Companies are becoming increasingly sophisticated in terms of understanding corporate responsibility and sustainability. More and more businesses are implementing corporate social sustainability principles at the very core of their business. But as environmental drivers such as pollution levels and water scarcity keep growing stronger, some are pushed to rethink business models and strategies.
According to the Ellen Macarthur Foundation, the circular economy in Europe could arrive to generate twice as much benefit as the current model is capable of translating into a GDP augmentation of 7 percentage points. A month ago, I would reduce the consumption of first materials by 32% and the name of emissions by 50%.
Circular economics is a concept that is gaining more and more attention. Ever since the industrial revolution, economic growth was based on a pattern of “take-make-consume and dispose”. A linear model that starts with raw resources and ends with a constantly growing level of waste. This model assumes resources are abundant, available and cheap to dispose of.
Circular economics is all about managing resources more efficiently throughout their lifecycle. As the name suggests, in the perfect example it’s about taking the linear model and closing it in a loop, turning what we used to consider as waste into a resource. This also includes repairing, refurbishing and recycling existing materials.
The products are designed under that paradigm to enjoy a new life thanks to its repair or remanufacturing. The resources include reuse in the production process itself, closing the cycle of material flow for new products. Or it can be transformed into secondary raw materials that are made from waste and can be used as resources cheaper and more efficient, innovative and new properties for other production processes. In addition, according to criteria of circularity produce also means work processes to achieve more energy efficient through the use of renewable energies.
The circular economy is also proposing new business models based on maximizing the use of or access to products, as an alternative to the purchase or possession of the product, offering services that can extend the life of the product and the relationship with the consumer. Consumers go from being owners to be users, so consumers rent or share a product, such as a washing machine, a mobile phone or a car, and the company provides related services. It is not about ‘doing more with less’, but’ do more with what we already have, “eliminating lost opportunities and solving the problem of low utilization. Talking about new business models, new activities, new ways of generating income. We speak, in short, to innovate.
First of all, the product lifecycle must be assessed. As this can be done from myriad angles, it’s the best to engage with cross-functional stakeholders. Having a cross-functional team will help to determine the key revenue streams, cost savings, marketing opportunities, possible partnerships etc.
- Implement circular economy suppose to help create a more sustainable society and a future:Reduces dependence on strategic resources.
It is restorative to the natural capital.
Contribute to reducing emissions.
Encourages the use of renewable energies.
Improving the health of people.
Minimize the impact on the environment.
Create new jobs related to innovation in new materials and new processes.
Circular economy concepts can be leveraged when collaborating with other companies. Many companies managed to reduce waste with other industries where their products can be repurposed.
The areas of action for the company circular economy are:
REGENERATE: Restoring natural capital to renewable energy and materials.
SHARE: Maximizing product sharing, reusing them or extending their service life: maintenance, design and update.
OPTIMIZE: Increase efficiency in energy and material processes. Minimize waste. Big Data, automation, IoT, and conduct remote control.
CLOSE THE CYCLE: repair and remanufacture of products and materials recycling products at the end of use for other industries. Biochemists from organic waste.
VIRTUALIZE: dematerialized and reduce the consumption of resources by providing the use digitally. Directly (eg books or music) or indirectly digitizing processes or services.
EXCHANGE: Substitute materials, energy, alternative processes or technologies that reduce the intensity of resource use (eg renewable materials or 3D printing).
Enabling technologies of circular economy:
Advanced technologies for recycling, the robotics and artificial intelligence.
Materials and life sciences and biotechnology.
Tracking and return for materials and products that are viable reverse logistics.
Technology modular design.
Mobile technologies that reduce the need for physical resources.
Communication machine to machine.
3D printing and additive manufacturing.
The circular economy is not only environmentally friendly, but it is an engine for innovation and represents an economic opportunity for businesses:
Increased productivity of resources.
New models of relationships with suppliers and customers.
Differentiation from the competition.
Adds value to the brand.
Access to new markets.
Add to sustainable innovation.
The need to rethink the product’s life-cycle from a circular perspective open a range of new business models economically profitable for the company. To ensure these opportunities, innovation in materials, products, processes and organization is essential. In fact, the greater sensitivity to environmental issues and a growing awareness of the scarcity of resources makes consumers increasingly appreciate the added value of enterprises and sustainable products.
Just like any other CSR activity, the idea shouldn’t be considered as a ‘good thing to do’, or PR instrument. Companies should implement these ideas at their very core and view them as a necessity to maintain a competitive advantage.
Circular models certainly aren’t something which can be implemented from one day to the other, but numerous companies are already making considerable progress in embedding this mindset into their organizations.