Here’s why the circular economy is good for business

What does the circular economy mean – and why should we all be paying attention to it? 
The old model of the economy, dominant for much of the 20th Century, is broken. It was linear, based on a process of ‘take-make-use-dispose’. Within that model, raw materials are extracted at the lowest cost and turned into products as cheaply as possible – with many of these designed to be disposable.  

But such a system is simply no longer sustainable. The global economy consumes 70% more raw materials than it can replenish while, according to the European Parliament, the EU alone produces 2.2bn tons of waste each year. Linear production and consumption also degrades the environment through pollution, contributes to biodiversity loss and accelerates global warming.  

A circular economy, by contrast, could reduce global material extraction by as much as a third, while reducing greenhouse gas emissions by up to 39% globally by 2032.  

The circular economy is also a central pillar in the European Green Deal, the EU’s strategy to achieve carbon neutrality and a fully sustainable economy by 2050. Importantly, a shift towards circularity is projected to deliver significant economic advantages: boosting business competitiveness and generating new employment opportunities – with estimates of 700,000 jobs in the EU alone by 2030, estimated by the European Parliament). It also drives innovation across industries and offers consumers products that provide better value over time. What’s the relevance and role for a company such as Sappi in building a circular economy? 

The paper and pulp sector is taking a leading role in the drive to decouple resource consumption from economic growth.  

At Sappi, many of our manufacturing processes are already circular, incorporating closed-loop systems for water usage, waste management and energy recovery. We also transform what were once considered waste streams into valuable resources, creating innovative bio-based products and alternative energy sources.  

A great example is our utilisation of lignin, traditionally an undervalued byproduct of pulp production, which we are repurposing for a wide range of industrial and agricultural applications – from being a natural, renewable dispersant in concrete admixtures to acting as a natural binder in animal feed that can also improve livestock gut health and performance. 

What other sustainable products is Sappi developing to help replace old, linear ones? 
At Sappi, we are innovating to replace traditional food packaging with mono bio-based or woodfibre-based alternatives – think of advanced barrier papers that can replace plastic across a range of everyday food and non-food packaging.  

We've already invested more than EUR 60m in new technology to scale up these recyclable packaging solutions. In addition, we are developing compostable packaging products boasting water-resistant, biodegradable barriers.  

Because moving to a market and society where recyclable packaging is the norm is essential for all of us. This is why a key role for our R&D department – a pioneer in this field – is to test our products and innovations to ensure that they meet external lab certifications and are fully recyclable and compliant with the latest regulations.  

It’s high time that more businesses and industries also realised that shifting to a circular economy provides a huge creative opportunity for business, as sustainable products are innovated and introduced to replace old, linear ones.  

What can other businesses learn from the Sappi example? 
These changes aren’t just about meeting internal targets. While Sappi has made a strong commitment to sustainability and has ambitious carbon emission targets, consumers are also driving change as they demand better, more sustainable options. Brands who don’t respond to this are likely to be left behind or lose the loyalty of their customers.  

We’ve been innovating and pushing the technology to meet this demand, but it also takes collaboration between industries – as no single industry, let alone company, can develop all components alone.  

For example, as one of the first to enter this field we initially lacked sufficient support from the chemistry side. Now we find our entire supply chain is working to provide the right materials and chemistry to achieve sustainability goals.  

Collaboration within our paper and packaging industry is also crucial. Right now there is no single labelling system to help consumers to make sustainable purchasing decisions or to ensure they recycle efficiently. Through industry associations and collaborative efforts, such as 4evergreen – which is aiming for a 90% recycling rate for fibre-based packaging by 2030 – we're pushing for harmonised regulations and standards that will benefit the entire paper industry.  

Are you optimistic that business will swiftly adopt a circular economy agenda? 
There is still much work to be done, but the benefits of achieving a truly circular economy are clear – from reduced use of natural resources to less waste and pollution from a product’s end of life.  

Alongside this, there is also a robust business case.  

Not least because an innovative approach based around recycling and reuse can unlock new revenue streams, reduce costs and enhance brand value.