In reading Tearfund’s report on the circular economy in developing countries last week, I was reminded of a useful summary of what the circular economy entails: the ReSOLVE framework. Developed by McKinsey, the framework takes the core principles of circularity and applies them to six actions: Regenerate, Share, Optimise, Loop, Virtualise, and Exchange. Here’s a summary graphic from the Tearfund report, with a little more detail on each of them below.
- Regenerate: a broad set of actions that maintain and enhance the earth’s biocapacity. That includes the transition from finite fossil fuels to renewable energy. It includes reclaiming land and restoring or protecting ecosystems. Returning biological resources to nature also falls into this category, through composting for example.
- Share: the ‘sharing economy’ is a concept that overlaps with the circular economy. Sharing gets the full use out of goods and eliminates waste and duplication. The average European car is only driving for 5% of the time, for example, spending the vast majority of the time parked up and out of use. Car-sharing schemes, tool hire, or libraries all help get more value out of products by sharing them. The second-hand market and repair are also filed under ‘share’, as they similarly reduce the ‘loop speed’ of goods passing through the economy, ensuring that they’re only sent back for recycling or reprocessing when they really need it.
- Optimise: this is about removing waste energy and materials in the manufacture of goods, and in the use of them as well. It also entails using technology to maximise resource use. For example, fertiliser use is destabilising the nitrogen cycle, but 70% of the fertiliser that is spread on crops is washed away or goes into the soil, and never ends up being used by the plant. Precision farming techniques can deliver exact quantities of fertiliser directly to the roots at just the point that plants look for it, ensuring that as little as possible is wasted.
- Loop: where organic materials are composted in a circular economy, inorganic (or ‘technical’) materials are reused. They may be recycled, or even better, goods or parts can be remanufactured. Either way, resources are processed, looped around and put back into the economy, rather than lost to it through landfill.
- Virtualise: if you have an e-reader or a Netflix subscription, you’re taking part in the virtualisation of the economy. Think how many different gadgets have been displaced by the apps on your phone – alarm clocks, maps, a daily newspaper. McKinsey also include driverless cars here and I’m not sure why, as the car itself is hardly dematerialised, even if the driver is.
- Exchange: the final category describes the processes of swapping in new technologies, upgrading or replacing older ways of doing things. Electric motors will replace internal combustion engines, for example. We may exchange ways of doing things too – perhaps swapping out private motoring, electric or otherwise, in favour of public transport and autonomous car-sharing.
This isn’t a to-do list for a circular economy. Rather, “each action represents a major circular business opportunity”, say McKinsey. In different ways, these actions all increase the utilisation of physical assets, prolong their life, and shift resource use from finite to renewable sources. Each action reinforces and accelerates the performance of the other actions, creating a strong compounding effect.”
- Read more in Growth Within: A Circular Economy Vision for a Competitive Europe from McKinsey and the Ellen MacArthur Foundation.