This Is The Thought-Provoking Topic That Will Be Addressed By Anton Booyzen, Director Advisory Group - Energy And Transmission And Dr Raylene Watson, Principal Consultant For The Industry And Buildings Business Unit At Royal Haskoningdhv, At This Year's Saama Conference To Be Hosted At The Lord Charles Hotel In Somerset West, Cape Town From 16 To 18 May 2016. There is a global shift in the way people and organisations look at the use of primary resources, as well as the functionality of assets, this shift is resulting in a mind-set change from the traditional linear economy to the use and investment in the development of a circular economy.
The traditional linear “take-make-dispose” economy is being replaced by a circular economy that is restorative and regenerative by design and aims to keep products, components and materials at their highest utility and value at all times.

A linear economy assumes the procurement of raw materials required to build or operate a facility which may result in the production of products or services for further sale to consumers. Once the use of these assets or products has expired, the assets or products are discarded as waste, and the ''linear'' cycle repeats itself. However, due to our planet's emerging resource crunch, linear consumption is now reaching its limits.

In contrast, the circular economy concept assumes that “waste” is never just "waste" but should rather be seen as a raw material input or, if repurposed in the case of a physical asset, should be utilised by others in a manner not initially intended.  Says Booyzen: "The primary drive behind this mindset change is the reduction in the availability of primary resources and the need to reduce the cost of extraction, transportation and processing. This has resulted in optimisation of opportunities and synergies across associated industries. In the case of repurposing of physical assets, functionality is now being assessed to ensure alternate utilisation of the same asset once the initial need for the asset has expired."

According to Watson, environmental concerns such as global warming have also played a role in this mind shift from linear to circular economies. Similarly, there is a shift to the use of sustainability reporting which requires companies to constantly evaluate where and how they procure their raw materials and to evaluate safe labour practices throughout their value chain. This further drives the need for asset optimisation and the reduction of environmental footprints such as water, greenhouse gasses, visual impacts, and the maintenance of the wellbeing of its employees, and end users of their services or products. Watson continues: "The key challenge in shifting to the circular economy, especially for well-established industries, is the need to re-evaluate the current business models. Instead of placing the focus on core processes associated with keeping the business running, organisations need to take a broader view of how their processes and business models relate to associated industries, and how they should position themselves within the full value chain within the industries they operate."

Booyzen gives an example of the brewery industry: "It is no longer acceptable to ensure tanks are kept clean and without leaks and that raw material inputs are combined at the correct consistencies. Breweries also need to ensure that they know exactly how and where raw ingredients are grown and sourced. Similarly beer brewing produces several by-products that can be used by other industries. During the malting of the barley, rootlets form on the grain and drip off. These can be collected and used for animal feed. The hops that are filtered out from the finished wort can also be collected and used again as fertilizer. The residual yeast from the brewing process is a rich source of B vitamins which can be put to use by pharmaceutical companies for the production of vitamins or drugs, or used as a food additive. Used beer cans and beer bottles are routinely recycled. There is a clear link here between the primary production processes on which breweries rely to produce core raw ingredients, and re-applying the ''waste'', thus closing the loop and creating the circular economy effect."

"Once a brewery reaches its end of life, the physical assets can also be repurposed, metals can be recycled, buildings can be re-designed and used for warehousing or as libraries or community centres. In the same way, old buildings previously used by others could now be used to house new brewery operations. We see a strong drive in this direction specifically with the growth in the artisanal beer brewing sector," Booyzen adds.

The shift towards a more circular economy will have a profound effect on the asset management industry. Key challenges for asset manager include the manner in which assets are to be defined in the future, as well as the assessment of whether the existing standards in place are able to evaluate the interdependencies which now need to be monitored and addressed in this new circular economic model. In addition, there will need to be a broadening of key skill sets required to facilitate informed decision making around circular economy business models - these may also include environmental managers, sustainability professionals, market analysts and resource economists.

"The business case for a circular economy is compelling and the asset management industry has a leading role to play. With sufficient collaboration, determination and innovative thinking, asset managers have the power to bring about circular growth," Booyzen concludes.

To register, visit www.saamaconference.org.za