By Adam Burns
Tomorrow’s industry will build once and use many times. Today, those with one eye on the future are planning, designing and assembling for recycling, recovery and reuse. This circular economy may be the ultimate answer to depletion and scarcity of resources, but there are also increasingly hard-to-ignore bottom line reasons for “good” business.
The Ellen Macarthur Foundation says circularity in manufacturing could yield net materials cost savings of up to US$630 billion p.a. in the EU alone and add $1 trillion to the global economy by 2025. An ING report says it will have a transformational effect on the financial landscape.
Governments and policy influencers are onboard. A circular economy was the hot topic at the 2015 World Economic Forum in Davos. The European Commission already has its ambitious circular economy strategy, but what about your business? How do you get there from here? I asked eleven industry leaders – from companies including Coca-Cola, Balfour Beatty and AB Electrolux – for their top four steps to progress.
Step one: look inside and out
“We start where we always start,” says Ulrike Sapiro, Coca-Cola’s Sustainability Director. “Which is looking at our entire value chain. Where are the biggest impact areas and how could circular economy thinking help improve that?”
Alan Knight, General Manager Corporate Responsibility with Arcelor Mittal agrees and adds a twist. It’s not only about looking inside the company, but also taking a wider view of what comes next. “Sometimes when we talk about new business models, we look internally. What is our own new business model we can launch? What we really should be talking about are new collaborations.”
Step two: your customers want this; tell them you do to
ING’s Global Head of Sustainable Finance, Leonie Schreve, says the new and next generation of employee and customer will force change. Ownership is less important to them, rather “sharing for sustainability is at the core of their mindset”.
And it’s not just the young, says Alan Knight, pointing to services like television rental that were common only 15 years ago. “A lot of citizens grew up with ‘a circular economy’, and the new world, which we as business people helped create, has decoupled them from that economy.” There is, he believes, “a sort of de-mindset there”, which demands deep consumer engagement.
“What's going to be the most interesting next step for those who are serious about the circular economy, whether it's a B2B or a B2C or even B2G model,” says Peter Lacy, Accenture’s Global Managing Director. “Is how to take the customer on the journey.” Communication – always communication – is key.
Step three: rethink your financial model
“Rethinking business models is one of the key drivers for circular economy success,” says Leonie Schreve. “And that requires not just recycling, but going beyond it: rethinking our business models, rethinking our finance models. That’s why ING issued the Circular Economy Report. Not that we’ve found the perfect solutions yet, but we engage with clients at an early stage to see how can we work together in redesigning and rethinking circular economy models. Then we can provide financing in an effective manner.”
Step four: mind your language
Paul Toyne, Balfour Beatty’s Group Head of Sustainability, said it best. “My final plea is this: let’s all agree never to use the word waste again in the context of materials, because it isn’t. In the natural world, one animal’s waste is another’s resource. It could be its food. It could be whatever else, a shelter. But let’s just ban the word waste.”
To find out more about the circular economy and how your business can do more with less – including step five – watch the following short videos: innovators and disruptors, challenges and opportunities, five steps to progress.