Environmental degradation has forced nations to have a new look at how to conserve the environment. More emphasis is being given to production, and the take-make-dispose pattern is being done away with. According to Bocken, Olivetti, Cullen, and Lifset (2017), the increasing popularity of a circular economy promises to redefine growth by focusing on positive wide society benefits. Circular economy focuses on decoupling the finite resources and creating waste from the system (Cerqueira, Soukiazis, and Proenca, 2018). With the model focused on the transition to renewable energy sources, the circular economy (CE) helps to develop economic, social and natural capital. The circular economy works on three principles which are designing waste out of pollution, keeping products and materials in use and regenerating natural systems (Cerqueira et al., 2018). The essay discusses how companies that adopt circular economy principles are able to raise their economic and social benefit while at the same time reducing the environmental impact.
Concepts and Characteristics of a Circular Economy
A circular economy is based on the ability of the economy to create activities that rebuilds the overall system health. Cerqueira et al., 2018 states that the concept is based on the need for the economy to be effective at all scales, for both large and small businesses, organisations and the entire globe. The movement to a circular economy is not based on the amount needed to adjust the effects of a linear economy; it represents a gradual shift that creates a long-lasting resilience, increases business and social benefits.
Didenko, Klochkov and Skripnuk, (2018) states that, unlike the linear economy, the circular economy is based on technical and biological cycles, consumption takes place only in biological cycles while technical processes recover and restore the products. In biological cycles, materials such as cotton or wood are fed back into the systems which regenerate living systems. Strategies such as reuse repair and remanufacture are the technical aspects of a circular economy.
The idea of a circular economy is rooted in the historical and philosophical origins; it was well established after the advent of computer-based studies which revealed the complex and interrelated nature of the world we live in (Geissdoerfer, Savaget, and Hultink, 2017). With the current advances in technology, it is possible to transits to a circular economy by increasing virtualisation, less use of materials, more transparency and intelligence through a proper feedback mechanism.
The characteristics of a circular economy are based around movement within certain systems (Geissdoerfer et al., 2017; Kalmykova, Sadagopan, and Rosado, 2018). The main components of the system are people, natural resource and other factors. The circular economy requires humans to consider themselves as part of the system rather than the administrators of the system. When humans are within the system, it will be easier to study how the system works and major principles (Ghisellini, Cialani, and Ulgiat, 2016). Moreover, humans being part of the system will enable them to promote ecological development and promote the objective law.
Another character of the circular economy is the circulation of all the resources within it. For instance, the labour within it is circulating, capital and natural resources are all circulating (Didenko et al., 2018). With the system, it becomes easier to do away with the engineering mechanics and adapt the guiding economic principles with regard to ecological rules. The circular economy requires that humans consider the bearing capacities of the ecological environment and that of the mechanical arena, then try to strike a balance between the two (Ghisellini et al., 2016; Kalmykova et al., 2018). An economy where the activities exceed the capacity of the available resources will bring about imbalanced ecological development.
The circular economy has a new look towards the environment. It no longer regards the environment as a raw material collection site or a dumping site like the traditional industry (Bocken et al. 2017; Cerqueira et al., 2018). It approaches the environment as a basis where humans get their livelihood and therefore should be taken care of, unlike the traditional era where it was seen as a dumping site. Through science and technology, the circular economy recognises its ability to develop or conserve nature and live in harmony with it. Man is given the main task of developing an all-around way.
A circular economy differs from the traditional economy through the perception held towards natural resources. The traditional production view creates social wealth maximally through the extraction of natural resources (Didenko et al., 2018; Geissdoerfer et al., 2017). The production view in a circular economy seeks to balance the bearing capacity of an ecological system and thus conserve nature to the best of our abilities. In production, the circular economy makes use of the three R (3R) principles. 3R (reduce, reuse, recycle) seeks to ensure that natural resources input is reduced as much as possible. Reusing will see that the natural life of a product is extended for as long as possible (Ghisellini et al., 2016). Recycling ensures that the waste emitted is brought down as much as possible and thus minimal harm to the environment. In their work, Goninan and Hasanagic, (2018) show that the 3R principles also ensure that humans utilise renewable resources as much as possible such as solar and wind power. With such measures in place, production will reasonably depend on ecological cycles. The 3R will make it possible to achieve harmony from an economic, social and ecological perspective. Therefore, improving the quality of life (Goninan and Hasanagic, 2018; Korhonen et al., 2018).
A misunderstanding exists on the guiding principles of the circular economy. For instance, the narration that circular economy limits the level of production and consumption does not hold weight, rather, it promotes a balanced consumption and emphasises on the need to recycle thus circular production and consumption (Springer and Schmitt, 2018). The production and consumption of disposable products often made of non-renewable materials should be reduced through taxation and proper administrative measures (Bocken et al. 2017; Didenko et al. 2018).
Drivers of a Circular Economy
Motivational drivers of a circular economy can be categorised as per their similarities and differences. Moreover, the drivers can further be categorised as internal or external drivers. Internal drivers help to understand what needs to be done within the enterprise while external drivers identify what can be done in the supply chain.
Policy and Economy
The policies that are in place helps to keep the circular economy moving. There are laws and policies on waste management that the government implements. Policy and economy is an external factor that is beyond an enterprise. By having policies that promote cleaner production and consumption trends, the circular economy could mean higher revenue generation and effective recycling (Didenko et al., 2018; Pigosso et al., 2017).
According to Ilic and Nikolic (2016), human and animal health pay a heavy price due to overconsumption of energy resources. Public health is often ignored; however, it is important to note that without the proper health facilities, everything will amount to nothing (Ghisellini et al., 2016; Goninan and Hasanagic, 2018). Even though the factor is an external one and relies on the government's goodwill, humans and animals deserve to live in a healthy environment that can only be assured by a circular economy (Ranta et al., 2018)
Need for Environmental Protection
The rate of global warming is on the rise; the associated climate change occurs due to the amount of waste that is produced in industries and disposed of using unconventional methods. Quina et al. (2017) show that factors such as modern agriculture and higher demand for renewable energy have played a significant role in environmental degradation. With the increased rate of production, there is a need for the mass producer to take measures that will see the protection of the environment.
The society is described as an external factor that pushes organisations to adopt the circular economy. People are aware of the risk involved with the wrong disposal of waste. According to Pringle, Barwood and Rahimifard (2016), there is a need to protect the growing population. The higher global population means that there is a higher consumption thus a higher demand for necessary resources. The higher consumption brings about the need for a circular economy (Winans, et al., 2017.
On the other hand, urbanisation has increased the need for organisations to adopt a circular economy. More people moving into cities mean that more waste is concentrated around certain areas. Therefore, it is easy to organise on waste collection. As organisations seek to better their market reputation, they will create more jobs for the society. The increased consumer environmental awareness means that organisations are under pressure to take care of the environment or otherwise lose potential customers (Bocken et al., 2017; Goninan and Hasanagic, 2018).
Singh and Ordonez, (2016) state that product development requires that the process of production is efficient to reduce waste. Product development also calls for the improvement of the materials that are used in production and better energy use in the supply chain. Proper development channels will see that increase in value and thus better product quality. When organisations are aware of the need to implement a circular economy in their production models, better products will be produced meaning a higher life and more value (Singh and Ordonez, 2016).
Circular Economy Practices
Government initiatives are playing a significant role in the adoption of circular economies. Laws are being established on the need to recycle. With pressure mounting on private companies, their profit-driven initiative is being diverted into protection efforts. There is also a massive adoption of pilot projects, through them; a way forward is being crafted on how to take care of the environment (Singh and Ordonez, 2016).
Public mention of performance indicators is putting pressure on companies to adopt the circular economy, recycling, reuse and remanufacturing means that other companies are also under pressure to perform. Measuring the degree to which an enterprise has implemented the circular economy, and the effect that it has on the environment means the consumer can make a rational decision. Moreover, the marketing and sale of remanufactured products are becoming a trend (Didenko et al., 2018; Goninan and Hasanagic, 2018). Therefore, external pressure is being mounted on the organisation to adopt the practices of a circular economy.
To ensure the adoption of a circular economy, there are fewer taxes and tax benefits from the authorities. Cleaner production is awarded and thus more pressure to use clean energy, eventually, lower cost of production. Consumers are likely to shift to cheaper products meaning more sales for the organisations.
Role of Circular Supply Chains as Advocated by Circular Economy
Supply chains play an important role in creating the end of life products that help to create more value. The value is created through a partnership with other companies where their waste is bought and used in a completely different process. Supply chain plays an essential role by ensuring that channels are created for recovering the used products. One principle of...
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