A new report suggests digital transformation can pave the way for resource-efficient materials cycles. The study looks at the German economy and notes only 14 per cent of the raw materials used in industry are recycled. Digital technology can change this.
The research is led by Dr Henning Wilts, Head of the Research Unit Circular Economy, and Dr Holger Berg, Project Co-ordinator for the Research Unit Circular Economy at the Wuppertal Institute. They have called the project the “Circular Economy Literacy” framework. The framework demonstrates that when secondary raw materials recovered from waste (which the researchers call “recyclates”) are fed back into production this can boost revenues; whereas the dominant model of not recycling leads to loss of value. Moreover, the fail to recycle creates dependency on volatile commodity markets, lowers resource productivity and increases environmental pollution.
Through an analysis of different businesses the researchers pinpoint the primary reason why 86 percent of materials come from non-recycled sources: a lack of information. This can be addressed through the use of digital technology and the gathering and analyzing of supply chain data. Data analysis can be used for, as an example, understand which materials are valuable. Another assessment could be which waste materials are hazardous and expensive to dispose of. Further analysis can show which types of waste are practical to recycle. According to Dr. Wilts: “There is an urgent need for better coordination of flows of materials and information, if we are to advance the transition to the circular economy.”
The researchers make four key points for businesses to consider:
The need to build bridges: linking digitalisation and the circular economy
The importance of closing gaps: dedicated support for small- and medium-sized enterprises (SMEs)
The importance of providing guidance: where is the digital circular economy making progress?
Seeing the big picture: in what areas can the digital circular economy make a real difference?
These four points, it is argued, can lay the foundations for a resource-efficient and digital circular economy.