With an ever-expanding world population and increasing pollution levels the need to build a more sustainable human society has become obvious. For years we have forgotten about nature and assumed we could keep going with our consumption and production habits for ever. Reality has caught up with us and we have had to come to the realisation that our current economic and business model is unsustainable.
As we look for ways to reduce the impact of human activity on the planet, the circular economy has become one of the solutions we can implement to reach a more sustainable future. It is a system where resources and materials are reused and recycled efficiently to minimise waste.
The circular economy describes a change in business models; it is about moving away from a linear economy where products are manufactured, used, and discarded when they reach the end of their life. Most of these, end up in landfills creating even more pollution.
In a circular economy all products are thought through with a focus on how each component can be reused, recycled, repurposed or recovered to avoid waste. It is about starting a new cycle from existing materials or products without using new resources.
We are all familiar with planned obsolescence and how our modern societies have pushed consumers towards buying new products instead of repairing them. In a circular economy, products are repaired, refurbished, and find a new life whilst still delivering what consumers are looking for.
Encouraging circularity is key to reaching our ambition to move towards a Net Zero society. In addition to recycling components and materials, the environmental impact of the goods produced and how they are manufactured is extremely important. The idea is to minimise our impact on the environment and to ultimately stop depleting our natural resources.
Embracing the circular economy is going to be a challenge, however, with inflation at an all-time high and pressure on supply chains, there might just be a business opportunity to be seized. By generating innovative ideas around circularity, companies could not only save the planet but also improve their competitiveness.
So, how can companies participate, make an impact and benefit from the circular economy?
It is important to be clear on where the business wants to focus its efforts and what makes sense for its activity. The changes have to be linked to the business objectives to make a maximum impact and get the buy in from the executive team. It also allows for relevant key performance indicators to be designed. Start with identifying a new way of creating value for the business which will allow the firm to shift its model.
Is it through an improved or more resilient supply chain?
Do you want to cut your Scope 3 emissions?
Would increased traceability of products help in repairing them or recovering and recycling them at the end of their life?
Answers will be different for each company but setting goals and formulating an action plan is the best place to start. Engagement across the business is paramount if change is to happen. Get ideas from employees on how to improve processes, communicate with your suppliers and your customers and make sure your objectives are clear. Having everybody working towards the same goal will generate new ideas and stimulate innovation. There will certainly be disruption along the way, but that can be planned too and not taking the risk is also a risk.
Recognising the value of the Earth’s resources and acknowledging its limits will take more and more companies on the path of the circular economy. Acting on climate change, ensuring future generations have access to food and water and can have a prosperous future should be motivating enough.
Other benefits will come from a change of model such as boosting economic growth, finding cost savings and increasing profits. There are still many barriers to this shift to circularity. Transforming a company is challenging and costly, small firms may not have the internal skillset to start making changes. Recycling and tracing capabilities are not performant enough and a lot more investment in research and development is required.
At Partner Executive we believe that the first step towards circularity does not have to be big. It is about identifying untapped value and scaling up. Not all change needs to happen at once, but it needs to be radical, innovative and inspiring. A lot is riding on it.
