Welcome to the April edition of the Circular Digest.
And say hello to our 17 new subscribers, we're delighted to have you!
This week we'll cover:
How the circular economy can reduce the impact of tariffs
Clorox's fine for greenwashing claims 🙈
EU's new rules on microplastics
Read on!
P.S: If you're interested in collaborating, get in touch by replying to this email 📩
The Headlines
Industry: RES, one of the world's largest independent renewable energy company, is showing how the circular economy can improve business efficiency. Since Covid, the company has operated a repair and refurbishment site in Albacete, Spain for wind and solar components, repairing over 18,000 components! It's now scaling this up globally, improving operational excellence, minimising downtime for clients and reducing energy bills.
Policy: The EU agreed new rules targeted to reduce microplastic pollution, in the form of pellet loss, across the supply chain. Every year the equivalent of 7,300 truckloads of plastic pellets are lost to the environment. Under this new regulation logistic operators will: 🙅♀️ be responsible for clean up where leakage occurs 🤔 carry out mandatory risk management plans to reduce microplastic loss ✅ have to be certified by a third-party if they handle >1500 tonnes of plastic pellets a year
Industry: Clorox Australia has been fined $5.2 million for greenwashing. Australia’s Federal Court fined Clorox AUD 8.25m for describing a range of kitchen and bin bags as containing “up to 50% ocean plastic“. Clorox admitted that the recycled plastic was not always collected from the ocean or from coastlines. In some cases, the plastic waste was collected up to 50km inland.
The offending product. Image: ACCC
Research: Just 9.5% of plastic made in 2022 used recycled material, according to the first detailed global analysis of its life cycle. The research also showed a rise in plastic being disposed of by incineration, with under 30% of plastic actually being recycled. Another cause of concern was the stats on mismanagement. Over 10% of plastic was mismanaged aka leaked into the environment.
The circular economy in the world of tariffs
The year is 2070. An erratic leader slaps tariffs on every single country in the world (including those with no people), some as high as 46%.
The stock market plummets, industry gets spooked. Governments start talking about new alliances and who they can buy their key resources from.
Oh wait… this literally just happened.
Okay... now you’re probably thinking what’s this got to do with the circular economy?
Let’s talk about how the circular economy can increase supply chain resilience!
A government meeting to discuss how to respond to Trump's tariffs 😉
Global supply chains
We live in a highly globalised world. Products can be manufactured in one part of the world and bought on the other side. In fact, many products have supply chains that span double digit countries and 6 continents. These supply chains are often incredibly finely tuned, operating with tight margins. A delay in one part of the supply chain can lead to the whole thing falling apart, like dominoes!
Take cars for example, their supply chains are incredibly complex. From raw material sourcing to manufacturing of components to assembling of the final product, transporting of the car and end-of-life and recycling. American cars are not solely made in the US. Ford has manufacturing and assembly plants in Mexico and an assembly plant in Canada. With tariffs, manufacturers could be subject to tariffs every step of the way, up to cumulative rates of 70%. This could mean price increases of $2-20k!
Supply chain resilience
So in an increasingly tumultuous economy that exposes the vulnerabilities in supply chains, how can the circular economy be a solution?
During the Covid-19 pandemic, when the whole world shut down, a Belgian study demonstrated that 66% of circular businesses didn’t suffer any losses, compared to just 2% of businesses with predominantly linear set ups.
Why? Their supply chains were different.
Businesses investing in repair, refurbishment, remanufacturing or regenerative models had developed supply chains which were more localised, diversified and had distributed production capabilities.
A circular economy eliminates waste and pollution, keeps materials in use at their highest value for as long as possible and regenerates nature.
By creating circular supply chains, you limit the need for resource extraction. This means you can keep materials circulating locally, limiting the need for expansive and global supply chains.
By creating circular supply chains that regenerate nature, what you take out gets put back into the earth, instead of being exported across borders.
Even the World Trade Organisation has highlighted how the circular economy can achieve many of the environmental, social and economic UN SDGs.
National and economic security
The circular economy can also support matters of national interest. Supply chain disruptions, from the pandemic to Russia’s invasion of Ukraine, demonstrated the need for local, circular supply chains to reduce exposure to shocks and prevent the depletion of critical resources. The circular economy as a matter of national security has been highlighted by the Environment Secretary of the UK.
Critical Raw Materials (CRMs) are a resource of national importance. Minerals such as copper, magnesium and lithium are used in low-carbon technologies such as batteries and solar panels.
There is no alternative to them.
The EU is heavily reliant on other countries to supply these minerals. China provides 100% of the EU’s heavy rare earth elements (REE), Turkey supplies 99% of the EU’s boron and South Africa supplies 71% of the EU’s platinum and an even higher share of the EU’s platinum group metals.
In the event where the EU can no longer source these minerals from these countries, it could have massive consequences on the EU’s goals to decarbonise and become a leader in digitalisation and tech.
If CRMs are used in a circular economy, they will be recycled back into the market.
With the Critical Raw Materials Act, the EU has set a benchmark of 25% of annual consumption to be from domestically recycled CRMs.
The circular economy is more than good for the environment
The circular economy is good for the environment. By reducing waste and keeping materials in use for longer, we are reducing the environmental impacts produced at every stage of the supply chain.
But… the circular economy is more than that.
It’s a system that can reduce vulnerabilities to shocks and conflict.
In a time where these are only increasing, the circular economy is the common sense answer.
What did you think of this edition of Circular Digest? If you have any thoughts, questions, or ideas for future content, reply to this email. 😊
See you next month!
Kayleigh
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