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What does the circular economy mean for 2017?

Circular economy

​Whether or not your business is directly linked to the supply chain of fossil fuels and other finite resources, the impact of sustainability - and a lack of it - is likely to affect the smooth running of your company at some point.

The concept of a circular economy has been championed as a solution to avoid the numerous economical, environmental and social problems that would arise out of running out of resources like oil, gas and the earth's vital minerals.

However, it is far more than just recycling. The idea has been around since the 1970s, but it was the creation of the Ellen MacArthur Foundation and the vocalisation of the concept by the record-breaking sailor that brought it to the attention of public figures and celebrities.

Largely, a circular economy relies on three key principles: preserving and enhancing finite stocks, optimising resource yields by circulating products, and making the system more effective by getting rid of anything that negatively impacts it.

Although this may sound like a strictly environmental problem that is unrelated to business, the idea of circular economy involves everything from mobile phones to washing machines and will impact every industry in some way.

Something like the automotive industry relies heavily on raw materials and certain precious metals, which is a key concern as estimates predict that resources will run out by 2030. There are also other challenges for motor companies. The high demand for raw materials has driven prices up dramatically, meaning that automotive businesses are spending billions each year just to secure the materials they need.

A circular economy would help motor companies look at secondary resources, and invest in recycling technologies. In addition, thousands of models are taken off the road each year by the EU, with vehicles having to meet safety and environmental regulations. However, most of these cars still have a number of components and raw materials that could be used, reducing the cost for the automotive sector.

The Ellen MacArthur Foundation estimates that remanufacturing cars would be between 30 and 50 per cent less expensive than building one from scratch, but these parts also have to undergo the quality control tests as new ones that are developed.

In the wider business model, this circular economy relies on a skilled workforce so creates more jobs, while it also reduces the amount of water, energy and chemical products that need to be used.

But can this same idea work on a much bigger scale?

There are calls to make entire cities sustainable through the key principles of a circular economy and many cities across the world are doing their best to use ingenuity to protect their finite resources. However, it's the Netherlands that is trying to put itself on the map as the circular hotspot of Europe.

Along with other stakeholders and investors, the Dutch government is working on a number of initiatives to put the country at the heart of this innovation. As part of the Netherlands Circular Hotspot campaign, a brand new Circular Expo will open close to Schiphol airport. This will showcase 30 examples of the circular economy in action.

The Netherlands, with its rich history of driving innovation in waste management and water solutions, will have to overcome a few challenges if it wants to see its theory become a reality.

Although the Netherlands benefits from its dense population when it comes to piloting new environmental methods, companies all over the country will have to get on board for it to be a success.

Climate change and the environment are historically difficult to get people to engage with, and something like the Dutch initiative would need complete co-operation. Even if this was possible from a consumer point of view, the Netherlands may struggle to get companies like the Dutch-based Shell on board.

Despite these difficulties, circular economies are one of the biggest talking points for those involved in environmental matters and they are expected to become a more prevalent topic over the next year.​