Circular Economy

Businesses across America are adopting the principles of a circular economy in increasing numbers from year to year.

Here are eight examples of how corporations, large and small, are taking a bite a circularity successfully by designing the waste out, keeping products in use longer:

According to the Ellen MacArthur Foundation, the leading voice in the circular economy movement, “We need to shift our way of thinking and build a circular economy — where waste and pollution are designed out in the first place; products and materials stay in use for much longer; and natural systems can regenerate.” Companies are embracing this mentality for a variety of reasons stemming from consumer’s increased importance on sustainability, but at the end of the day – wasting less means spending less.

In a report entitled Waste to Wealth, Accenture estimated the associated value at stake for moving to a circular economic model to be $4.5 trillion by 2030. This is between 4-5% of the projected global gross domestic product (GDP), more than the entire German economy today (the world’s fourth-largest). Businesses need to start moving now to be able to keep up with a trend that is showing nothing but signs of growth.

# 1 Fast Track to the Circular Economy: Design the Waste Out

This requires corporations to specifically understand how their products are used, the waste generated during its manufacturing process, during the product’s intended use, as well as after consumers are done with the product.  Change the Chemicals or Ingredients to Minimize Toxicity, Carbon Emission, Water Consumption, or to Increase Recycled Content

The textiles industry uses vast quantities of water and chemicals and produces huge amounts of toxic waste. To address this enormous problem DyeCoo has developed a process of dyeing cloth that uses no water at all, and no chemicals other than the dyes themselves. According to their site, the technology uses highly pressurized “supercritical” carbon dioxide, halfway between a liquid and a gas, that dissolves the dye and carries it deep into the fabric. The carbon dioxide then evaporates and is in turn recycled and used again. 98% of the dye is absorbed by the cloth, giving vibrant colors. And because the cloth doesn’t need to dry, the process takes half the time, uses less energy, and even costs less. The company already has partnerships with major brands like Nike and IKEA.

# 2 Embrace Modularity

A huge aspect of circularity is repairing a product instead of discarding it. For example, if the left speaker of headphones breaks, you shouldn’t have to replace the whole pair, you should be able to just buy a new speaker module and plug it in.

One company that is already pioneering the modularity of ordinary things, Gerrard St., offers high-quality modular headphones on a subscription basis, which allows customers to easily disassemble and upgrade or repair their headphones for no extra charge. By producing headphones on a modular basis, Gerrard St. reuses 85% of components and thus requires fewer virgin materials to create new headphones. Because customers repair and upgrade their headphones modularly, the company is then incentivized to produce a more durable product so that their revenue period is maximized.

# 3 Switch From A Sell to Lease Model

Philips has generated significant value for their business is through embracing the Product as a Service model. One example is Lumify, a subscription service that provides customers access to ultrasound transducers, apps, and an online ecosystem. The revenue generated from such green and circular initiatives constituted 64% and 12% of the company’s sales respectively in 2016, demonstrating the value of moving towards circularity.

A more recent example is Adidas ultra-boost shoes that you don’t buy, you lease and return when worn. The returned materials get used in the production of new shoes.

# 4 Way To Transition to the Circular Economy: Integrate End of Life Product Returns

Take back items that have reached the end of their lifecycle return and segregate them from regular returns so they can be repaired or reconditioned before being resold to a different market. Example: IKEA, is investing to extend the life of their products, making them easier to disassemble for repairs, and offering consumers incentives to bring back their used furniture instead of throwing them away. Ikea then repairs and resells them.

Another option is to implement an automatic return program to make it easier for consumers to bring back used products, like Mattel’s take-back program. By taking products and recycling them directly into new products, waste is removed from the production cycle.

# 5 Leverage Technology to Solve Specific Problems

Circularity also applies to the biological flow of material, and a key point to address is reducing food waste.   Specific studies from Champions 123 have demonstrated that every $1 invested in reducing food waste generates operational savings ranging between 6 and 14X.  Their latest research has shown how businesses can achieve over 50% reduction in food waste sent to the landfill.

Such results are pivotal in showing the way companies can achieve the United Nation’s 17 Sustainable Development Goals (SDGs) by 2030 but also play a key role in achieving Climate Action Goals (SDG13), Zero Hunger (SDG2), as well as promoting sustainable ecosystems and halting biodiversity loss (SDG 15)

A good example of how technology can help reduce food waste in hospitality is Winnow, a technology company in the hospitality sector.  The company helping its customers tackle the massive issue of food waste by developing artificial intelligence tools and accurate analytics to reduce food waste in commercial kitchens. They claim that they can help restaurants cut food waste by 50%, reduce food costs by 3%-8%, and achieve an increase in return on investment (ROI) of up to 10 times in year one

# 6 Circular Economy Fast Track Is To Embrace Upcycling

Circularity and its associated innovations aren’t confined to small start-ups. Currently, the world’s largest brewer wants 100% of its product to be in packaging that’s returnable or made from majority-recycled content by 2025. As it is, nearly half of their products are sold in returnable glass bottles, and AB InBev is working with suppliers and customers to increase that number to 100%. They have also launched a protein drink made from spent grains recycled from the brewing process, which were previously only resold as animal feed.

Every year, more global corporations are transitioning to a circular economy in the hope of becoming more resilient, reduce long-term operating costs, reducing risk, and creating new revenue streams. Obtaining a competitive advantage from circularity requires more than just incremental change – It requires a fundamental re-engineering of a business. 1GNITE is helping corporations of all sizes transition to a circular business model cost-effectively.  Contact us to get a leg on the competition.