For all the talk about the circular economy, many still operate under the mistaken belief that it’s simply a newfangled term for recycling. While recycling is certainly an important part of the circular model, it’s actually the final stage in the life cycle of a product. In the circular economy, the emphasis is also on the redesign of products for durability, reuse for longevity — and reducing the extraction of precious materials for sustainability.

An economic model with the complementary aims of cutting waste, promoting sustainable consumption, and more thoughtful production, circularity is a restorative and regenerative system where materials are looped back for use, extending the lifecycle of a material or a product for its entire economic value, minimizing its impact on the environment.

This approach exists in contrast to the traditional linear economy’s “take, make, dispose” model, where products manufactured from raw materials are used perhaps only once — often for just moments — and then discarded as waste, ending up in landfills, burnt or polluting our waterways.

There is inarguably a great deal of room for improvement insofar as recycling goes — currently, only 7.2 percent of used materials are cycled back into our economies. However, it’s vital that we also focus on the potential for meaningful change via product lifecycle extension, designing products for hardiness, long life, and ease of repair, and for sharing or ‘product as a service’ approaches, where consumers make use of products when needed rather than owning something they may utilize once or just a few times.

Greater adoption of circular principles will have myriad benefits for the planet, leading directly to a reduction in waste, environmental pollution, and landfill pressure. Resources can be conserved, with longer-lifespan products reducing demand for raw materials and the energy expended in resource extraction, manufacturing, shipping, and waste management.

It follows, of course, that through these measures, greenhouse gas emissions will fall — dramatically, in fact. A paper from the Ellen MacArthur Foundation entitled ‘Completing the Picture: How the Circular Economy Tackles Climate Change’ demonstrates that, by 2050, “designing out waste, keeping materials in use, and regenerating farmland can reduce (GHG) emissions by 9.3 billion tonnes. That is equivalent to eliminating current emissions from all forms of transport globally.”

From a purely pragmatic, dollar-and-cents perspective, there are also numerous benefits for businesses, beyond simply doing their part to help heal the planet (which can have a priceless effect on brand reputation and equity). Reducing material usage, making supply chains more efficient, and lowering waste disposal costs all have a healthy impact on a company’s bottom line.

Adopting circular principles can open up new revenue streams and promote innovation within an organization, potentially leading to world-changing and hugely profitable inventions. Furthermore, as ESG compliance becomes increasingly crucial and vital to securing both customers and financing, every business will soon have to report their CO2 emissions, share this information with stakeholders, and demonstrate their efforts to align with net-zero guidelines.

Food is one area where change is urgently needed. According to the WEF, 40 percent of plastic produced is used for packaging, making it the largest contributor to single-use waste. A great deal of this plastic packaging is used to serve or transport food, and very little of it gets recycled.

Each year, an average individual contributes 16 tonnes of single-use plastic waste. Even a seemingly insignificant item like a small salad container or plastic water bottle can be responsible for emitting 100-400 grams of CO2. When items such as these are discarded and not recycled, it is damaging both ecologically and economically, as nearly all value is lost.

Pressure for change in the food industry is coming in an unavoidable ‘pincer movement’ from consumers and regulators. The Global Sustainability Study 2022 by Simon-Kucher & Partners found that 66 percent of consumers rank sustainability as one of the top five drivers behind a purchase decision, up from 50 percent the previous year, and 71 percent of global consumers are making changes to the way they live and the products they buy in an effort to live more sustainably.

Lawmakers are also taking steps to make circularity compulsory. The EU has put forth minimum reuse targets for packaging, aiming for 20 percent of takeaway cups by 2030 and 80 percent by 2040, while also targeting 10 percent and 50 percent (by 2030 and 2040) for packaging used in online purchases. In Germany, it is already legislated that every food outlet must provide a reusable option.

Asian countries are following the lead  – under its Zero Waste Masterplan, Singapore aims to reduce the amount of waste sent to its only landfill each day by 30 percent by 2030.

From businesses’ perspectives, moving toward circular helps shore up sustainable supply chains and operations, stem the tide of ever-rising packaging costs, alleviate supply chain disruptions that cause shortages and delays, and allow for product innovations. Beyond this, adopting circular measures increases brand value and provides a business with additional touchpoints where they can learn more about their customers.

Incorporating reusable food packaging and analyzing the data it generates opens up countless opportunities for customer engagement. One of the most exciting developments for F&B companies, businesses will be able to get a better understanding of their customers’ preferences, behaviors, and values — in turn allowing businesses to improve products, services, social media, and marketing to better cater to their target audience.

Let’s take the simple case of a cinema that operates within a closed system — selling hundreds if not thousands of paper cups, popcorn packaging, and other single-use packaging. A transition to reusable packaging with RFID-embedded chips would help the cinema acquire more customers by offering unique incentives, increase consumer engagement by analyzing consumer behavior data, improve operations by assessing hardware analytics and usage — and oh yes, reduce CO2 emissions by driving circularity.

Transitioning to a circular reusable packaging system should not be viewed as a costly and mandatory shift. Instead, it’s an opportunity to build sustainable operating models, engage with customers in new ways — and do your part in improving the environment. That’s truly closing the circle.

Manni Sidhu is Chief Executive Officer at Modoru, a SaaS platform that helps F&B companies build data driven circular reusable packaging systems.

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