Are we going in circles? Good! The shift to a Circular Economy and how Asset Finance is aiding.

Updated: Dec 3, 2019


Given the most basic economic problem of limited resources and unlimited wants, it is astounding how much we throw away. A quick tour over the last 100 years shows us that we went from being a highly resourceful circular economy to a wasteful disposable linear economy.



Mass production brought rapid improvements to quality of life, products become cheaper and more accessible, which in general was considered a good thing. What wasn't considered however was the environmental consequences. In the Victorian era, you would buy a piece of furniture to have for the rest of your life, the linear economy has been taken so far that today you buy a piece to then throw it out a year later when fashion changes. When multiplied by all the products we buy day in day out, multiplied then by the population, we can see why we have reached breaking point.



At the beginning of 2018, China stopped importing other countries waste, which Western countries relied on to clear the sheer amount of rubbish that was being produced. Reuse, Reduce and Recycle has been widely publicised motto over the last ten years, but it only seems that it is really gaining traction now. With stricter regulation and heightened public pressure, companies are becoming more circular economy minded.



Ikea

Having mentioned furniture above, we can’t avoid Ikea, for decades they have been churning out furniture for the masses at affordable prices. But a trip to your local dump will see that it is mainly their and other flat pack companies furniture being discarded. Looking to buck this trend Ikea CEO Torbjörn Lööf released this statement last year:


"Our ambition is to become people and planet-positive by 2030 while growing the IKEA business. Through our size and reach, we have the opportunity to inspire and enable more than one billion people to live better lives, within the limits of the planet".

With the following very admirable aims, which if delivered will have a phenomenally positive effect on the environment.

  • Designing all IKEA products with new circular principles, with the goal to only use renewable and recycled materials

  • Offering services that make it easier for people to bring home, care for and pass on products

  • Removing all single-use plastic products from the IKEA range globally and from customer and co-worker restaurants in stores* by 2020

  • Increasing the proportion of plant-based choices in the IKEA food offer, like the veggie hot dog launching globally in August 2018

  • Becoming climate positive** and reducing the total IKEA climate footprint by an average of 70% per product

  • Achieving zero emissions home deliveries by 2025*

  • Expanding the offer of affordable home solar solutions to 29 IKEA markets* by 2025




Bulk Food Markets

On a smaller scale but equally as commendable is the rise of the plastic-free bulk food market, where customers bring their own reusable packaging such as Tupperware that they then fill them with the store's wares, mainly grains, nuts and dried fruit all which traditionally as packaged in non-recyclable plastic. The Source, a bulk food shop based in Chiswick and Clapham boast that they and their customers have saved over 5,000 kilograms of plastic from landfill and some 200,000 pieces of plastic packaging from production. Imagine if this eco-saving could be multiplied nation-wide by having shops in every major city.



Tesco



Tesco is also attempting to significantly reduce plastic packaging waste, last year it published that it would ban hard-to-recycle plastics from its stores by 2019 and make all packaging fully recyclable by 2025. As of last week, Tesco began a trial in its Watford and Swindon Extra branches by removing 45 mainly fruit and vegetables that are unnecessarily packaged in plastic and offer for each of these items a loose alternative.






Adidas

In the fashion industry, Adidas are putting their best foot forward and put their stake in the ground announcing that by 2024 they will only use recycled plastics for their shoes and clothing. This is a phenomenal contribution to creating a more circular global economy as the behemoth sportswear retailer sells almost one billion mostly polyester garments around the world annually. Experts have warned that at present recycled materials cost around 20 percent however Adidas has emphasised that the more companies that partake in using recycled materials the more competitively priced the materials will become.


TerraCycle

At this year’s World Economic Forum in January, TerraCycle announced their new concept Loop, a revolutionary perfectly circular packaging system. The offering is best explained by TerraCycle CEO Tom Szaky: “Through Loop, consumers can now responsibly consume products in specially designed durable, reusable or fully recyclable packaging made from materials like alloys, glass and engineered plastics. When a consumer returns the packaging, it is refilled, or the contact is reused or recycled through groundbreaking technology.” Watch the promotional video for Loop here.


Also watch a short clip of Tom explaining the Circular Economy and Loops offering here.




How does Asset Finance come into this?

With the global economy shifting, there are a huge number of opportunities available to UK SMEs in every industry, however, there may be considerable barriers to entry. Of course, the recycling and waste industry will continue to grow and boom, if household waste can become a valuable commodity then waste and recycling companies will stand to gain massively. However, this will all rely on their ability to turn our waste into usable raw material, which of course requires the right technology and machinery. This machinery, especially if it adopts the technological advances of Industry 4.0, as discussed in our article, will not be cheap. If we take an advanced waste plastic sorting machine costing £200,000, this is a huge chunk of cash required for a piece of equipment that will only pay dividends over the decades. This is where alternative finance through leasing or hire purchase is the ideal financial tool, giving firms access to the assets required to remain competitive without having the in house funding to cover the cost.


For companies who can adapt to the return to a more sustainable circular economy massive opportunities exist outside of the waste and recycling industry as well. If there is an opportunity you wish to seize but lack the funding, GSM Finance and our team of London finance brokers can advise and arrange a no-obligation quote. Even if you wish to simply further understand the advantages and disadvantages of hire purchase or leasing, our friendly brokers are happy to discuss and share our two decades of experience. Sometimes asset finance isn't the right fit for what you are trying to achieve, however, we can arrange unsecured business loans of any amount from £25k to £5 million. So if you are a UK SME looking for an alternative business loan, come to GSM for quick, friendly and efficient funding. Use our Contact page, to email, phone or get a quote.


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