What is the circular economy?

The ‘circular economy’ is a phrase frequently used in the media and by politicians – there is a huge amount written on the subject, which makes it easy to get confused about what exactly it means.

At its core, the circular economy is a simple principle – it’s about sustainability. It’s an economy that considers the environmental and social impact of the way we buy and use things, and ultimately the way that we can maximise the beneficial use of our resources.

At a practical level, what does adopting the circular economy look like for businesses?

Although it’s a simple concept at heart, truly adopting a circular economy would be difficult to achieve overnight. It requires a change of mindset towards how we can be more sustainable and this needs to be present at every level within a business. Those who adopt the circular economy will design products and services in such a way that:

• the value added in manufactured products is maintained through maintenance, reuse, and remanufacture;
• where value can no longer be retained in the above way, products and packaging are recycled;
• energy inputs are sourced from renewable sources;
• resource use is consistent and responsible, making the most of natural resources.

A recent study indicates that if all EU states were to adopt the circular economy, there would be a potential €1.8 trillion collective economic annual benefit by 2030. There are also, however, further benefits to businesses that adopt the circular economy beyond improved efficiency and reduction of costs.

A recent study indicates that if all EU states were to adopt the circular economy, there would be a potential €1.8 trillion collective economic annual benefit by 2030.

Benefits to business

There are three broad categories of benefits for businesses adopting the circular economy – environmental, social and economic.

The circular economy is grounded in tackling the key environmental issues that we are all familiar with today. Through adopting the principles of the circular economy, businesses can reduce their reliance on using and disposing of the world’s natural resources. Businesses then, through the circular economy, have an opportunity to contribute towards the global effort to tackle climate change.

From a social perspective, a greater understanding of where we source our materials has several benefits for businesses. Consumers’ mindsets have changed significantly in this space recently, becoming increasingly socially and environmentally aware; leading to a tendency for consumers to favour companies that are socially responsible. At the same time, a higher calibre of employee is likely to be attracted to such businesses.

Finally, from an economic standpoint, circular economy driven businesses are at their very heart more efficient and are therefore likely to be more profitable. A report from the Ellen MacArthur Foundation in 2015 emphasised the vast financial benefits for the manufacturing industry if it were to embrace a cyclical design process. Businesses that adopt these principles will also reap the financial benefits of improving energy efficiency.

From an economic standpoint, circular economy driven businesses are at their very heart more efficient and are therefore likely to be more profitable.

What does the future hold for the circular economy?

Although in its relative infancy, regulation in support of the circular economy is coming. As global political momentum gathers around climate change and marine plastic pollution, politicians, stakeholders and ultimately businesses will need to adapt. Those who have already taken steps in this direction will benefit the most.

There are already companies that are shaping themselves around capitalising on the circular economy (i.e. Toast Ale here in the UK).  There is still time for less sustainability-minded companies to take the necessary steps to adapt their business models to position themselves within the circular economy.

 Learn more about how Ditto Sustainability is using their patented technology to play a part in consulting companies as they move towards the circular economy: http://www.dittosustainability.ai/

But if you have to spend £20 every year on a replacement pair, then over three years that’s £60 spent. It makes more sense to spend that £60 at the start on a pair of shoes that will last three years or more, especially if they are more comfortable and a higher quality.

Your shopping habits have a huge effect on the environment too, and it is certainly suffering for these so-called ‘fast-fashion’ trends. While scooping up a dress for £5 might seem like an exciting bargain, let’s be honest, the price might be more the motivator in the purchase than the style, quality, or comfort. More and more of these clothes just end up being worn once or twice before heading to the bin. In fact, in a survey by Method Home, of 2,000 British shoppers, nearly a fifth admitted to throwing clothes in the bin.

What impact can fast fashion have?

With fashion trends changing faster than ever before, there’s an increasing pressure on consumers to change up their wardrobes faster. But, with our money only stretching so far, many of us are turning to cheaper outlets for our clothing.

Cut-cost fashion must also find somewhere to make savings along the production line. You can’t sell a £5 dress without using cheaper materials and such. This often leads to garments made quickly with non-organic fabrics. Plus, as the Independent reported, the process of dying these clothes is the second largest contributor to water pollution.

While the short-term purchase may be cheaper, the cost to keep replacing the item over the years will add up. If a more expensive version will last a number of years, it could end up being comparatively cheaper.

By its very nature, it is expected that the garment you have purchased will not be kept long, nor will it be expected to last for years. On the flip side, fashion with an emphasis on quality and durability will see you through. This manifests particularly in the threads lost during washing. Cheap clothes tend to shed tiny microfibres when washed, which end up polluting our oceans.

The cost of quality

As Life Hacker rightly states, a high price doesn’t always mean high quality. Here’s some top tips for spotting good quality shoes and clothing:

1. Spares for repairs — this is like a calling card from the designer. If the item comes with spare buttons, then the item is expected to last enough for it to require a button mend at some point!
2. Check the pattern matches at the seams — it’s the little things that are the biggest giveaway!
3. Look for gaps in the stitching — an item that will last will have no gaps between stitches on the seam, and also have more stitches per inch. Take a good look at those stitches!
4. Don’t look at the price tag — as mentioned before, this isn’t always an indicator or quality. People can, and will, charge good money for a poor product. Take a look at the item itself.
5. For clothes, scrunch them up a bit — take some of the material in your hand and ball it up for a few seconds, then let go. A good quality material will survive and the wrinkles will fall out. Cheap material will stay wrinkled and creased.

Leather ankle boots for example are versatile and can be used for range of occasions, so make sure to buy a quality pair to withstand all those wears! Divide its cost by the amount of times you think you’ll wear it and that will give you the cost per wear. If it’s something you’ll wear every day, definitely check the quality of the item! Remember, the ‘bargain’ comes in how many times you think you’ll wear the item. It’s always recommended to invest a little in timeless staples that can be mixed and matched for a variety of outfits.

Sources:

https://theecologist.org/2018/oct/30/fast-fashion-method-madness

https://lifehacker.com/cheap-clothes-are-too-expensive-buy-quality-instead-1751019637

https://fashionunited.uk/news/fashion/method-soap-brand-wants-to-clean-waste-in-fashion/2018101239428

http://www.wrap.org.uk/content/love-your-clothes-waste-prevention

https://www.independent.co.uk/life-style/fashion/environment-costs-fast-fashion-pollution-waste-sustainability-a8139386.html

https://www.itv.com/news/2018-10-31/britains-love-of-fast-fashion-is-harming-marine-life/

https://www.cbc.ca/news/canada/london/like-uber-for-clothes-stmnt-startup-fight-fast-fashion-closet-rentals-1.4902265

https://www.buzzfeed.com/alisoncaporimo/clothing-quality-clues?utm_term=.dewknndvZ#.jdqgLLJQ3

https://www.liveabout.com/how-to-spot-quality-clothing-1387970

Following the recent government announcement of plans to prohibit all petrol and diesel vehicles by the year 2040, Britain is weighing up the idea of switching to ‘green’ driving more than ever before.

New research from leading comparison website MoneySuperMarket has delved into the mind of the consumer to determine just how viable this switch is. The research reveals factors such as the true cost of making the switch to electric driving versus driving a petrol or diesel car. It also explores the number of charging points currently available in major UK cities, a key factor in the viability of the plan to turn the UK electric.

The research also highlights the lack of knowledge currently being shared on the benefits of driving electric and public concerns about the feasibility of the 2040 ban.

Is the British Public Prepared?

With 49% of the British public stating that they have never considered purchasing an electric or hybrid car, it appears that education and pricing are crucial factors in the public’s apprehension to go electric. Some of the key findings from the research include:

51% of people surveyed stated price is currently the biggest barrier to them buying an electric or hybrid car.

Nearly 30% of people don’t buy electric or hybrid cars due to lack of knowledge of how they work.

62% of people don’t know that the Government offers discounts and grants on buying an electric or hybrid car

The True Cost of Driving Green

Beyond public opinion, cost is a major factor in the sustainability of the plan to move to electric and a concern for the public as a whole. Fundamental findings on the cost of buying and running electric, petrol and diesel cars revealed that, although cheaper to run, electric cars are not the most cost-effective motor to own overall. Some findings on the cost of running each car type include:

While the upfront costs of petrol vehicles were the lowest, the average running costs of an electric car are 20% cheaper than diesel and petrol engines, with an average saving of £2,109 across 6 years.

Filling up your petrol or diesel car is 5 times more expensive than electric.

Petrol cars boast the lowest average insurance premium (£697.19), whilst electric remains the most expensive to insure at £923.

If drivers switch to electric in 2018, they’ll save almost £8,000 on running costs by the time the ban is enforced.

Taking Charge in 2040

The government’s plan to turn the UK into a nation of electric car drivers rides not only on the cost of the cars over their lifetimes, but also on the feasibility of fuelling these vehicles. Having an appropriate number of public charging points will be key for the success of Britain’s electric switchover.

Data collected on the number of electric car charging points available to drivers in UK cities bring into question whether the UK as a whole is truly ready for an electric revolution. Whilst the capital performed well, with 210 charging points in Central London, other cities fell short. Large cities such as Liverpool and Cardiff had fewer than 10 raising questions over the preparedness of major UK cities for 2040.

For the full details on the true cost of driving green and how the UK is shaping up, click here to see the full research.

Methodology

To create an average for each fuel type, an average was taken of 3 of the top selling cars from petrol, diesel and electric respectively. Data for the upfront costs of each of the 9 vehicles were taken from their brand’s site as well as costs of servicing, road tax and MOT prices. The ‘lifetime’ was measured as 6 years with the average mileage of 7,900 miles a year entered onto the site nextgreencar.com to determine the fuel costs. The overall costs for each model were made into 3 separate averages for electric, petrol and diesel fuel types. The models used included:

-    Ford Fiesta Style – Petrol
-    Volkswagen Golf – Petrol
-    Ford Focus – Petro
-    Skoda Superb Estate – Diesel
-    Vauxhall Astra Hatchback – Diesel
-    BMW 3 Series Saloon – Diesel
-    Renault Zoe Signature – Electric
-    Nissan Leaf Acenta – Electric
-    BMW i3 – Electric

In order to find out the number of electric car charging points per city, the site www.zap-map.com was used.

(Source: MoneySuperMarket)

New report from national law firm Mills & Reeve highlights the defiant ambition of the mid-market despite serious challenges, and demands for sustainable growth finance.

Mid-market businesses remain ambitious and confident in their growth prospects despite an unstable economic landscape, the impact of Brexit and an unsupportive funding environment, according to new research from national law firm Mills & Reeve.

The study, ‘Defying Gravity’ - based on the opinions of 500 leaders of medium-sized businesses in the UK – reveals that 83% of mid-market businesses plan to increase turnover in this financial year (2017/2018) by an average of 22%, and two thirds of leaders aiming to grow (62%) are willing to bet their house on meeting this target. This is not unrealistic, with the new research also revealing that two thirds (66%) of medium-sized businesses grew turnover last year, at an impressive average of 20%.

However, mid-market businesses face serious challenges to growth. Three fifths (59%) of mid-market business leaders do not believe that the economy is strong and stable. Two thirds (64%) of mid-market boards are concerned that there is now a real risk of recession, and that economic uncertainty will disproportionately affect the mid-market (66%).

With single market access “critical” for three fifths (60%) of mid-market businesses, Brexit looms large on leaders’ list of concerns. Three in five (61%) mid-market leaders are concerned that the UK failing to reach an agreement with the EU would cause “significant damage” to their business, and 60% are concerned that regions outside London will be disproportionately affected by Brexit. More than half (55%) of leaders are concerned that implementation of Brexit is a serious threat to their ability to recruit both specialist and low-cost talent.

The external funding needed to supercharge growth is also found to be lacking: almost three in five mid-market leaders (58%) say that their company can’t achieve its growth potential without better long-term finance options. More than half (56%) of business leaders stated that mid-market finance is not “fit for purpose”, with two thirds (63%) believing that the UK funding environment is great for start-ups, but not for mid-market firms.

Claire Clarke, managing partner at Mills & Reeve, comments: “Despite very real challenges, it is encouraging to see mid-market leaders remaining defiantly ambitious about growth, determined to beat market conditions and to hold their position as the driving force of the British economy.

“But these businesses are being hindered in their efforts to realise their ambitions. Accessing growth finance suited to mid-market needs is a significant challenge, and the unstable economic and political landscape is causing some businesses to refrain from making the investment necessary to grow.”

The findings are released today ahead of a series of reports from Mills & Reeve championing the mid-market and exploring the current challenges faced by business leaders.

The research goes on to reveal a perceived lack of support from Government, with two thirds (65%) of medium-sized business leaders frustrated that the Government “keeps presenting obstacles to mid-market growth”. Three-quarters (74%) cite a lack of targeted policy support, with 61% concerned that Brexit will distract Government from supporting regional development and infrastructure.

Jayne Hussey, head of mid-market at Mills & Reeve, adds: “The mid-market is the unsung powerhouse of the UK economy, and we are hopeful that medium-sized businesses can continue to overcome the barriers to growth formed by uncertainty. The events of the recent past may have rocked the nation’s confidence, but the resilience, strength and ambition of mid-market business leaders appears to remain intact.”

(Source: Mills & Reeve)

The White House is on fire. Every day – almost every few hours – new scandals are breaking. From investigations about Russian collusion to alleged obstruction of justice, the blaze is white hot. But when it comes to the world of businesses and law, it's not the alleged criminal law bombshells that are causing the most panic. James Goodnow, talks to Finance Monthly.

On June 1^st, US President Donald Trump formally announced what everyone knew was coming: the US is out of the Paris Climate Accord. The announcement and its build up set off another explosion the likes of which Trump and his Twitter account aren't as accustomed to fighting: a neck-snapping backlash from the business community and the lawyers who represent them.

Trump Thumbs His Nose at Business

“Global warming is an expensive hoax!” Donald Trump famously — or infamously — tweeted in January 2014. With that shot across the bow at the global scientific community, Trump started his war against climate change. His claim served as a rallying cry for his base supporters — many of whom believed that rejecting limits on carbon emissions would lead to a resurgence of US jobs in the coal industry. And the strategy was largely successful, catapulting Trump into the White House.

Despite Trump's bluster, the business community largely took a wait-and-see approach following Trump's election. The reason: Trump engaged in plenty of campaign hyperbole that was ultimately dialed back once he assumed office. Obamacare "repeal and replace" is stalled, construction has not started on Trump's border wall with Mexico, and his travel ban has been blocked by the courts. Perhaps the withdrawal from the Paris Accord would end with the same fate: a promise that would be delayed or not fulfilled.

The business world miscalculated. What business leaders monitoring the situation failed to account for is the fact Trump was backed into a corner. He needed a win with his base. And withdrawal from the Paris Accord is one of the only "successes" he could accomplish unilaterally.

The Business World's Reaction

The response from the business and legal community has been swift. On June 1, 25 major US companies, including juggernauts Apple, Facebook, Google and PG&E signed an open letter to the president that appeared in the New York Times and Wall Street Journal. The letter makes the business case for the Paris Accord: "Climate change presents both business risks and business opportunities."

The day before the announcement, Tesla and SpaceX CEO Elon Musk gave Trump an informal ultimatum on Twitter, saying he will have "no choice but to depart" from Trump advisory councils if Trump pulled the plug on the Paris Accord. Musk's comments are not isolated. Since the election, over 1000 businesses signed the Business Backs Low-Carbon USA statement.

The chorus of voices coming from the business community is united by a common theme: US withdrawal from the Paris Accord is not only ethically questionable, but leads to dangerous instability for business. Every day, business leaders make difficult decisions about where to allocate resources. A stable and uniform framework allows businesses to confidently invest in technology that will last into the future. According to the Business Backs Low-Carbon USA statement: "Investment in the low carbon economy ... give[s] financial decision-makers clarity and boost[s] the confidence of investors worldwide."

Legal Community Reaction

Trump's decision has also put lawyers into hyper-drive. Within Washington, there is widespread disagreement about the legal implications of Trump's move. Last week, a group of 22 US lawmakers, including Senate majority leader Mitch McConnell, warned Trump in a letter that his failure to withdraw from the Paris Accord could open the litigation floodgates: “Because of existing provisions within the Clean Air Act and others embedded in the Paris Agreement, remaining in it would subject the United States to significant litigation risk." But it's far from clear that US withdrawal from the Paris Accord will immunize the White House from the courts – with groups that favor the agreement already having vowed to sue.

In-house lawyers are no doubt sweating, as well. Lawyers at large corporations with operations in the United States are tasked with providing recommendations to business leadership on what they can and can't do from a regulatory perspective. With Trump pulling the US out the Paris Accord, lawyers now have to look to domestic regulations — a scheme that itself could be turned upside down — and try to reconcile those with international protocols. All of this uncertainty may translate into lawyers feeling like they are walking on quicksand.

Trump's Political Miscalculation? 

Trump prides himself on operating on instinct. Prior to making his decision to pull out from the Paris Accord, he no doubt felt the rumblings of this business backlash coming. Why, then, did he move forward? Part of the answer may lie in his examining his base. Recent polls show that, for the first time, Trump's support among his core supporters is starting to erode. And that may spell danger for Trump, who relied on a mobilized and rock-solid base to ride into the White House. Trump thus decided that his need for a political victory and appeasing his base was worth the kickback from the business community.

But Trump may be missing something here. According to many reports, moderate conservatives and centrists who voted for Trump did so in part because they believed his rhetoric was nothing more than puffing that wouldn't ultimately be acted on. They were willing to throw their support behind him believing that he would revert to more traditional GOP, pro-business values.

But Trump's withdrawal from the Paris Accord demonstrates that Trump isn't all talk. When his back is against the wall, he is willing to act – even if it means acting against the interests of non-base voters who helped elect him. That realization may alienate the critical segment of the business electorate he needs to win again in 2020. More immediately, it may spell trouble for Republican members of Congress in 2018.

The White House is on fire. But it may not be heat from the blaze that stops Trump politically – but rather a cooling to Trump and his policies from moderate Republicans and the business world.

James Goodnow is an attorney and legal and political commentator based in the United States. He is a graduate of Harvard Law School and Santa Clara University. You can follow him on Twitter at @JamesGoodnow or email him directly at james@jamesgoodnow.com.