A circular economy is one where waste is eliminated and resources are circulated, limiting humans’ impact on the environment and allowing for nature to regenerate.
The linear model of ‘take, make, waste’ is not sustainable, and has already caused irreparable damage to the planet.
To limit further harm, the transition to a circular economy needs to be accelerated through implementing circular economy practices.
We ranked 10 of the top circular economy strategies.
10. Design for durability and repairability
Top benefit: Products can be fixed
Key businesses: IKEA, Patagonia, Fairphone
Designing durable products extends their lifespan, avoiding waste for as long as possible. Products that are easy to repair don’t even need to become waste once they break as they can be fixed.
IKEA designs all its products to be repaired, repurposed, reused, resold and recycled instead of becoming more waste.
Jesper Brodin, Chief Executive Officer of Ingka Group, explains: “If you look at our tradition and history, long before anybody could spell sustainability, it was about reducing air in the packages, filling up the containers, making a flatpack.
“The only way IKEA can be successful in the future is to be in a hurry to get sustainable.”
9. Product life extension
Top benefit: Products last longer
Key businesses: Levi Strauss & Co, Philips, Dyson
Product life extension maximises the value and utility of resources, cutting down the need for raw materials. To extend the life of its products, Levi’s created product tags called ‘Care Tag for Our Planet’ that offer customers tips on how best to preserve its clothing.
Jeffrey Hogue, Chief Sustainability Officer at Levi Strauss & Co, says: “To make real progress on the most important issues the industry is facing, we’ll need new types of leadership, partnership and commitment that do not focus on being first or differentiating our approaches from our competitors, but instead move us forward in ways that benefit all our stakeholders.”
8. Resource Efficiency and Optimisation
Top benefit: Less raw materials used
Key businesses: Siemens, Unilever, Toyota
Smart use of materials allows for their value to be maximised whilst minimising waste – doing more with less benefits both the planet and the economy. Measures like material substitution and energy recovery can make a big difference.
Siemens leads in resource efficiency by using advanced technologies including smart grids, digital twins and automation.
“At Siemens, sustainability and improving lives through technology with purpose is at the heart of everything we do,” says Judith Wiese, Chief Sustainability Officer at Siemens.
“We are committed to supporting and empowering the people, communities, and societies we serve on their sustainability journey.”
7. Reuse and Sharing Platforms
Top benefit: Less new products manufactured
Key businesses: Airbnb, Lime, Vinted
How many times have you bought something only to use it once? Reusing and sharing items stops new things being produced where they will be used minimally.
Vinted is a platform where members can buy and sell second hand fashion and other items. On average, each second hand purchase on Vinted avoids 1.25kg of CO2e.
Thomas Plantenga, Chief Executive Officer at Vinted Group, says: “No one should have to choose between what’s better for the climate and what’s better for their wallet, so we aim to make second-hand easy and affordable for everyone.”
6. Recycling and material recovery
Top benefit: Raw materials replaced
Key businesses: SUEZ, TerraCycle, Veolia
Recycling and material recovery are essential to a circular economy, turning waste into useful resources. This reduces the need for raw materials and ‘closes the loop’.
SUEZ provides advanced recycling and material recovery services around the world, focussing on transforming waste into secondary raw materials.
“Tackling climate change requires companies to shift from a linear business model, where natural resources are extracted, used and discarded, to a circular economy model. And to accelerate this, transformative technology is key,” says Sabrina Soussan, Chairman and Chief Executive Officer at SUEZ.
5. Waste reduction and minimal packaging
Top benefit: Reduce packaging waste
Key businesses: Lush, Apple, PepsiCo
Using minimal packaging helps to reduce waste and pollution whilst maintaining the value of products and materials.
66% of Lush products sold each year are ‘naked’, coming in no packaging. This reduces the amount of water in products that adds weight when they are transported and reduces the use of plastics.
Mark Constantine, Co-Founder and Chief Executive Officer at Lush, explains: “We went back to basics at the start of Lush – we stripped away the packaging and we put larger numbers of highly knowledgeable staff on the shop floor, to bring back the art of conversation and specialised service.”
4. Reverse logistics and take-back programs
Top benefit: Reuse materials
Key businesses: Coca-Cola HBC, H&M, Dell
Reverse logistics is a supply chain management process that moves goods from their final destination back to the manufacturer or distributor. This allows packaging and used goods to be recycled.
Dell runs responsible recovery and recycling services to reduce electronic waste, accepting any brand of products.
“Sustainability and ESG commitments are now widely recognized as business imperatives that impact everything from supplier decisions to business strategy,” says Michael Dell, Chairman and Chief Executive Officer at Dell Technologies.
“At Dell, we are both meeting our goals and helping customers meet theirs.”
3. Digitalisation and data analytics
Top benefit: Improved visibility
Key businesses: NAVEX, Workiva, Persefoni
It's difficult to make worthwhile improvements without seeing where they are needed and the impact they make. By harnessing data, companies can track their environmental impact and optimise the changes they make.
NAVEX One is used by more than 13,000 companies including PepsiCo, DP World and Cargill to track ESG data.
The platform combines scattered information into a single powerful tool for sustainability decision-making and support with compliance.
It also allows for collaborative reporting, creating a shared vision of ESG progress.
Sean Thompson, Chief Executive Officer at NAVEX, explains: “We believe the correct approach starts with collecting and analysing the right data.
“This allows us to prioritise actions that will deliver the greatest positive difference for our workplace, employees, and the communities that support us.”
2. Collaborative supply chains
Top benefit: Shared knowledge and innovation
Key businesses: L'Oréal, Procter & Gamble, Danone
Collaboration throughout supply chains allows for knowledge and innovations to be shared, making optimisations at every step. It also helps to foster transparency and shared responsibility.
Danone has a direct relationship with more than 58,000 farms and is partnering with agriculture ingredients suppliers to transition farming practices to become more sustainable.
Its brands are also leading this transformation by engaging consumers in the movement. Blédina, a company specialising in baby food, invites consumers to visit farms where ingredients are grown to see how they work.
Vikram Agarwal, Chief Operations Officer at Danone, explains sustainability is not just about numbers: “It’s about a holistic approach. We collaborate closely with our farmers, like the More Holstein Farm in Spain to develop a more sustainable end-to-end agri-food model.
“I’m proud that we have been working with them for 43 years, and that recently, they’ve become the first BCorp certified farm in Europe!”
1. Policy and regulatory support
Top benefit: Encourages businesses to become circular
Key businesses: Ellen MacArthur Foundation, WRAP, Loop
Policy and regulatory support is the backbone of implementing a circular economy. They help to encourage businesses to adopt circular practices through providing incentives and frameworks that make sure practices are making the difference they should be.
By aligning economic incentives with environmental goals, policy and regulatory support can make a huge difference in the speed at which companies are able to start making changes.
The Ellen MacArthur Foundation, founded by Dame Ellen MacArthur in 2009, helps to advocate for a circular economy through its research and reports. It says circular economies deliver better outcomes for both people and the environment.
The foundation has been recognised by the United Nations, and more than 1000 companies worldwide have joined its network as partners or members including BlackRock, Google and Mars.
“Despite the common use of big words, we have to be honest and recognise that it's very difficult to move beyond the margins of business as usual - profound change isn't easy to define, let alone implement,” says Jocelyn Blériot, Executive Lead for Policy and Institutions at the Ellen MacArthur Foundation.
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