We are entering a defining decade for sustainable consumption, with current estimates showing humans use enough resources for 1.6 planet Earths. Circular business strategies driven by consumer and legislative pressures are already prominent in the EU, and set to grow worldwide. In reality, the only way forward for a liveable planet is to decouple economic growth from finite resources through circular strategies – but for those early in the journey, what practical tips can companies take forward?
The circular economy, according to The Ellen MacArthur Foundation, is based on principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Circularity represents both a massive economic opportunity for companies and governments, as well as an effective approach to reduce emissions and waste.
Corporate Citizenship works closely with clients across sectors, to develop circular strategies and business models, building on nearly a quarter century of strategy consulting specialising in sustainable and responsible business. We are proud to partner with Textile Exchange to deliver the circularity module of the Textile Exchange Corporate Fiber and Materials Benchmark (CFMB). Whether companies are footprinting, setting targets to reduce waste and increase recycling, or taking a broader approach across offerings to partner with suppliers, customers and other stakeholders, we’ve outlined a few key tips and principles that apply across industries.
- Does your company have visibility of use of finite resources and management through baselines and environmental footprints? Understanding baseline use of energy, water, waste and single-use materials is step 1.
- Does your company have a circularity strategy in place? Do you have specific goals, targets and KPIs to not only reduce waste, but reduce reliance on finite materials while still growing the business? A circularity strategy defines longer-term goals, responsibilities, timelines and resources. Measurable targets define proactive plans – such as those to increase recycled materials, plans to increase resource efficiency by preventing pre-consumer waste through demand forecasting, engaging with suppliers to address waste, and other means, and by developing and scaling models such as resale, leasing and remanufacturing.
- To what extent is your strategy embedded in business planning, operations and performance metrics? Are the people driving circular strategies and initiatives, held accountable through their own performance goals and incentives? Are circular initiatives included in budget cycles?
- Does your company design for circularity? Have you set specific targets for number or percentage of R&D spend, or number or percentage of products at each R&D phase, that adhere to circular design principles and standards?
- Have you considered and evaluated the right pathways for investment in circularity? Consider:
- Investing in start-ups piloting new recycling technologies, or to support incubators or accelerators.
- Value chain operations: investment in external systems to foster circularity upstream and downstream, such as supplier projects, collection systems or infrastructure projects.
- Circularity innovation and technology: new technologies or processes such as new fibre recycling, Avery Dennison’s digital ID system, or industrial packaging reconditioning services offered by Mauser Packaging Solutions.
- Have you set supplier requirements to advance circular principles? Walmart has committed to electrify its entire vehicle fleet by 2040, and Amazon has announced a purchase of 100,000 fully electric vehicles by 2030.
- Has your company aligned circularity strategy with the SDGs? Circularity is an important part of the SDGs, particularly SDG 12.5: “By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse”. Drawing connections between a company’s circularity strategy and the SDGs helps drive home the opportunities for integration. The intention of this question is to ask whether your company has explicitly linked its circularity strategy to the SDGs.
The above list is a starting point for companies in early stages of circularity. It is not at all intended to be exhaustive. Of course, as the old adage goes, “If this were easy, we’d have done it by now.” We’ve made significant progress in reducing barriers to circular models, but many still remain firmly entrenched. A few barriers include:
- Resistance to increases in supplier power. As suppliers bring more comprehensive end-to-end circular solutions, it challenges the B2B customer model of sourcing various steps in production from different suppliers, driving prices down through increased supplier competition. Suppliers in manufacturing are moving beyond sales of products to products and services, increasingly offering a broader array to customers – including many components of circular solutions. Buyers need to look beyond the short term and value the long-term reduction in overall costs, while taking on the risk of fewer suppliers.
- Investment gaps. In textiles and other industries, we continue to see gaps in key technology investments that would support quality inputs and production of quality materials, as well as technologies to drive resource efficiency across the chain.
- Visibility across the value chain. It takes investment to map resource efficiency across the value chain, and incentives are not always there for comprehensive baselines.
If we are to live within planetary boundaries, circular strategies and business models that decouple growth from finite resources are the only way forward. From now to 2030, we have a chance to define that future.
Abby Davidson, Vice President, North America