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Explainer: what is the circular economy?


Cirkulär ekonomi

The rate at which we’re digging up and using the world’s scarce resources means that, before long, they will simply run out.

We are one planet. But right now, we’re consuming as if we have three at our disposal.

The circular economy aims to change how we view stuff. How we make it, use it and ultimately dispose of it.

The approach will ensure the world can support the needs of a burgeoning population while, at the same time, reversing our current unsustainable levels of pollution.

Here we explain why circular thinking is an inspired – if somewhat obvious – solution to a huge global problem.

Take, make, dispose

Much of today’s economic activity can be characterised as linear. We extract materials, manufacture goods, use them once, then throw them away.

New products almost entirely depend on the use of virgin raw materials and vast amounts of energy and water. In the design phase, little or no consideration is given to the product’s reuse or recovery value. What’s more, the cost of materials has been rising and getting increasingly volatile.

While great strides have been made to improve resource efficiency, the take-make-dispose model still leads to huge losses. In the FMCG sector, for example, the total annual material input value is estimated at $3.2 trillion (Opens in a pop-up window ), of which only 20% is recovered.

Estimates suggest that, by 2025, there will be another billion people on earth. Not only will the number of consumers grow, patterns of consumption will change too. For example, an expected shift towards more packaged goods will mean more packaging material and more waste.

We need a whole new way of thinking

For most people, circular means recycling. But that’s actually the last resort. A circular economy is restorative and regenerative by design. It uses as few resources as possible – from renewable sources – in the first place and derives the most value from them during their lifetime.

The idea is to design things that can be maintained and reused. When they can no longer be used in their current form, the materials go into something else. And when eventually the material has degraded, it’s recycled and turned into new goods. This is often called ‘closed loop’.

It’s easy to see how this approach can be applied to, say, a mobile phone or a car, where the product is used, maybe shared, sold on, then dismantled so certain components can be reused.

But how does it fit with a company like Unilever?

For us, as for most FMCG companies, circularity is a priority in rethinking and tackling the urgent issue regarding plastic packaging.

It’s hard to avoid plastic

Plastic is an important and integral part of the global economy, and its use has grown phenomenally over the past 40 years. Today nearly everybody, everywhere comes into contact with plastics and especially plastic packaging each and every day.

Over 300 million tonnes of plastic is produced annually, 26% of which goes into packaging.

Not only does it bring direct economic benefits, it can also contribute to better resource efficiency. For instance, it helps avoid waste by extending the shelf life of food and it reduces fuel consumption during transport by bringing packaging weight down.

But there’s a big – and growing – problem.

Of all the world’s plastic packaging, currently only 14% gets collected, of which just 8% is recycled. Much of the rest ends up in landfill or, worse, litters our streets, streams and oceans. According to the Ellen MacArthur Foundation, by 2050 there will be more plastic than fish in the sea.

Being part of the solution

As a large FMCG company, we use a lot of plastic. That means we can influence how this plays out. We want to help lead the way towards a circular economy for all our packaging, especially plastic.

In January 2017, we announced a commitment to make all our plastic packaging reusable, recyclable or compostable by 2025. Alongside this, we have also pledged to increase the use of recycled plastic content in our packaging to at least 25% in the same timeframe.

We’re focusing our efforts in three areas: designing our packaging so we use less plastic in the first place; looking for alternative materials so we move away from plastic; and, where we do use plastic, making sure it stands the best possible chance of being recycled.

Our starting point is the quantity we use. Through redesigns, we have already reduced the amount of packaging waste per consumer by 29% since 2010. One example is our MuCell technology, where gas bubbles are injected in the middle layer of the bottle wall, reducing the amount of plastic required by around 15%. We have made this technology available to our competitors.

We’re also developing refillable and reusable packs. In 2017, we launched refills across our Rexona body wash range in Brazil and Dove shampoo in India. Earlier this year, also in Brazil, we launched super-concentrated refills for our OMO laundry detergents, saving 75% plastic. And in France, we’re testing an in-store dispensing machine for our Skip and Persil laundry detergents to see how shoppers react to the concept.

In terms of moving away from plastic, we’re exploring a range of alternative materials including paper, soluble packaging and, for certain applications, we’re considering moving to metals, particularly aluminium, which is much more widely recycled than plastic in many regions. We will only do this where there are no unintended consequences like, for instance, increased greenhouse gas emissions or energy usage.

75% plastic saved with our OMO laundry detergent super-concentrated refills

Recycling: the challenges and opportunities

Improving the types of plastic we use is key. In terms of our target to use more recycled plastic content in our packaging, at the moment, like others, we are constrained by availability of materials, recycling infrastructure and technology. Around 30% of plastics remain extremely difficult to recycle.

Take sachets, for example. Like many companies, we use sachets to make products accessible to low-income consumers. To address sachet waste, we are investing in CreaSolv® Technology so that the plastic can be reused. We intend to make this technology open source so others – including our competitors – can use it.

Our plant-based Home Care brand Seventh Generation aims to make all its packaging fully recyclable or compostable by 2020. It’s also eliminating virgin petroleum plastic (that’s new plastic made from oil) and virgin fibre (virgin wood pulp) from its packs.

We’re making this shift from virgin to recycled materials in brands like TRESemmé and Suave. In others, we’ve gone a step further.

The packaging for our Love Beauty and Planet range is made from 100% recycled materials and is also 100% recyclable. One new innovation is the use of a special adhesive which makes it easier to remove labels cleanly at recycling facilities.

Similarly, REN has introduced a 100% recycled bottle, containing 20% ocean plastic.

And we’ve made changes to our tea bags, which traditionally use a small amount of plastic in the seal. Brands in Poland, Canada and Indonesia have adapted their manufacturing process to use plant-based materials. In March 2018, we launched our first fully biodegradable PG tips tea bags in the UK, made with corn starch.

Wider impact through partnerships

The move towards a circular economy for plastics requires wider change. That’s why we’re partnering with start-up Ioniqa and the largest global producer of PET resin, Indorama Ventures, to pioneer new technology that converts PET waste back into virgin grade material for use in food packaging.

This innovation is particularly exciting because it could unlock one of the major barriers today – making all forms of recycled PET suitable for food packaging. Making the PET stream fully circular would be an important milestone towards this ambition, helping us while also transforming the industry.

It’s not all about packaging

Aside from packaging, we have adopted circular economy practices in other parts of our business.

Many of our production line machines are easy to disassemble, allowing us to reuse modules if a product design changes and redeploy components to where capacity is needed. This is far more economical – and environmentally friendly – than purchasing new.

In many of our factories, the waste created from the production process is used to generate energy. Ben & Jerry’s is a good example. One of its plants in the Netherlands is powered in part by the ‘Chunkinator’ which turns ice cream bi-products into biogas.

We also have a zero waste to landfill programme in all our facilities. One aspect of this is returning transport packaging – such as drums, pallets and cartons – back to suppliers so they can be reused.

En cirkulär ekonomi.

Recycling drop-off point in Brazil

Working with governments, industry and consumers

To move to a more circular economy approach we need to fundamentally rethink the way we design products and packaging, in the context of the systems in which products flow. To that end, we’re working with national governments to develop waste collection and recycling infrastructure.

Collecting and sorting recyclable materials is key to ensuring they can be reused. Consumers, therefore, have a vital role to play. To help here, we run projects aimed at encouraging consumers to recycle more and make recycling a lifelong habit.

In Brazil, for example, we work with Consumer Goods Forum companies and NGO CEMPRE to increase the types of materials recycled, drop-off points for used packaging, and co-operatives to sort materials. This initiative has collected over 100,000 tonnes since it began 15 years ago.

Finally, we are collaborating with the Ellen MacArthur Foundation and its New Plastics Economy initiative to define what materials are put into the marketplace. This will ensure our packaging is compatible with existing and future recycling infrastructure.

Focusing on the themes of recycling, reuse and recyclability, the New Plastics Economy represents the systems-level change the world so desperately needs.

Ground view of a forest of tall trees

Rethinking plastic packaging

We want to move towards a circular economy, so that more plastic packaging can be reused or recycled.

Find out how you can take action.

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