Opening the (black) box of closing the loop: An empirical study of how companies create new use lives for waste materials

Opening the (black) box of closing the loop: An empirical study of how companies create new use lives for waste materials

Elizabeth Miller Aalto University, Otaniementie 14, 02150 Espoo, Finland, elizabeth.miller@aalto.fi

Abstract

Circular economy is the normative idea that natural resources should flow in closed loops so that at the end of life, materials re-enter production processes instead of going to landfill or incineration. The concept is presented as a way to de-grow natural resource usage while maintaining streams for financial revenues. In recent years, much attention has been given to circular economy in both academic and practitioner discourse, but there is still no clear organization of how closing the loop is done in practice and what enables these activities. This paper develops taxonomies for closing material loops and identifies the enabling mechanisms for each. It is aimed at inductive theory building and uses a multiple case study design of five circular economy frontrunner companies in Finland that engage in activities to give waste materials new lives. Initial taxonomies were developed from the literature, which offers three general types of loop closing activities: what this paper calls circular value maintenance (returning materials into the same production processes for a second life as the same type of product), upcycling (using materials for a higher-value purpose in the next use life) and downcycling (using materials for a lower-value purpose in the next use life). Interview and archival data were analyzed using thematic analysis to understand what characterizes these taxonomies and how their enabling mechanisms compare. The preliminary findings add a fourth taxonomy: equal/ambiguous value change, in which it is not clear how the value has changed between material use lives although materials are being used for a different purpose than in the first use life. There also appear to be correlations between the value change taxonomies and the types of activities used to acquire the materials and the enablers of these activities, at least for the case companies examined. The circular value maintenance activities are carried out through companies taking their post-consumer products back, and the systems needed to execute this are enabled by legal and/or financial mechanisms. The upcycling activities in these cases are done through utilizing pre-consumer side stream waste and purchasing upcycled materials from intermediaries, and these activities are enabled by internal company strategy, the ability to produce premium products and symbiotic industry networks and partnerships. Equal/ambiguous value change activities are done through taking in post-consumer products that the company did not sell, and these activities are enabled by storage and sorting capabilities because of the lack of control over what is taken in. Finally, downcycling activities are done when there does not seem to be a way to create economic value from waste materials, and these activities are enabled by a desire to fulfill corporate responsibility obligations and/or goals. Although the results of this study cannot be generalized to a population given the small sample size inherent in case research, it offers a look into the black box of closing material loops and paves the way for future research on enabling and incentivizing new kinds of material flows to decrease the volume of natural resources flowing into production processes.

Keywords: circular economy, closed loop, sustainable production, case study, value creation