Skip to 0 minutes and 4 secondsSTEVEN DAY: Hello, dear learners. Welcome to week six on the circular economy. My name is Steven Day. I'm the mentor for this week. And I'm here with Dr. Donato Masi your module tutor. How are you, Donato?

Skip to 0 minutes and 17 secondsDONATO MASI: Hello Steven. I'm fine, thank you.

Skip to 0 minutes and 20 secondsSTEVEN DAY: I'm well too. So first off, I would like to ask a question about the utopian scale of the circular economy. How do you think we can handle this ambitious project?

Skip to 0 minutes and 33 secondsDONATO MASI: Well, I think that it's not utopic to talk about the circular economy now for different reasons. The first reason is that when we talk about circular economy, we are talking about an economy. So we are talking about business and profit. The idea of the circular economy is to achieve a synergy between the environmental and the economic pillar of sustainability. So it's not your topic and embracing the circular economy means doing something in line with the interest of businesses.

Skip to 1 minute and 5 secondsThe second reason why we can really think that circular economy is a promising solution for companies is that it coordinates a full set at three different levels, the macro level of policymakers, the middle level of supply chains and companies, and the micro level of technologies. So the coordination of performance at different levels will facilitate the implementation of this new concept and the transition for a more circular production and consumption pattern.

Skip to 1 minute and 37 secondsSTEVEN DAY: So if you could talk to an individual about how he can help in this transition what would you say is necessary for us as individuals to adapt to make the circular economy become a reality?

Skip to 1 minute and 50 secondsDONATO MASI: Oh, well, this is an interesting question. We just ran a survey involving companies, manufacturing companies all over the world, and we realised that a key barrier to the implementation of the circular economy is the world. So a lot of people are not aware of what a circular economy is, and what are the key advantages connected to its implementation. So people operate both within companies and as individuals. So a first fundamental change for the transition to a circular economy is to understand what the circular economy is. So take some time to understand what the circular economy is. And why it can be beneficial for a big business or for us as individuals and societies.

Skip to 2 minutes and 39 secondsThen there are the, I think, two mental attitudes that we have to adopt if we really want to shift to a circular economy. So the first is to think big. Adopt a holistic perspective. And perceive ourselves as components of a broader system, that is the ecosystem. And to perceive ourselves as part of this broad ecosystem. So can see that all the things that we do, and consider the consequences that we have on this broader ecosystem. This is true also for companies. So companies should move from the old focus on the narrow business or the supply chain, and to consider in a holistic perspective what the impact of the company on the entire ecosystem could be.

Skip to 3 minutes and 37 secondsAnd this holistic perspective can also imply an advantage. Because if they think to the broader ecosystem that there might be advantages and opportunities for me as a manager or as a firm. The second mental attitude that we should adopt to promote this transition is to think in the longer term. Because often we perceive that advantage of the circular economy in the more long term. So we cannot expect benefits in the short term. Or we cannot expect to see a change in the next few months. But we should adopt some practises and look for results in the more longer term. But it's proven and it's a sure that the practices promoted by the circular economy are effective. And so they work.

Skip to 4 minutes and 31 secondsSTEVEN DAY: So we were talking about long term. Thinking more short term, what would be a technology or product that you can imagine becoming circular in the future?

Skip to 4 minutes and 42 secondsDONATO MASI: Oh well, there are different types of products that are shifting more and more to more circular business models. A good example is cars. So traditionally for cars, the transition to a circular economy was mainly driven by regulation. Because regulation forced car manufacturers to let us say adopt materials that were recyclable for at least the 90% of the weight of the car. More recently, the transition to a more circular economy is an interesting-- let's say it's driven by different consumers behaviours. Because consumers are more and more adopting consumption patterns based on choosing a service rather than a physical product. So this type of business models are coherent with the principles of the circular economy.

Skip to 5 minutes and 43 secondsWhile for cars the transition was let's say already ongoing. Now there are new types of products that are shifting more and more to a circular economy. And we can mention some examples for fast moving consumer goods. For instance, in the clothes industry, we're having some good examples of companies that are adopting a leasing based business model, which is quite unusual for clothes. And also, we are seeing that some companies are giving incentives to consumers to return their products at the end of their life cycle. So there are some new business models for which the transition to circular economy is offering some new and interesting solutions.

Skip to 6 minutes and 38 secondsSTEVEN DAY: Yeah, well, one of the examples for clothing would be H&M who take back all products.

Skip to 6 minutes and 44 secondsDONATO MASI: Exactly. It's an interesting initiative recently implemented. And well, when I teach and I ask my students whether they are aware or not of this, it's a very good example, because most of them-- many of them shop at H&M and they have seen this change. And it's something that they perceive as a benefit. So we can see an example of synergy between the let's say performance of the firm related to the more traditional measures and the environmental performance. So that there is consumer value and environmental value at the same time when these types of solutions are implemented.

Skip to 7 minutes and 26 secondsSTEVEN DAY: OK, Donato, thank you very much for this. And we come to one last question. And that would be why is the circular economy becoming topical now and not 20 years ago, for example?

Skip to 7 minutes and 37 secondsDONATO MASI: Oh well, there are two types of reasons why the circular economy is becoming so important. In last years, the first type of reason are related to the protection of the environment. So protecting the environment is something that is particularly-- that is very important. And with the entrance of the new actors in the international markets, the urgency of adopting this type of solution is more clear. And let's say the need is particularly evident with new actors with the population of billions of people. So really, it became clear that with the current production and consumption models, the resources are simply not enough.

Skip to 8 minutes and 39 secondsBut there is also a second class of reasons why circular economies are particularly relevant now that are more related to business. So we can mention for instance the fact that regulation is becoming increasingly stringent in terms of protection of the environment. So as we said, we have to intervene in favour of the environment, not only because it's ethical doing it, but because regulation forces companies to commit to a protected environment and to adopt these type of measures. Then we can think to what's happening in terms of the prices of raw materials. There are several reports that show that in the last few years the price of raw materials is becoming increasing volatile.

Skip to 9 minutes and 29 secondsSo we can expect that there will be competition for the purchase of some critical raw materials. And so the circular economy might be a solution to deal with this type of risk. The third reason from a business perspective, so the third reason of the relevance of the circular economy last year is a change in some behavioural patterns of consumers. What I mean is that consumers are increasingly willing to purchase a service, like we said, for cars. So consumers are increasingly willing to purchase a service rather than a physical product.

Skip to 10 minutes and 11 secondsAnd therefore, with these types of business models, the company has to keep ownership of the physical product and the closed-loop supply chain that is able to collect the products at the end of the-- they re-use and to refurbish them when necessary, and make them available to the customers again. So this change in the behaviour of consumers is also another reason why more and more companies are shifting to more circular business models and more circular supply chains. So I think that definitely because of these reasons the transition is ongoing there are several solutions out there, it's interesting to see how these solutions will evolve.

Skip to 10 minutes and 55 secondsSTEVEN DAY: OK, great. Thank you very much, Donato.

Skip to 10 minutes and 57 secondsDONATO MASI: Thank you Steven for your questions.

Skip to 11 minutes and 0 secondsSTEVEN DAY: This wraps up this last week of our course. I'd like to thank all learners for participating and for the discussions we've had. Is there anything you want to add, Donato?

Skip to 11 minutes and 12 secondsDONATO MASI: Thank you to everybody.

Week 6 summary

In this week we have seen how economic and environmental reasons urge for the reduction of waste and a better use of natural resources. There are already several solutions for these issues, such as recycling, refurbishing, and reusing product returns. These solutions are effective but only solve limited parts of the problem. A circular Economy aims at combining these solutions and at designing an entire economic framework that is restorative and regenerative by intention and design.

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This video is from the free online course:

Supply Chains in Practice: How Things Get to You

The University of Warwick