The Circular Economy

At the heart of Ray Anderson’s first book, Mid-Course Correction, is a complicated series of diagrams with lots of loops and arrows – illustrating what he called, “The Prototypical Company of the 21st Century.” When the book was first published in 1998, the idea of sustainability in business was in its infancy. The thought that industry, in particular, would move away from its linear, extractive past -- where materials were mined, manufactured and disposed of -- and toward what we now call the circular economy seemed like a lot of wishful thinking.

But if you know Ray Anderson’s story, you know that he could be powerfully persuasive in his ability to establish a future vision not just for his company, Interface, but for all of business and industry. In Ray’s words, “If we get this right, we'll spend the rest of our days harvesting yester-year’s carpets and other petrochemically derived products and recycling them into new materials; and converting sunlight into energy; with zero scrap going to the landfill and zero emissions into the ecosystem.  And we’ll be doing well … very well … by doing good.  That’s the vision.”

Flash forward over a quarter of a century later and the circular economy is no longer wishful thinking. It’s the basis for innovation that has the potential to unlock $4.5 trillion of value, according to the World Economic Forum. Ray’s original illustrations are no longer confounding; they are the blueprint for dozens, even hundreds, of other illustrations that seek to capture the potential – and the reality – of what it looks like to design circular products and systems.

What is the circular economy?

According to that same WEF Report, the Circular Economy is defined as follows: “A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems and business models.” Sound familiar?

Around the World with Ellen MacArthur

While many consultancies and business think tanks have embraced, explored and evolved circular economy concepts, perhaps none is better known than the Ellen MacArthur Foundation. Dame Ellen MacArthur gained prominence when she set a world record for the fastest solo nonstop sailing voyage around the world on her first attempt in 2005. That successful journey earned her the title “Dame,” according to British tradition, and while her early and persistent ambition for sailing – and the success she achieved – were her original calling card, it is the work of the Ellen MacArthur Foundation for which she will be best remembered.

In her 2015 TED talk, which has been viewed by conservative estimate more than 2 million times, Ellen describes the insights she gained during her solo sails as being the basis for the Foundation that bears her name.“It's hard to explain, but you enter a different mode when you head out there,” Ellen said. “Your boat is your entire world, and what you take with you when you leave is all you have. If I said to you all now, "Go off into Vancouver and find everything you will need for your survival for the next three months," that's quite a task. That's food, fuel, clothes, even toilet roll and toothpaste. That's what we do, and when we leave, we manage it down to the last drop of diesel and the last packet of food. No experience in my life could have given me a better understanding of the definition of the word "finite." What we have out there is all we have. There is no more.”

There is no more.

That is the realization that Ellen returned from her travels wit her own spear in the chest.

Ellen goes on: “Suddenly I connected the dots. Our global economy is no different. It's entirely dependent on finite materials we only have once in the history of humanity. And it was a bit like seeing something you weren't expecting under a stone and having two choices: I either put that stone to one side and learn more about it, or I put that stone back and I carry on with my dream job of sailing around the world. I chose the first. I put it to one side and I began a new journey of learning, speaking to chief executives, experts, scientists, economists to try to understand just how our global economy works.”Today, the Ellen MacArthur Foundation is a global force in the movement towards a circular economy, providing education, inspiration, and recognition for the forward-thinking companies that are on the path to closing the loop.

Nature as Model and Mentor

The circular economy isn’t just based on the idea that resources are finite and that recyclability and reuse are possible. It is modeled on the systems we find in nature, where one organism’s waste is another’s food. Nature is, in so many ways, the original circular economy. This idea was popularized in Cradle to Cradle: Remaking the Way we Make Things (2002) by William McDonough and Michael Braungart, and the idea that nature’s model might be instructive for industry has set off hundreds – maybe thousands – of lightbulb moments for visionary designers and innovators seeking to unlock those trillions that the WEF thinks are out there.

Systems Thinking Works Here, Too!

If you’ve been around the sustainability world for any amount of time, you’ve no doubt been introduced to the idea of systems thinking. John Lanier recalls with great fondness his introduction to the work of Donella Meadows when he was a student at Presidio Graduate School taking the Principles of Sustainable Management course. “I've read many books in my life that have challenged me, more that have educated me, and more still that have entertained me. This book did all of that. It also ordered my thoughts, offering a new lens through which to view the world, in a way that nearly no other book has done.”

“We must see the world for the complex system that it is,” John said. “We must appreciate its myriad cultures, life forms, and physical constraints. We must look for the leverage points, those tricky little places where just the right bit of focus, pressure, and insistence can make all the difference.”

Inherent in the understanding of the world and its systems is understanding not just the idea that waste equals food, but the systems that exist to make it so.

Landfills Full of Straws

Working in the deep trenches of the environmental and sustainability movements for decades, it’s easy to forget that not everybody has the experiences that you have had. Not everyone gets to read the things you read, see the progress that you see, or lament the persistent roadblocks to progress. Indeed, that’s one of the most frustrating things about being committed to something as big and amorphous as sustainability – the fact that not everyone can “see” what you see.

The circular economy movement seeks to make the invisible visible by illustrating not just with diagrams, but also with actions – little actions that can add up, sure, but that also help us understand the bigger ideas.

One of those little actions that helps illustrate a bigger idea is the one of drinking straws – ubiquitous, useful, and made of plastic most of the time. Over the past few years, straws have entered the zeitgeist as a symbol of all that is wasteful and avoidable. Bamboo and paper straws have emerged as an alternative; stainless steel, reusable straws – once impossible to find – have become commonplace and even hip.

Some environmentalists roll their eyes – straws, really? This is the thing we’re going to focus on? But as John Lanier says, straws open the door to the realizing that there’s no such place as “away.”

“Perhaps we can ask our waiters to ‘hold the straw’ when we order a drink, rather than use it for 30 minutes and then send it to the landfill for hundreds of years,” John says. “And I get that using disposable plates for a dinner party simplifies clean up, but unfortunately we can’t really ‘throw things away.’ Where is ‘away’ on a map? And don’t even get me started on bottled water. Carrying around a canteen is a pretty easy thing to do. So, let’s replace ‘disposable’ with ‘reusable’ in our collective language. I bet we can make this world a little bit better if we do.”

The Material Connection

We talk often about the circular economy in the context of green business – for example, what is the role of the supply chain in creating a circular economy, and how do we design for a circular economy? Central to that conversation is a dialogue about material choice – a question that goes far beyond paper or plastic, straw or no straw.

The conversation about material choice is becoming a more sophisticated one, thanks not just to the choices we now have in which straw to choose, but also because we are becoming more aware of packaging, and its potential to contribute to a circular economy. Unilever has long been out in front as a company on the leading edge when it comes to rethinking its products (and their packaging) in the name of circularity. For example, rather than eliminate plastics completely, Unilever takes the stand that plastic has a “vital” role in the economy, allowing for the safe and efficient transport of products, but that it has no place in “our oceans, rivers, streets and countryside.”

A 2013 report from the Ellen MacArthur Foundation on the “New Plastics Economy” suggests a road map based on three fundamental realizations, developed from the Foundation’s research:

  1. Without fundamental redesign and innovation, about 30% of plastic packaging will never be reused or recycled.
  2. For at least 20% of plastic packaging, reuse provides an economically attractive opportunity.
  3. With concerted efforts on design and after-use systems, recycling would be economically attractive for the remaining 50% of plastic packaging.For companies like Unilever, this kind of road mapping helps to validate their business model, which is defined by its “Sustainable Living Plan.”

According to the company’s website: “As a consumer goods company, we have a clear responsibility to play our part. And the benefits of the circular economy for business are clear. More effective use of materials means lower costs and less waste. It means new sources of value for customers and citizens, better risk management of raw materials and improved approaches to the supply chain.”

Changes Big and Small

As important as it is for corporations – particularly manufacturers – to acknowledge and respond to their role in building a circular economy, the little choices we make as consumers can add up to big impact, too.

Did you know, for example, that glass bottles are currently so devalued in the marketplace that some recyclers won’t even accept them? It’s an obscure but true fact that has influenced John Lanier to make the decision to never consume one of his favorite adult beverages, beer, from anything other than aluminum can.

In fact, there are some sectors of the circular economy that depend greatly on consumers’ willingness to ‘return’ items at the end of their useful life. It’s a phenomenon that is slowly catching on, and it’s hampered by a lot of things – from our consumer-y, fast-fashion culture to the extra steps that it takes to find and responsibly return a product for re-use or recycling.

According to a Reuter’s Report in 2020, only a fifth of e-waste, for example, is recycled globally. “Little data exists for what happens to the rest,” the report says, “And while some is inevitably stored in drawers and cupboards, or passed on to friends and family, much of it ends up in landfill or is incinerated. Illegal or unregulated e-waste can end up being pulled apart manually by poor workers in developing countries, who are then exposed to health problems from toxic materials.”

It's a problem in need of a multi-pronged solution or set of solutions, and in some cases, that begs for new business models altogether. And if you crunch the numbers, new business models equal new business opportunity. According to a 2019 report from the World Economic Forum, “Metals like gold, copper and nickel in products such as mobile phones, laptops and TVs are worth around $62.5bn, three times more than the annual output of the world’s silver mines. There is 100 times more gold in a tonne of mobile phones than in a tonne of gold ore.”

In other words, the incentive is there, in economic terms. But what about human nature and our resistance to change?

New Behaviors: Refuse and Repurpose

Nearly any child born in the 1980s and beyond would have learned at a young age about recycling. And many of us can easily recite the three Rs: reduce, reuse, and recycle. But as John Lanier reminds us, the circular economy requires that we add a couple more Rs to the equation: Refuse and Repurpose. Consumer behavior changes slowly, but with the right cues from business and society, we will slowly but surely see an uptake in “refuse” – i.e., refusing a bag, a straw, and so on. Repurposing also requires us to rethink business as usual – whether you are a consumer or a corporate purchaser. Can you repurpose that box, or that building, rather than build a new one?

The Moral Case for a Circular Economy

Ray Anderson spoke often and eloquently about the flaws inherent in economic models that are predicated on the abundant and infinite supply of raw materials, and he also acknowledged that the undoing of that flawed thinking starts well outside the factory doors. In fact, he recalled being an industrial engineering student at Georgia Tech in the 1950s, where every problem or case would start with the words, “assume raw materials are available and plentiful.”

As thought leadership around the circular economy has coalesced over the last couple of decades, it’s not just scientists and innovators and tender-hearted environmentalists who have given voice to the conflict inherent in our industrial world.

The Pope has weighed in as well.

As John Lanier has noted, Pope Francis, in Laudato Si, Chapter 3, Paragraph 106, says: “Men and women have constantly intervened in nature, but for a long time this meant being in tune with and respecting the possibilities offered by the things themselves. It was a matter of receiving what nature itself allowed, as if from its own hand. Now, by contrast, we are the ones to lay our hands on things, attempting to extract everything possible from them while frequently ignoring or forgetting the reality in front of us. Human beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. It is based on the lie that there is an infinite supply of earth’s goods, and this leads to the planet being squeezed dry beyond every limit.”

The bold emphasis above is John’s, and he explores the Pope’s use of the word “confrontational.”

John says, “To me, the word that stands out in this quote is ‘confrontational.’ This is a sharp-edged word. It is hard to admit that our relationship with the natural world might have such a negative connotation. It largely rings true though, because of the first word that I used to describe our current take-make-waste industrial model: ‘take.’ Taking is a fundamentally confrontational concept. One football team tries to take the ball from the other. A warring country strives to take land from its rival. Mean people take candy from babies. All confrontational.”

“Imagine if our society viewed raw materials not as something to be taken from the earth, but rather something to be humbly received from it? ‘Receive’ is a much different word than ‘take.’ I can receive a gift. I can receive a hug and a promise. I can receive love. When we take from the earth, it surrenders to us. When we receive from the earth, it gives to us. Which sounds more dignified to you?

”It’s a mindset shift that requires we summon not just our ingenuity and our innovative nature, but also our ethos and our empathy. Given the ways we have historically sought growth and evaluated success, do we have the capacity to make this massive shift, particularly in the Western world?

The Time is Now

If the circular economy is having its moment (one that’s meant to last), it has a couple of significant shoulders that it’s standing on, one of them very close to us at the Ray C. Anderson Foundation.

Jim Hartzfeld, a former Interface executive, is often asked to share his firsthand story of Interface’s transformation toward a sustainable business model, because he was “in the room where it happened,” quite literally. August 31 is an auspicious day in Interface lore because it was the first time Ray ever spoke his environmental epiphany out loud, and it was to a team who had assembled to address a question that the company had never heard before – “What are you doing for the environment?” As Jim tells the story, he can’t help but make the leap between those early days at Interface and today’s circular economy.“

On Day Zero of Interface’s sustainability journey, founder and CEO Ray Anderson described the outline of a radical vision of a cyclical enterprise that would become ecologically restorative through its influence on others,” Jim recalls.

And while there was not a road map for Interface to follow, there were examples here and there of companies who had not made the shift, but instead were built from the outset on sustainability principles – one of them a household name, Patagonia.  John Lanier recalls the Patagonia story and why it was so instructive to those early days at Interface, in a blog post noting one of the many ways in which Patagonia is set apart as a role model for purpose-led business: “In 1986, Patagonia made a truly groundbreaking promise. Having become increasingly aware of environmental degradation across the globe, Patagonia recognized the power of small, local NGOs dedicated to protecting ecosystems. Properly supported, these organizations could keep forests intact, rivers clean, and endangered species protected. Patagonia committed to donating 10% of annual profits to such organizations, later increasing their pledge to 10% of profits or 1% of sales, whichever is higher. They’ve honored that pledge every year.”

Mid-Course Correction Revisited

As time marches on and we have more distance between our present day and that auspicious day in 1994 when Ray Anderson first spoke his environmental vision out loud, we recognize how important it is to keep his voice and vision alive. To that end, John Lanier revisited his grandfather’s story in 2019, building on it with new insights into the greatest sustainability challenges and opportunities facing the world today. More than anything else, businesses today must respond to resource scarcity and global warming, and not just by “being less bad.” In building the circular economy and decarbonizing business and industry, we see the chance to fundamentally solve some of the world’s greatest challenges. Moreover, these two issues are fully interrelated – one of the best ways to solve global warming is by creating the circular economy. As you might expect, Interface remains up to the task with its Climate Take Back initiative, and as a part of that work, in 2020 they introduced the first climate negative carpet tile. It’s one of many full circle moments that serve to remind us that the right thing to do is often the smart thing to do, too.