Circular Economy & Systems Thinking

By Simon Seebaluck

As a nationally recognised professional institute, the IMC introduces  Circular Economy principles to increase awareness across its members. The Circular Economy is an economic master plan that recommends ingenious ways of modifying the perennial and prevailing linear system of consumption into a circular one. Ultimately, it is about reconsidering our consumption attitude both on a personal and a business vantage point, so that we can mitigate wastage. A Circular Economy not only alleviates the volume of raw materials required for a growing population but can also reduce carbon emissions and water usage during the manufacturing process. The nascent Circular Economy and Systems Thinking is the new approach to attaining sustainable development. This ensures that people have continuous resources such as energy, water, food, and health whilst not compromising the ability of future generations’ ability to achieve their basic requirements (Raworth, 2012; U.N, 1987).

Unfortunately, the present system is antithetical for businesses, people, and the environment. It consists of resources being extracted from the ground to make products beyond what is required, after which consumers dispose to landfills what they no longer need or desire. 
Consequently, we need to explore how a nexus between Circular Economy and Systems Thinking may provide the basis for a paradigm shift from a linear economy to a circular one.

Issues

 High-performing waste and recycling systems that deal with recovered, reused, and recycled materials can mitigate the amount of waste disposed to landfills and enhance significant economic opportunities for the Australian community. Presently, Australia is part of the highest rate of waste generation, over 50 million tons, globally and ranks poorly in terms of resource recovery. According to the Australian Bureau of Statistics, the annual contribution of the waste sector is over $10 billion, whilst losing materials to landfills over hundreds of millions of dollars.

For instance, in 2020, Australians generated around 2,100 kg per person (Waste Authority Annual Report, 2021), over 1000kg more waste per person when compared to Belgium, which generated 410 kg per person, with 633 kg per person in Germany and 462 kg per person in Spain (Eurostat, 2021). The contrast between Australia and Europe on waste generation is quite broad, and to taper the gap, our politicians, local governments, businesses, and individual householders need to embrace new policies. Therefore, if adequate and appropriate policies compounded with Systems Thinking are not implemented, it could lead to a dystopian future. This will include Systems Thinking, the implementation of a waste hierarchy, the avoidance of waste generation, the maximisation of waste recovery, and the protection of the environment from the impacts of disposal. 

Inherently, a circular economy offers opportunities for recycling, local activity in job creation and energy conservation by not producing new products, which also alleviates any unnecessary transportation.  

The concept of the circular economy is derived from a dyad of a production and consumption system with minimal losses of materials and energy through extensive reuse, recycling, and recovery.

Albeit, the journey to becoming a circular economy is challenging and strenuous yet potentially achievable. Unfortunately, there is a big gap between current and desired Australian performance.  Although we decreased our amount of waste from 2600 kg in 2014 to 2100 kg in 2020, this is still high when compared to European and global indicators.

It will be essential to establish how Australia may acquire knowledge and expertise from Europe, considering the latter’s successful adaptation to waste management policy whilst simultaneously becoming one of the lowest waste generation continents in the world. Further, an exploration of how Germany's waste recovery system is one of the highest in the world. Therefore, Systems Thinking can provide a driving force for a quantum leap from a linear economy to a circular one, and appropriate knowledge and enabling infrastructure to assist in removing barriers to behavioural change.

Impact

Annually, the global economy yields over one billion tons of solid waste, made principally of paper, plastics, metals, organics, and various other by-products. A circular economy suggests complex system operations (such as product-service systems, remanufacturing, and repair) for an industrial economy that is restorative and relies on renewable energy (Ellen MacArthur Foundation [EMF], 2014). Ultimately, this disposed economy doctrine of “take-make-waste”, also known as the linear economy, must be revamped and redesigned. It’s now imperative to think about the world in new ways. Many societal, business and environmental fundamentals have altered where professional designers in numerous fields have failed in their responsibility to predict and design out the adverse effects of their products. These harmful side effects can no longer be accepted if we are to survive in future. Further, we can no longer assume that things are working as simple machines and continue to think that the “take-make-waste” doctrine is adequate. As we live in a time of complex systems, we must endure the vicissitudes of these systems. Systems Thinking is an analysis process that concentrates on discerning how the parts of a system interact to produce the overall behaviour changes needed.

Systems Thinking

There is undoubtedly a necessity for new techniques to design if we are to stop the surging problems of man-made world participation in decision-making, which could provide a necessary reorientation. For example, millions of phones are thrown away every year because they are not built to last.

Therefore, design is key to the first principle of the Circular Economy; design out waste and pollution. When something is designed, important decisions are made that impact how materials are chosen that are safe and circular, how it is produced, how it is consumed, and what happens when it’s no longer required (EMF, 2017). In other words, a systems thinker perceives the relationships between the elements, unravels the association of factors, and holistically analyses the system, ensuring that the products and services produced fit within the circular economy and do not go back to landfills. This requires a paradigm shift in mindset from linear to circular, and it is achieved through a myriad of ways, such as Systems Thinking, designing, and optimising products to eliminate waste by promoting efficient reuse, disassembly, and refurbishment.

Several players have identified viable business prospects in aiming to achieve more circular material loops in manufacturing and production and describe how possible recovery routes could be defined. Notably, a circular economy builds on long-standing sustainability concepts, including product life cycle. Systems Thinking resource efficiency predominantly sustains materials and energy circulating in the economy for as long as possible. Designers and manufacturers can enhance shifting towards a more circular production model to improve maximum efficiencies (material, economic, and environmental) by collectively managing and sharing the activities among players within the product value chain. In fact, according to the World Bank, by 2025, global waste generation is predicted to increase by an additional 70%, propelled in large part by growing populations, rising median incomes, and the accelerating pace of urbanisation.

Potential

It is estimated that the Circular Economy could generate US$1 trillion in cost savings on materials by 2025. Companies should continuously strive to transform waste products and processes into improvements in their bottom line. The fusion of steady utilisation of rising patterns and declining natural resources has forced companies to reconcile by selling more products with fewer source materials. For example, General Motors earns an extra $1 billion per year from recycling and reusing what would otherwise be scrapped or discarded, and Coca-Cola saves $90 million yearly through its reduced-weight bottles.

In achieving such an aim, three chief obstacles to implementing effective waste management initiatives should be eliminated: namely, the lack of a starting point, innovative ideas, and top-down leadership. Correspondingly, research from the EMF and the McKinsey Center for Business estimates that if the economy adapted to a Circular Economy, it could mitigate consumption of new materials by up to 32% within 15 years and by more than 50% by 2050.

Overall

The potential benefits of shifting to a Circular Economy extend beyond the economy and into the natural environment. By designing out waste and pollution, keeping products and materials in use, and regenerating rather than degrading biological systems, the Circular Economy epitomises a powerful contribution to achieving global climate targets. Implementing what the Europeans are doing on waste reduction is vital while concurrently promoting a high waste recovery. This system needs to be implemented in our legislation to meet the United Nations 2030 targets. Therefore, our politicians should align their political agenda to these principles. Additionally, businesses should foster Systems Thinking into their designing and manufacturing process for an effective circular economy, which could potentially enhance their bottom-line. 

It is vital that companies remain motivated and not mired in traditional ways regarding Systems Thinking and the Circular Economy. These factors are intrinsically linked to achieving organisational success. Finally, the Circular Economy represents a continuous learning journey and model for countries committed to a sustainable environment for both businesses and communities.

Simon Seebaluck is an Affiliate Member of IMC and member of the IMC WA Chapter.  Simon holds an MBA from Edith Cowan University specialising in Marketing and Sustainability.
 

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