5 things leaders can do to create a truly circular economy
As the world continues to grow, so does our environmental footprint. Last year, at the G7 Alliance on Resource Efficiency workshop held in Washington, DC, it was noted that three quarters of all raw materials used in industrialised countries end up in landfills in just one year — that number is staggering and cause for significant concern.
The circular economy can dramatically alter that trend and create a more sustainable and profitable future. However, there are significant barriers that keep us from achieving this. Below are five things we as leaders of the Fourth Industrial Revolution can do to create a true circular economy:
 Realise a circle is not a line
We need a fundamental paradigm shift to leave behind linear thinking and not look at the end-of-life of a product as waste, but rather, a critical source of supply for new products. With a circular economy, a supply chain starts and ends at the same place.
That may sound simple, but it is a radical concept to many. We must shift our perspective and realise there is no end-of-life for a product, just an end of effective use.
 Commit to circular supply chains
To achieve a circular economy, products must be designed with materials that can be economically and responsibly recovered or re-purposed. By thinking about the lifecycle of the raw materials as opposed to the finished product, companies can benefit both financially and socially.
At Johnson Controls, our conventional automotive batteries have been designed so 99% of the materials can be reused. While this may not be possible in all products, this thinking, coupled with a one-for-one product exchange of old product for new, is critical to creating a circular supply chain.
Without standardised materials across sectors, a circular system would be limited to only one company or product line. This happened in the 1990s when another battery company introduced non-standard materials into their vehicle batteries. What provided a marginal product improvement caused the entire recycling system to fail since the new product could not be recovered and reused across the sector.
Fortunately, market forces drove this marginal product improvement out to ensure the greater value enabled by the circle. Today, while our products are highly differentiated, they use a standard set of materials allowing us to recycle a competitor’s product in our system.
 Align the circular system with every part of the business
While new products are delivered and sold, they should also be exchanged for used ones. In this type of scenario, a marketing campaign can impact raw material supply through increasing returns. In terms of logistics, a new system must be put in place to manage the flow of new and used materials at the same time.
Additionally, careful planning and execution is needed to ensure recycling facilities are well equipped to supply the manufacturing process.
 Address regulatory constraints
Government regulations developed in the functional silos of a linear paradigm can hinder the ability to close the loop and create a circular economy. Manufacturing and distribution regulations vary from country to country, which makes it difficult to create a scale-able process for end-of-life and recovery of used products.
For example, while the only difference between a new vehicle battery and a used one is it can no longer hold an effective charge, the two products are treated very differently by regulations. Just as the business community must integrate circular thinking, policymakers must also identify and remove regulatory roadblocks.
Our journey to create a closed-loop supply chain at Johnson Controls began when we recycled our first battery in Germany in 1904. Today in the G7 economies, 99% of all used conventional vehicle batteries are responsibly recycled and recovered to create new ones.
In the early 1900s, Henry Ford pioneered vertical integration to supply the growing demand for the Ford Motor Company. As we prepare for the Fourth Industrial Revolution and the consequences that come with it, now is the time for us to pioneer 'circular integration'. It has been and can be done.
 Related articles on Designing Buildings Wiki
- Blockchains will change construction.
- Building Revolutions - review.
- Circular economy.
- Circular economy - transforming the worlds number one consumer of raw materials.
- Faraday Challenge.
- Impact of the sharing economy on construction craft labour and equipment markets.
- Managing packaging waste streams.
- Recyclable construction materials.
- The future of electricity in domestic buildings.
- The use of batteries to store electricity for buildings.
- Waste management plan.
--Future of Construction 14:31, 20 Jun 2017 (BST)
Featured articles and news
PCSAs enable clients to employ contractors before the main contract commences. Read our introductory article.
ICE 200 brings together transformative projects from the past 200 years - and the engineers behind them.
Dame Judith Hackitt hosts an industry summit to kick start the second phase of the review.
This article explains the Buildings Regulations completion certificate, what it is, and when its needed.
Graphene has many potential applications, but when will it start being used in civil engineering?
Increasing productivity – now more than ever as we lead up to Brexit – should be the sector’s number one priority in 2018.
Carillion's collapse causes Construction Leadership Council to delay the construction sector deal report.
Urban Heritage, Development and Sustainability: international frameworks, national and local guidance.
What will the General Data Protection Regulations (GDPR) mean for you when they come into force in May?
Business Secretary chairs a new taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation.
Sir John Armitt is appointed the new chair of the National Infrastructure Commission.
High quality and high density homes - is it what we need or is it storing up trouble?