According to Global Footprint Network in 2022, humanity, in principle, would need 1.75 Earths to fulfill the current demand for raw materials and energy. A logical consequence of such high demand is that exhaustive consumer behavior further leads to both increased CO2 emissions and the vast consumption of resources. These two factors are exacerbating the climate crisis and the shortage of resources, leading to supply bottlenecks and price increases in many places. Companies now face huge challenges to reliably manage the business and maintain stable value creation. Starting in 2023, those with more than 250 employees will face new requirements to document and submit measures for expanding their sustainability in an environmental, social and governance (ESG) report. The circular economy offers companies a way out.
The circular economy aims to decouple our economic activities from environmental damage. To do this, we need to completely change the way we produce and consume - away from the "throwaway society." The goal: to create a regenerative system in which we consume fewer resources and use them wisely, produce less waste and reduce greenhouse gas emissions.
This blog answers the questions...
...What is circular asset management
...How can companies apply the circular economy concept now?
What is the circular economy?
The circular economy is an economic system in which resources are used for as long as possible, repaired, and regenerated and recycled at the end of their life cycle to minimize waste and reduce environmental impact. It promotes the reuse of materials and products, thus reducing dependence on primary resources.
Circular economy vs. throwaway economy
Currently, the economic models of modern societies are linear. In efforts to offer a large quantity of products as cheaply as possible and to provide easy access to materials and energy, an awareness of sustainability comes up significantly short in the process. Products are manufactured, used and, in most cases, discarded as soon as they are past their prime. It is self-evident that this results in an enormous amount of waste and that resources are simply squandered.
To reduce the extremely negative effects of economic activities on the environment, admittedly narrow-minded behavior must be extensively changed to return expired materials and products back to the beginning of the cycle. True to the motto: "Today's products become tomorrow's raw materials!"
This is precisely where the principle of the circular economy comes in, with the ultimate goal of creating an endless circle to decrease the output of raw materials and return the highest possible proportion of materials back into the cycle. Starting over instead of throwing away. Second life instead of landfill. The idea comes from nature, where everything "natural" is part of cycles - what dies does not remain as trash, but is reused as a resource for other things.
This sustainable management is also addressed by the European Commission in the form of an action plan.
Companies need to rethink - and not just in their choice of energy source, but at all points along the value chain. Like GOT BAG - whose products are made from recycled ocean plastic.
Benefits of the circular economy
- Low CO2 emissions (high energy consumption for new production)
- Less waste of resources (less dependence on supply chains)
- Competitive advantage (with higher CO2 price)Durable, innovative products
- Cost savings
- Higher quality of life!! 🌍🌞
- ...and and and...
Circular Asset Management as an Enabler for the Circular Economy?
What does asset tracking and management have to do with the circular economy anyway? Well, in fact, both can be linked in numerous ways, because circular asset management makes a pretty big contribution to sustainable management, which is important to every company (regardless of products and internal processes). Circular asset management makes it possible to record product lifecycle and relevant information, and to integrate the continuous management of various processes. Data maintenance is also elementary for the circular economy: without constantly maintained data, it is difficult to make more sustainable purchasing decisions or to return materials, resources and products back into the cycle.
Learn here how we work with furniture manufacturer bene to make products ready for circular use from the start.
The. 9 R's of Circularity
Broken down into the following 9 Rs of the circular economy, there are some possibilities for change and opportunity. The integration of a sustainable economy cannot happen overnight, but must take place in several steps and within a well thought-out concept:
Refuse: Avoid waste and buy only what you really need.
Rethink: An approach to using resources more responsibly and sustainably.
Reduce: Establishing an economical approach with regard to materials and resources as a decision criterion.
Reuse: Determine whether materials, resources and products can be reused.
Repair: In recent decades, repair has unfortunately taken a back seat economically. This needs to be reversed.
Refurbish: Reworking and refining of used but undamaged products on a smaller scale to get as close as possible to the quality of new products.
Remanufacture: Partial or complete dismantling of products with simultaneous reconditioning, updating and finishing.
Repurpose: Determine whether materials or products can be reused in other settings or for other purposes.
Recover: Recycling products by breaking them down into individual components so that they can be used again as sources of raw materials.
So how does this apply to businesses?
Because of the revised legal framework on ESG guidelines as well as market demands and consumer expectations, companies are faced with the challenge of embarking on the path to sustainability as quickly as possible. There are an incredible number of adjustments that can be made - both in the sustainability of the value chain and in the framework conditions for the company itself.
The 9 Rs cannot be applied everywhere from one day to the next - however, they provide a highly recommended roadmap from which to start at several levels in the company and to enable further development.
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