4 ways the Circular Economy can help mitigate the ongoing cost of living challenges

The UK is suffering a cost-of-living crisis the like of which we haven’t seen for more than 30 years. The cost of essentials such as groceries, energy and fuel is spiralling, with the latest quarterly ONS figures showing inflation rates topping 10% in September.

The Circular Economy is based on using less to deliver more, and in doing so offers opportunities to help navigate the ongoing cost of living challenges.

Using and re-using naturally sustainable raw materials is cheaper than sourcing new raw materials for every product, but cost savings aren't just limited to materials. One of the major economic benefits of the Circular Economy is that it promotes circular business models that extend the value generating potential of a product. Here are some practical examples:

1. XaaS (Anything as a Service)

   XaaS operating models are promoting a shift away from personal asset ownership towards paying for access to products and services, when required.

   XaaS are often more cost-efficient for the end consumer and reduce one-off expensive purchases. Many operate using a subscription model, which allows you to enjoy flexibility.

   Mobility as a Service could provide consumers a solution to the rise in transport cost. With key mindset shift being mobility delivered as a service rather than owning vehicles.

   XaaS business models should also deliver higher profit margins for businesses who can rent the same asset multiple times, generating a far higher return than a traditional one-off sale where asset ownership is transferred. It also promotes other Circular Economy principles with a clear incentive for business owners to keep assets in circulation for longer by maintaining, repairing, and re-using.

2. Cutting food waste cuts food bills

   UK households produce 4.5 million tonnes of avoidable food waste every year, worth £14 billion in total which is equivalent to £700 for each family with children. A huge quantity of edible food is also wasted in retail manufacturing, hospitality and farms. In 2021 this equated to 106,000 tonnes, worth over £330 million and the equivalent of over 253 million meals.

   Surplus food redistributed via charitable channels made up 69% of the total in 2021, a proportion that has increased from 40% in 2015.

   However, Circular Economy principles have placed a spotlight on the UK food manufacturing, retail, hospitality & food service sectors, with mounting pressure to increase the amount of surplus food made available for redistribution.

   Sustainably minded entrepreneurs are embracing the challenge of creating solutions that tackle the UK’s food waste problem. Technology is playing a crucial role, providing access to data and information that allows businesses and consumers to take positive steps to reduce their own food waste.

   TOO GOOD TO GO

   On the Too Good To Go app, restaurants, cafes and bakeries list leftover food that would otherwise be thrown away. Users can then browse the map for food near them and pick up a 'magic bag' for a fraction of the original retail cost. Registration to the app is free and users can specify their dietary requirements. Too Good To Go also teams up with businesses in the food industry to help them look at their individual food waste problems.

   NOWASTE

   For those of us who want to prevent food waste in our own homes, an app like NoWaste may be just what we need. NoWaste users can scan receipts and barcodes, log each weekly shop, make lists of what's in, plan meals more effectively and receive automatic expiration reminders. Beyond their main aim of reducing food waste, 5-star reviewers rave that NoWaste has saved them time, money and mental energy when managing the food in their home.

   NOSH

   nosh is an AI-based app offering another option to track the food you have in your home. With nosh, users can view categorised expiry and use by dates all on one screen, so they can easily prioritise which foods to use up first. nosh shares this functionality but emphasises that best before dates aren’t intended to say the food is no longer safe to eat. Users have access to recipe suggestions, clear visibility of the foods they already have and a weekly shopping list formulated based on their buying and wasting habits.

3. Ventures in thrifted finds – second-hand fashion

   Buying new clothes regularly can be expensive and has a significant environmental impact, with the fast fashion industry contributing over 92 million tonnes of waste each year.

   Driven by economic and environmental arguments, second hand is cool with both the desire and opportunity to participate in the sharing economy increasing. 70% of consumers say it's easier to shop second-hand than it was five years ago, thanks to the emergence of technology and online marketplaces, such as Depop or Vinted.

   The Circular Economy has been the inspiration and catalyst for the increase in second hand fashion marketplaces as entrepreneurs look to target consumers placing increasing importance on sustainability, in order extend the useful life of fashion items and slow industry consumption.

4. Energy Efficiency in your home

   A staggering 3.2 million UK households are currently living in fuel poverty.

   There are a few Circular Economy solutions for making your home more energy efficient. Companies such as BDO client, Green Home Group, operate in in the regulatory-backed Energy Company Obligation (ECO 4) market that underpins the UK’s long-term commitments to reducing the carbon emissions from domestic properties and tackling fuel poverty. ECO 4 obligates the UK energy companies to deliver lifetime savings targets (LTS) across fuel poor households. The government scheme requires energy suppliers to promote the installation of measures that lead to financial savings on energy bills, such as the installation of insulation and heating measures for those most in need. The cost to you could be nothing, depending on your personal circumstances.

   Making sure your home more insulated is not the only way you can cut your energy bills. Smart home applications have boomed over the last decade and can offer homes and businesses a new level of control over the energy you use.

   Hive

   Smart home technology is constantly making your home more intelligent. You can now control everything from your doorbell to your washing machine, all from your smartphone - and now, you can save money on your bills with it too. Hive is one of the biggest names in smart thermostats and claim to save customers as much as £130 a year.

   Nest

   Nest is the brainchild of Google and Nest Labs, a company specialising in home automation devices. The result is one of the most sophisticated smart thermostats available.

   As well as being able to monitor and adjust a room's current temperature, Nest can also detect light, humidity and motion to recognise whether you're in the room. It can then use these sensors to learn your schedule, meaning there's no need to programme it in every day, as it will instinctively adapt to your habits.

   Tado

   Tado smart thermostat is growing in popularity thanks to claims that it can cut your energy bills by 31%, paying for itself in less than a year.

   While the advanced Tado systems have a higher upfront cost than some of the other smart thermostats, it does give you the option of self-setup, saving you on professional installation fees.

   Tado also gives you the option to fit a thermostat to each radiator in your home, giving you accurate room-by-room control over the temperature of your house.

   It also has geolocation automation to automatically turn your heating on or off as it senses you arriving or leaving home.
    

With interest rates rising in a bid to curb inflation, economic growth will be suppressed, and the pressure on consumers is also rising. The Circular Economy is continuing to innovate and could be an important factor in reducing costs and protecting discretionary spending.