the world. Of course, with better formalisation and links to industry, these results could be even greater.
The Circular Economy presents a real opportunity for shared value in South Africa – by supporting small circular economy businesses, for example, and aligning this to BEE, South African corporates can achieve impact in many different ways while also scoring well against a range of policies. By also adopting some circular practices internally as well, there could not only be an overall positive environmental impact but significant cost savings as well in the long run.
Simanye’s research services: Simanye provides expert research services in all areas relating to our core work, including the SDGs, social enterprise models, value chains, enterprise development and more. If you would like to find out more about our research services or If you need BEE advisory work and are interested in how this could link to exciting new areas such as the circular economy, please get in touch.