First appeared at We are Circular BLOG
Is Circular Economy immune to coronavirus?
Piotr Nejman
We are Circular Co-founder
It was so beautiful, was supposed to be green..

On March 11, 2020, the European Commission published the Circular Economy Action Plan, which is a part of the European Green Deal. This coincided with the acceleration of coronavirus spread and lockdown in many countries around the world, and above all, the beginning of an extremely stressful period for all of us.
It was easy to talk about environmental and sustainable development topics, as long as the prosperity continued. Recent years have encouraged companies to invest in innovation and development. Despite the specter of the crisis, which some had predicted, everything seemed destined to grow. A positive financial result at the end of the year gave companies a margin to experiment with new, more sustainable business models, materials and processes. Moreover, pressure from consumers fed up with excessive buying also grew, as they started to pay more and more attention to the environmental aspects from year to year.

However, with an epidemic outbreak that infects not only the body but also the mind, as well as global economies; when people lose their jobs, companies close down, airlines are grounded, and we are stuck at home, everyone starts focusing on 'current problems'.
Is this the end of CE?

In the first week of the epidemic I had many conversations on how this situation means the end or certainly a long break for sustainability and a slowdown in the transformation towards circular economy. The coming crisis heralded discussions about "how to fix it all", how to survive the crisis, how to maintain a team or in the personal zone - "how to manage it? - how to survive isolation, face the fear of an unknown virus and how to protect your family.

Attention has been shifted from 'potential', 'distant' and 'future' threats to 'real', 'near' and 'present' ones.

The main factor, of course, is the financial issue - we will all have to tighten our belts. Companies will not be able to afford wastefulness, especially when it comes to solutions believed, though wrongly, to be generating costs rather than profits. Any expenditure in times of crisis will have to pay back quickly.
Another blow the pandemic caused to the environment was the need to ensure safety. As a result of both the introduced regulations and our fears, the use of protection means increased rapidly - disposable face masks, visors, gloves or plastic bags. An average shop stand surrounded by Plexiglas looks like a guarded bank. All these restrictions that limited the contact with external factors, increase the amount of garbage and make it difficult to return to reusable packaging at the same time.

Although we cut down on shopping and many people started cooking again (or for the first time) at home, suddenly everything also became "a take away" - meals or groceries - all in disposable packaging in order to be contactless. E-commerce has attracted many new customers who switched to the option of home delivery for the first time.

In previous article, I wrote about my predictions for the coming months and strategies for escaping through innovation. Coronavirus undoubtedly accelerated many trends that otherwise would need more years before they entered the mainstream. I believe that circular economy can be one of these and below I present 10 reasons why it makes sense.
10 reasons why it's finally the best time for Circular Economy!
1. Values, imagination and gray rhinos
The epidemic has brought about a certain reevaluation in the lives of many people. Fear for our health and life and of our loved ones, closure and uncertainty cut us off for a while from the pursuit of consumption. Locked, baffled and scared, we turned to other people - e.g. forming neighborhood self-help or supporting the elderly and lonely. Restaurants, although in a difficult situation themselves, began to deliver meals for healthcare professionals.

Definitely, we all realized that it's possible to consume less, that there are more important things - health, life and community. We reached some turning point, but also felt a sense of surprise - how could it be that we did not foresee it, how is it possible that we were not ready, that we were not fully capable, not able to manufacture and ship the necessary equipment and that our supply chains are so fragile.

Hardly anyone, actually almost nobody expected such a threat. Even when the virus had been raging in China for good, the threat seemed unreal. For this reason, the coronavirus quickly gained the name of the next "Black Swan" - a highly unlikely event that we do not expect, and which has negative large-scale effects. Although it is rationalized post factum, in reality, it cannot have been predicted. It gained popularity after the financial crisis of 2008/9 by Nassim Taleb's book.

Epidemics happened many times before in the history of mankind. The twentieth century itself brought the Spanish flu or the swine flu. Years ago, Bill Gates warned that we should prepare for a global pandemic, because it is a virus, not a war that may decimate the population.

And, in fact, the coronavirus is the Gray rhino - an occurrence with adverse effects that had been anticipated, but commonly underestimated. This definition fits perfectly the climate catastrophe, which is a huge Gray Rhino, an obvious threat we can already see on the horizon speeding towards us.

Perhaps the pandemic will expand our imagination a bit - we will begin to admit the possibility of "unbelievable" events, such as the lack of natural resources, and open our eyes to other important problems that we have to face.

This definition fits perfectly the climate catastrophe, which is a huge Gray Rhino, an obvious threat we can already see on the horizon speeding towards us.
2. Public interventions
One of the key elements of economic recovery will be intensive public intervention programs. Countries have already started printing money that quickly feeds the economy. Still, in the long run, we will probably see more precise programs targeted at specific investments or industries. The effects of stimulating the economy on a large scale can be obtained, for example, by investment in energy transformation and other circular projects.

Investing in such activities is much better. Instead of building other unnecessary facilities, governments can take a real step to achieve climate goals that are unavoidable sooner or later anyway, and create new permanent jobs.

Moreover, bold public activities in recent years have brought very good results - without a top-down ban on single-use plastic, we would still hear excuses on how expensive and difficult to implement its eradication is.
Photo: World Economic Forum
3. Great reconstruction
If everything collapsed, if everything needed to be rebuilt, now is the best chance to rebuild it properly - according to the new assumptions. We're doing a reboot, so that we can design a lot of things from scratch, e.g. what shopping, traveling or mass production are supposed to look like.

  • business models - it's time to verify current business models - not only at the superficial operational level, but much deeper - noticing new customer needs, proposing new values, building channels and looking for partnerships
  • redesigning services and experiences - if fewer people are to be crowded in a bank outlet or hotel service is to limit contact with guests - it will be necessary to redesign these services; initially to ensure safety, but ultimately to provide relevant experience; it's a chance to deal with waste of many kinds - e.g. food in hotel restaurants
  • product (re)design - products will also have to be redesigned or designed anew - if we are to build something new, maybe we can also think about modularity, durability or materials used
  • public spaces - buildings or city centers - due to the popularity of remote work, the need to maintain large, lavish offices in the city center is decreasing; it is a moment to think about the function and concept of city centers and buildings; the ones designed with modularity in mind can grow / shrink and change their purpose. More people spending time in their neighbourhoods will also cause the development of local and neighbourhood communities and services, which can be a base, e.g. for simple sharing services.
4. Digitalisation
The two recent months have accelerated the digital transformation by years. And you can see that users have been waiting for this. Companies that have not wasted time in recent years and invested in digitalisation - are now harvesting. This is not just about introducing new IT solutions, but about changing business models - satisfying the same needs by providing a digital solution (listening to music: discs → cloud music; the need or 'job' does not change, the mean changes). Digitalisation introduces multiple usage, thus eliminating the need for mass production, and at the same time facilitates sharing and enables buying without leaving home and visiting crowded places.

Now, companies impacted by coronavirus will harness digitalisation also as a way for improving efficiency and driving costs down.
5. Rise of startups and innovation
Each crisis brings a huge increase in innovation - companies such as Uber, Airbnb are the products of the last crisis. Also, this time, we can expect a flood of startups aiming to destroy the status quo. An additional factor here will be the difficult career start for young graduates. The previous crisis has shown that these people are accelerating more slowly on their career paths - it's harder to find internships and junior jobs could be reduced easier. Disappointment can translate into great concepts for startups, especially since the younger generation has a greater awareness and commitment to climate issues.

The present time is also an excellent time to experiment - the unexpected restrictions on all of us forced us to improvise on many levels.
In prosperity startups knock on corporations,
In crisis startups knock corporates down
6. Savings
The incoming crisis will undoubtedly affect financial and purchasing decisions for both consumers and companies. Any opportunities for cost-cutting will be appreciated:

  • cost optimization - in the production process, waste management, logistics and distribution

  • more careful and planned consumer purchases

  • used and refurbished products available at a lower price, may become more popular when compared with the new ones

  • sharing - if we can ensure a sense of hygiene and safety, then access to shared resources or spaces will be a beneficial alternative to ownership - allowing for lower costs and better liquidity

  • increase in popularity of DIY and repairs - both at home and in the public zone - e.g. medical devices
This will coincide with impeded shopping experience - the traffic in retail chains is still at a lower level and it is easily noticeable we don't want to rush back to the stores and thus buy less.
7. Additional income
Companies facing the crisis will start looking for new sources of income in the form of modified business models - hopefully circular! - and generating additional revenue on resources already owned - e.g. by providing space, equipment on platforms such as FLOOW 2

Waste, which was still a rising cost until now, thanks to the new partnerships can finally become an additional resource, which will facilitate the transfer of production to new regional producers.

For consumers, there may come a moment of reflection, whether all the items, clothes or appliances are still necessary - maybe giving them a new life and getting some money back is not a bad idea.
8. Local supply chains
Coronavirus and closing borders suddenly showed how fragile global supply chains are.

As long as everything worked, the companies were focused solely on cutting costs, without taking security issues into account (ethical issues I am going to leave aside). Delegating the production to subcontractors in Asian countries, or in practice to networks of subcontractors dependent on each other, turned out to be fragile. According to Marc Anderssen moreover, the outsourcing of production to specialized subcontractors who had been gaining independence every year, meant that we suddenly became unable to produce ourselves. This problem was highlighted by the coronavirus, when it turned out that even the simplest personal protective equipment, not to mention advanced medical devices, are no longer produced not only in the US, but throughout Europe, including CEE countries that provide manufacturing facilities for many industries.

In response, companies will now look for new local, regionally organized chains. Such reorganization also opens more opportunities, such as new partnerships not only in the production area, but throughout the entire value chain, including the exchange of raw materials and resources
9. Raw materials
Difficulties in global supplies may push companies to look for raw materials closer - where they actually exist, but so far have not been considered a priority, e.g. waste management on platforms such as Cyrkl or urban mining. It is also a chance for new partnerships between companies and innovative products.
10. Workplaces
Many companies which closed for the time of quarantine will not reopen and some other ones will permanently reduce employment due to digitization. Investments in the circular economy mean new local jobs, which will be of great importance to help combat the effects of the crisis.
Circular 'New normal'?
A way out of this crisis is through cooperation, empathy, discipline and innovation. When the recession hits the stock exchanges, it seems safer to stick to proven business models and stay away from experiments with new uncertain concepts. In fact however, the time when everything is dynamically changing and we can reach deeper than before, is a great moment to rebuild everything as it should be.
Photo credits: Unsplash
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