UK businesses have a significant market opportunity to develop products and processes that make better use of resources in a world that increasingly recognises the major environmental and social impacts of products and materials, and in which competition for resources is getting keener all the time.
The international competition for resources has profound consequences for UK businesses. In a recent survey of its members by the manufacturers' organisation EEF, more than 80% of chief executives said that raw materials' shortages were a risk to their business in 2012. The Confederation of British Industry notes that 75% of European entrepreneurs have seen the material costs of their business rise over the last five years, and 87% expect prices to continue rising over the next decade.
Businesses increasingly recognise that more efficient use of resources across the supply chain brings not only cost savings and lower supply risks, but also presents opportunities for growth as customers demand products that save them money and reduce environmental and social impacts.
While considerable progress has been made in areas such as recycling and material recovery over the last decade, most material flows in the UK economy are still based on a linear model of ‘take-make-dispose'. We need to go beyond better and more efficient recycling of materials and towards systemic approaches where products (and the materials they contain) are designed to generate economic value over multiple product lives.
Leading companies recognise that moving to an economy that is predominantly circular presents substantial opportunities for cost reduction, mitigation of supply risks and for their products or services to stand out in the market as sustainable. An economic analysis conducted for the Ellen MacArthur Foundation concluded that the circular economy
represents an economic opportunity exceeding $340bn a year in the EU.
At the same time, we need to reduce environmental impacts on a lifecycle basis. For example, products may be designed to a more durable, higher specification and supported by a business model based on servicing them or that allows them to be remanufactured or disassembled into high-value products or materials. In the circular economy, brand-owners or manufacturers will increasingly think in terms of managing the material resource over the life cycle as a strategic means to maximise value and mitigate exposure to price volatility and/or materials supply risks.
For some material resources, there may be concerns over possible non-availability or interruption of future supply. In June 2010, the European Union published an analysis of 41 minerals and metals, from which 14 categories of ‘critical raw materials' were identified as being of particular concern based on their economic importance and supply risk – antimony, beryllium, cobalt, fluorspar, gallium, germanium, graphite, indium, magnesium, niobium, platinum group metals, rare earths, tantalum and tungsten.
Many of the materials identified are important for the manufacture of high- tech or clean-tech products, which are in turn vital for economic growth. For other materials, future regulation or supply chain pressure may mean that businesses need to consider alternative approaches.