Moving to a circular economy plays a vital part in the response to the climate emergency we face. But take a look at the membership list of the Ellen MacArthur Foundation1 and you’ll see that a growing number of leading organisations recognise the circular economy is also an opportunity to grow revenue, innovate and strengthen both their competitive and financial position. If there’s such a clear economic and environmental case to shift strategy, mindset and operations, what’s stopping so many companies from embracing a transformation?
Are you waiting for your sustainability department to deliver this for you? Perhaps therein lies the issue. This is an organisation-wide opportunity and one to get excited about.
What do we mean by the circular economy?
Circular economy system diagram2
The circular economy is a system aimed at eliminating waste and the continual use of resources. Circular systems employ reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a closed-loop system, minimising the use of resource inputs and the creation of waste, pollution and carbon emissions3. The circular economy aims to keep products, equipment and infrastructure in use for longer, thus improving the productivity of these resources. All ‘waste’ should become ‘input’’ for another process: either a by-product or recovered resource for another industrial process, or as regenerative resources for nature, e.g. compost. This is regenerative in approach, in contrast to the traditional linear economy, which has a ‘take-make-dispose’ model of production.
The Ellen MacArthur Foundation states that a transition to a circular economy will combat 49% of greenhouse gas (GHG) emissions. This complements GHG reduction measures such as renewable energy and energy efficiency4.
Five steps to simple yet effective circularity
To transition to a circular model, every part of your business needs to be involved, from supply chain to finance, marketing to IT. This goes way beyond your sustainability department and penetrates all operating functions, across sectors into full value-chains and beyond high-level principles into actionable business practice. It takes an industry-leading shift in mindset to get this right, starting with your strategy and through to delivery. Here are five good places to start.
1. Lead courageously
Contrary to popular business belief, this is not a time to lead from behind. The pursuit of circular economy solutions requires ambitious leaders to embrace innovation. They are rewarded with a captive audience. In a sea of sustainability misinformation, society is looking for clarity, transparency and education. Those making the largest strides in circular economy transformation are lauded for bringing simplicity to the problem and paving the way for others to closely follow suit. We will rapidly see a shift in attitudes and expectations for business operations and what is currently a slow awakening, will soon become restlessness and impatience with inactivity in industry. Those who get it right will have earned brand loyalty in the process.
2. Create a compelling vision
The first step of this journey is to be clear about where you want to get to and why. A northern star for your transformation can light the way to an ambitious future of ‘inherently circular’ rather than a future of just ‘less linear’, incrementally picking off the low hanging fruit. ‘Sustainable’ isn’t enough – it means different things to all of us and doesn’t help you define a roadmap to success. How circular economy principles apply in a university will differ to that of a media outlet or a supermarket. Your vision should be simple, compelling and understood by everyone in your organisation.
You need the ‘why’ for when it gets hard. Over time, customers, staff and even your board can grow numb to your vision. It’s too easy to get bogged down in the day-to-day of delivery, chasing a top-level target. It’s the ‘why’ that keeps us motivated to make changes at pace. Your ‘why’ can be driven by business objectives (“so we have the edge on our competitors”) or environmental ambitions (“so we can show our industry a sustainable solution”).
Finally, publicise it. Society is attuned to the fact that there aren’t quick fixes to achieve circular economy solutions, but publicising your intent will: earn interim recognition for your efforts; attract the right kinds of collaborators; compel others to follow you and make you accountable to your own ambition!
3. Make it a no-brainer for your board
Underpinned by the objective of creating long term economic value and mitigating climate related risk, circular economy principles present a wide range of business benefits.
There is a common misconception that sustainable means more expensive, which is part of the reason we’re seeing large organisations drag their feet. The circular economy presents each sector with different opportunities for enhancing competitiveness, accelerating growth and mitigating risk. Your reason for transformation is a better business strategy (not saving the planet) and it’s easier than you think to build a strong internal case (tailored to your audience) to justify the initial investment to get there.
For example, your CEO might be interested in the fact that consumer businesses are moving to a service-based model and moving away from consume-to-use models, decoupling commercial growth and material inputs. Whereas your COO will want to know that it will reduce complexity and waste in your operations, provide net material savings and attract the best future talent. Underpinning your case, you need data relevant to your business.
”Nearly 40% of millennials have chosen a job because of company sustainability, with less than a quarter of gen X respondents saying the same and only 17% of baby boomers.
4. Think big, implement small
Once you have a clear vision and an engaged organisation, empower each team to own design and implementation of your vision in their area – this is their future (and an exciting one at that). Whether it’s a shift to paperless, a new source of raw material or elimination of avoidable air travel, your business is going to feel some pain designing and implementing the change. Make the benefits clear, provoke debate and provide a safe place for your staff to think differently. Classically, the devil is in the detail when it comes to implementation and you’re dependent on those who know it. There are a range of ways to keep your teams engaged in the bigger picture as they work on their parts of the solution (e.g. Scaled Agile portfolio management).
5. Create a ripple
Regardless of your drivers for shifting to a circular economy, you have an opportunity to affect wider change across your industry and beyond. The easiest place to start is your suppliers and partners. Encode your new values into your policies and contracts, and actively encourage positive shifts in your partners’ operations to align with your vision.
Looking beyond, communicate your vision and transformation in a meaningful way for both your industry and your customers. If everyone around you has a clear understanding of why you’ve changed, they are more likely to feel like need to too.
1 Circular Economy 100 | Ellen MacArthur Foundation
2 Circular Economy System Diagram | Ellen MacArthur Foundation
3 Geissdoerfer, Martin; Savaget, Paulo; Bocken, Nancy M. P.; Hultink, Erik Jan (2017-02-01). “The Circular Economy – A new sustainability paradigm?”. Journal of Cleaner Production. 143: 757–768. doi:10.1016/j.jclepro.2016.12.048.
4 Towards the Circular Economy: an economic and business rationale for an accelerated transition. Ellen MacArthur Foundation. 2012. p. 24. Archived from the original on 2013-01-10. Retrieved 2012-01-30.
The time is now for businesses to take action to show they are a key part of the solution and not just the problem. Gate One can help businesses to overcome the challenges and explore the opportunities being a sustainable business unlocks.