Eduardo Carbajal: The future is circular

Eduardo CarbajalEduardo Carbajal Source: Courtesy

Global economic conditions in this turbulent 2020 are demanding a paradigm shift to produce the goods and services we currently consume. The world stage where the European economies are expected to contract around 8 percent and the United States will do so close to 10 percent, they suggest that we should make a urgent transformation of the current economic model.

Some years ago, Ellen MacArthur Foundation, from the United Kingdom, assured that “the linear model based on produce, use and throw away is leading to levels of scarcity, volatility and price increases that our economy cannot assume”. Given the current health emergency problems that have led us to confinement that makes companies reduce their production levels and the less fortunate go bankrupt, it requires an immediate reaction from all sectors that participate in the economy.

The proposal that is made not only by this author, but by a good number of academics, researchers, scientists and politicians convinced of the urgency of change, is to transform our process of linear production in a circular economy.

The circular economy proposes that waste from a production process be part of the value chain of other companies, and that we reuse resources in a more sustainable way, even so that companies have greater economic profits. This proposal could generate many benefits, because in addition to representing a market of many millions of dollars, it would help to regenerate ecosystems and reduce water and air pollution. La circular economy strategy It is based on reducing the consumption of natural resources and assimilating the productive processes of nature, where any residue becomes an economic resource for another productive process.

The European Environment Commission He estimated that the value of environmental and ecological businesses was more than one trillion euros in 2017 and also stated that by 2030, the value of this would be triple. This represents an area of ​​opportunity to generate money and, in addition, grow with a commitment of responsibility with the environment and with the planet.

There are some successful cases of companies that have decided to adopt the circular economy as the axis of their productive and commercial strategies and they have resulted in an increase in its economic benefits and in its reputation as a conscious business.

The Dutch company Philips has decided to integrate the circular economy into its strategic vision, recognizing that they provide light, not waste of it, the bulbs, for which they have adopted a policy of collecting used bulbs and integrate them again into their production processes, recycling them. This has generated millions of euros in savings.

Another successful case is that of Manzana, in whose stores it has a section for recovery and acceptance of old products and exchanges them for credits for a new product. What it does with the recovered products, is to concentrate to submit them to a process of removal of materials through the line of Liam robots, which disassembles and recovers material for recycling in 11 seconds.

Caterpillar Inc. has decided to incorporate the fundamental principles of the circular economy throughout its value chain, including product development, human resources, supply chain, distribution network and relationships with customers and suppliers. His ability to “remanufacturing”Amounts to more than 80,000 tons per year of recycled material at the end of its life and is used to rebuild new engines, machinery, turbines, etc.

Let me give the latest example of a company adopting the circular economy and this is the French car manufacturer, Renault. At its Paris plant, it remanufactures engines and transmissions so that it can be sold to other car companies around the world. With this, its facilities consume 80 percent less electricity and 90 percent less water, in addition to producing 70 percent less oil and detergent waste, resulting in an increase in its operating margin.

If we continue in this line, more and more large companies have decided to join the philosophy of the circular economy. And although we can think at first that the purposes of these companies are to maximize their profits and minimize their costs to have higher economic profits, We must also highlight that their actions contribute to their production processes demanding less and less virgin natural resources.

Given the current circumstances, there is still a great area of ​​possibility for business to be aware and to give the economy as a whole the opportunity to aspire to a better world for all. If we are all capable of modifying our behavior to improve our economy and our survival as a species, then we can aspire to a circular future.

The author is an economist and professor of Finance and Economics at the Monterrey Campus Business School.

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