The Circular Economy in Action
More companies are taking a look at the ‘circular economy’ concept as a way to bring their business processes in line with sustainability goals. If you haven’t heard of the ‘circular economy,’ now is a good time to learn more about it, said John Ortiz, product stewardship Manager for desktop & enterprise printing at the Hewlett-Packard Company. At Stewardship 2015, Ortiz walked attendees through the basics during The Circular Economy as a Driver for Product Stewardship Innovation. He also talked about how HP is applying the concept.
The first thing to know about the circular economy is that it has an opposite—the linear economy. The linear economy concept is what we’re used to, says Ortiz. It has four steps—take (raw materials from the earth), make, consume, and discard.
On the other hand, the circular economy concept is characterized by two cycles—the biological materials and technical materials. Biological materials are designed to cascade through the system and reenter the biosphere as nutrients that can biodegrade and rebuild capital. Toxic chemicals which damage or endanger the biosphere are phased out. Meanwhile, technical materials such as polymers and metals remain in circulation, and the goal is to prevent them from reentering the biosphere by keeping them in use as long as possible.
A key point of the circular economy is to focus on restoration rather than ‘discarding.’ Business models that focus on leasing, renting and other service contracts enable the recovery, regeneration, redeployment of goods. “If you’re able to keep products in use, either by remanufacturing or redistributing them, refurbishing it, then those materials aren’t draining the earth’s resources,” says Ortiz.
To facilitate this, the circular economy emphasizes good design. “People are focusing less on owning stuff and focusing more on sharing stuff,” said Ortiz. “To do that, you have to have good design to enable it.”
He also outlined for attendees the building blocks of the circular economy, including:
- Design, with a focus on what consumers are doing with the product as a key driver
- New business models, with an emphasis on the consumer as ‘user’ and collaborative consumption.
- A reverse cycle that centers on collection, treatment and redeployment
- Enablers and favorable systems that rely on cross-sector, cross-cycle collaboration, including legal, regulatory, taxation, investment and education stakeholders
The need for a circular economy is driven by constrained resources and consumer preferences, said Ortiz. As living standards increase globally, prices in raw materials are expected to rise. At the same time, technology is enabling consumer preferences for sharing rather than ownership. Ortiz cited Uber’s ride-sharing model as one example.
What HP is Doing
HP is implementing circular economy concepts, and its product stewards play a key role, says Ortiz. The company starts with the stated intention of eliminating waste as driver of product design. Practically speaking, that meant developing product lines, such as some printers, that have an unlimited lifecycle. Modular designs allow for accessories to be swapped, and the old models run the same software as newer models. “We’ve designed that product so you never have to be satisfied with an obsolete product,” says Oritz.
HP also introduced Instant Ink, a subscription service that allows consumers and small businesses to purchase a number of pages per month. HP monitors their printers and when ink is low, it will ship new cartridges directly to the customer. Customers return their used cartridges for free. They’re then cleaned, disassembled or shredded. The remnants are augmented with other material streams and re-used for clothing hanger or bottle manufacturing, for instance.
“This program didn’t start out as a circular economy initiative,” Ortiz pointed out. It started with customer dissatisfaction at the cost of ink and the tendency for it to run out at inopportune times. Nonetheless, the program has changed incentives for way HP designs. The next generation of Instant Ink cartridges enabled wasted reduction by making the cartridges larger and having a different life expectancy attached to them.
The product stewardship team helped make these programs work, said Ortiz. “You’ve got to go beyond risk mitigation,” he said. “You don’t need to be completely circular as a company, but I think you can target specific product lines and services that you’re doing.”