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March 24, 2015
How packaging plays in the circular economy
Katherine O'Dea
Tuesday, March 24, 2015 - 1:00am
A circular economy business model revolution is underway in a number of industry sectors — apparel, building products, durable goods and electronics, to name a few.
One driving factor is cost savings. Another driver, of course, is the increasing recognition that economic growth must be decoupled from resource consumption or our planet's resources simply will run out.
In a circular economy business model, value is found in new uses of materials; it is about continuous material valorization. By design, circular economy business models enable companies to retain more of the value of the materials, energy and labor inputs that go into producing goods and services.
One of the earliest crusaders for a circular economy approach, circa 1992-1993, was Xerox Corp.'s Jack Azar, associate director of environmental products and technology at that time. Azar developed what he called Asset Recovery Management (ARM) programs or “managing products and inventory to minimize their environmental impact at all stages of the life cycle [which] entails reusing an asset either by remanufacturing to its original state, converting to a different state, or dismantling to retrieve the original components.”
He implemented the program by limiting production materials to recyclable and recycled thermoplastics and metals. When Xerox applied ARM, they got out of the business of selling copiers and went into the business of selling copies. Customers leased the machines and when the lease period expired, they got upgraded models and Xerox reclaimed the original resources for use in next generation machines.
The commercial carpet industry has a more recent implementation of circular economy practices. Three industry leaders — Interface, Shaw and Desso — all provide the service of floor covering by leasing carpet, which they take back when worn, during a building renovation or when customers desire to change their floor covering. After recovering their material asset, old carpeting, they separate the backing material from the carpet fibers, reprocess both and use them to manufacture new carpet tiles.
These companies reduce their reliance on virgin resources and leverage existing material investments to produce new carpeting via take-back programs. By rethinking their linear model of material consumption and product delivery, they divert used carpet away from landfill and extend the utility and value of the materials. As a bonus, their customers avoid carpet disposal fees.
With both Xerox and carpet manufacturers, it's easy to visualize how the traditional business model of take, make, use and dispose is transformed from a one-way linear system into a resilient and restorative cycle.
Read more at GreenBiz.
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