While the term “Circular Economy” first appeared in the late 1980s, the ideals it represents – producing and disposing of less by reusing and recycling more – are now a part of mainstream conversation. This is great news for both the environment and global economies.
In what is probably the most extensive piece of research published on the topic to date, a 2015 report by management consulting firm Accenture projected that the circular economy would add $4.5 trillion to the global GDP by 2030. Since Accenture didn’t predict that a global pandemic would disrupt economies and lives around the world, let’s subtract a few billion dollars to account for the impact of COVID19’s and say it’ll be $4 trillion. That is still a massive amount of economic growth. It also translates into job growth – up to 18 million by 2030, according to the International Labour Organization.
Of course, the primary reason the world needs to move away from the “take, make, waste” model of production and consumption is environmental. Our global “Ecological Footprint,” a metric that measures how much nature we have vs. how much we use, is in such a massive state of deficit that it would take 1.7 Earths to give us the resources we use while also absorbing our waste.
Currently, we use more than 100 billion tons of resources including metals, minerals, fossil fuels as well as organic materials from plants and animals. We recycle and reuse just 8.6% of that. According to the impact organization Circle Economy’s 2021 Circularity Gap Report, circular strategies can nearly double the amount of materials we reuse while also cutting global greenhouse gas emissions by 39 percent. In Germany, another study showed that a circular economy could reduce consumption of primary raw materials by 68 percent in the next 30 years.
If the current COP26 Climate Talks are any indication, governments around the world are finally coming together to take action toward a net zero emission future while agreeing that the largest and fastest impact will be seen if bigger nations evolve faster and embrace sustainable sources of energy sooner.
At the same time we’re seeing governments, brands and retailers move toward a circular economy, we’re seeing gradual changes in consumer behavior, as well. As per a consumer survey from threadUp and Accenture, over 48% of the consumers are willing to give second hand clothing as a gift, and, interestingly, over 56% are also willing to accept second hand fashion as a gift. It’s clearly reflected in holiday shopping, as over 33 million consumers bought second hand fashion for the first time last year (2020).
The survey also revealed an even bigger shift in the consumer behavior of millennial and Gen-Z populations, with nearly half (45%) reporting they refuse to buy from brands that don’t associate themselves with sustainability.
Source – 2019 Accenture US Holiday Shopping Survey & https://www.thredup.com/resale/
The study also proposes 5 business models that are likely to succeed in the next decade. They’re shown in the figure below.
As noted in the above diagram, Entrupy’s solution forms the foundation for three of the business models: “Product Life Extension”, “Sharing Platform” and “Products as a Service”.
Entrupy Fingerprinting allows brands to tag and uniquely identify every single, individual product using advanced computer vision. Hence, fingerprinting becomes the first step in Product Life Extension (Repair, Upgrade, Resell). Secondly, by re-identifying the product at every touch point, fingerprinting enables the Sharing Platforms and Products as-a-service models. As recently seen in our own customer demographics, more and more pre-owned marketplaces and rental services are promoting circular fashion. The primary driver from a technological point is Fingerprinting bridging the physical and digital twins using the image fingerprints.
The next decade is going to be an exciting time for the circular economy. Nearly 60% of the retailers are interested in offering circular solutions and we at Entrupy are excited about offering our solutions that not just helps them to succeed in their business but also makes the world a better place to live in. Do write to us at [email protected] if you’ve questions on how to move to a circular economy.
