‘Closing the loop’ on the supply chain through improved product design, extending asset life, reuse and recycling can deliver tangible commercial and sustainability gains across a wider range of goods and materials.
Closed-loop systems reduce the need for extraction and processing of new resources, and lessen the associated impacts on the natural environment. They can improve quality and value by extending the useful life of goods, enabling their re-use and re-sale, saving money for businesses and cutting costs for consumers.
Value can be realised by:
circling goods within the system for longer by enhancing their durability and reusability
cascading the use of materials more effectively through different sectors and products (for example, using fibres in textiles, upholstery, and finally insulation materials)
ensuring that material streams remain uncontaminated and of high quality, enabling their longevity
tightening the circle by minimising initial material use.
Business value levers
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Source: Accenture, 2013
Size of the prize
Net material cost savings of around £15-£18 billion a year in the UK consumer goods industry, representing around 20% of all material input costs. [i]
Circular economy has created over 100,000 jobs in the UK (83% of which are outside London), in over 5,000 companies, servicing market of £13 billion. [ii]
For example, food waste could create profits of £113 per tonne of waste in the UK (£1 billion a year), based on savings from roll-out of anaerobic digestion, avoided landfill costs and revenues in the form of feed-in-tariffs from electricity generation. [iii]
In the clothing sector, around £850 per tonne of clothing in net profit could be generated in the UK from enabling re-use and recycling (£1 billion a year). [iv]
Diagram source [v]
The environmental benefits, particularly from retention and regeneration of natural resources, from a circular economy are significant and the market is still under-developed. Circular economic approaches can achieve a possible 50-90% reduction in a product’s environmental footprint. [vi]
Marks & Spencer reduced the number of carrier bags customers use by 78% over 5 years since the introduction of carrier bag charging. Using closed-loop thinking, they were also able to ensure every carrier bag is made from 100% recycled material that is sourced from their own waste streams (thereby cutting costs). [ivi]
“ We say to our paint suppliers: If you won’t recycle the cans, we won’t buy the paint from you. ”