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How Circular Economy Strategies Can Strengthen Your Business Post-COVID-19
Through the disruption of the COVID-19 pandemic, national and international lockdowns have transformed how many of us live and work.
The challenges can seem overwhelming - loneliness, job losses, bereavement and increased anxiety - and yet, we’re feeling more passionate than ever about helping our home planet.
Increasingly, people want to combat climate change and help nature to thrive. The pandemic reminds us that we’re all part of a larger community. People want to be part of the solution, not part of the problem.
People expect businesses to be ethical and sustainable, and not to ‘greenwash’.
Using unsafe materials, deforestation and putting unrecyclable products into the market can severely damage brand reputations. According to Euromonitor International’s Lifestyles Survey 2019, consumer habits are evolving, with people increasingly choosing to buy less and to repair instead of replacing.
Businesses are changing their perspectives too, sensing the fragility of ‘sell more’ strategies with a focus on volume production, cost-down procurement, plus the pressure and expense of developing new products and acquiring more customers.
Customers - and colleagues - are signalling they want to engage with businesses that have transparency, responsibility and sustainability at the core of their purpose.
The future is circular
The circular economy is gaining traction, with people realizing it’s better for our climate, planet and society. In June 2020, over 50 policymakers, CEOs and other global leaders signed a statement: ‘A solution to build back better: the circular economy.’ Coordinated by the Ellen MacArthur Foundation, the group believes “together we can build an economy that is distributed, diverse, and inclusive.”
Around the world, governments, cities and businesses large and small are getting started. Leaders see circular economy approaches as the best way to prepare for the future: embedding resilience to absorb external shocks.
The circular economy is about getting more out of products, components and materials, while avoiding waste and pollution to reduce our environmental footprints. It helps you control and reduce costs and risks, create new offers and revenue streams and develop new markets. What's more, circular approaches strengthen customer relationships and engage your employees and suppliers.
How do we integrate these opportunities into business? In the second edition of A Circular Economy Handbook, I build on the work of leading researchers, think tanks and consultancies to outline three circular strategies:
- From fast to slow: to slow the flow of resources through the system. Rather than trying to persuade customers to replace things more frequently, we design things that last longer, are repairable and suitable to be refurbished, remade and eventually to be recycled. The upside is happy, loyal customers who promote our brand, rather than putting people off it.
- From solo to shared: to get more out of less, we are moving away from an ‘ownership’ culture where we buy things even though we might only use them once a year. Instead, we can rent things, or share them with others. That means better value for the users, and your business benefits from access to new customers.
- From disposal to recovery: to close the loop and regenerate resources. Instead of dumping or burning our precious, finite materials together with the energy, knowledge and labour we ‘embedded’ throughout the supply chain, we get them back into the system to use them again. We aim to reuse the product or components, rather than using more energy, labour, chemicals and so on to recycle them. Business can create value from these end-of-use resources, especially as green taxes start to penalise waste and virgin material use.
Underpinning these strategies is the principle of using less, and using sustainable resources. That means choosing recycled or renewable materials which are safe for humans and nature at every stage of the product lifecycle. Resource efficiency underpins cost-competitiveness, and of course, avoiding harmful chemicals is better for your reputation.
Businesses of all sizes, in every sector, are switching to circular
Let’s look at a few examples, starting with global businesses and moving onto start-ups and social enterprises.
Example 1: IKEA
IKEA has committed to be a ‘circular business by 2030, built on renewable energy and regenerative resources; decoupling material use from our growth.’
IKEA’s 2019 Sustainability report confirmed that more than 60% of its product range was based on renewable materials and more than 10% contained recycled content. Head of Circular Design Malin Nordin, says IKEA wants to accelerate the shift: “… in terms of the pandemic. It has become even more important and relevant to take care of what you already have and prolong the life of products that you already have.”
IKEA already provides spare fixings, free of charge, to help customers keep self-assembly products in use. In November 2020, IKEA launches two experiments. It will open a second-hand store in Sweden, for a 6-month pilot. The store is at ReTuna, a specialist recycling mall which opened in 2015, and will have a team to carry out furniture repairs and renovations.
In addition, a buy-back trial will run in 27 countries for a short period, to help customers "take a stand against excessive consumption." Customers will also receive IKEA vouchers for between 30-50% of the item’s original value, depending on condition. The items will go on sale in stores, with anything not resold being recycled.
"If you don't have circularity built into your model, you're going to be expensive..."
Jesper Brodin, CEO IKEA, on Outrage and Optimisim Podcast ep28
IKEA’s other experiments include textile recycling and leasing office furniture to business customers in Switzerland.
Example 2: Unilever
Unilever encourages behaviour change through its brands, including Dove, Ben & Jerry’s, Lipton and Omo.
Unilever’s circular and resource efficiency approaches unlocked impressive savings of over $1 billion since 2008 by improving water and energy efficiency, using less material and producing less waste. Customers showed their approval too, with Unilever's “sustainable living” brands delivering 70% of its turnover growth in 2019
On top of this, Unilever will ‘help create a circular economy for plastics’. By 2025, it will halve its use of virgin plastic, reducing its absolute use of plastic packaging, accelerating its use of recycled plastic, and also helping to collect and process more plastic packaging than it sells.
Unilever is also working with award-winning start-up Algramo. Launched in Chile in 2012, Algramo (“by the gramme”) solves the ‘poverty tax’ (when lower-income consumers buy products in smaller, more “affordable” formats, but end up paying up to 40% more for products). Algramo’s refill system allows customers to purchase the quantity of products they need at ‘bulk’ prices — making the sustainable option more affordable, equitable and convenient.
Algramo's technology makes refills easy and COVID-19 secure. Image used with permission from Algramo.com
Algramo’s service operates in over 2,000 family-owned stores, reaching over 325,000 customers in Santiago, Chile and it now offers a mobile option using electric trikes. Algramo has expanded to the US with refill vending machines in New York City, partnering with Colgate-Palmolive and Clorox.
When closing the loop, it’s important to avoid ‘downcycling’ resources into lower value products. Rob Thompson, aware of the critical and increasing problem of plastic pollution in the oceans, started doing clean-ups in his kayak. In the Circular Economy Podcast, Rob recalls coming up against recurring obstacles:
- How to access the inaccessible coves, estuaries and other areas the regular beach cleaners couldn’t get to;
- How to dispose of the plastic generated through clean-up operations;
- How to fund the running costs of doing this.
Rob applied circular economy principles to these barriers, launching Odyssey Innovation to recycle marine plastic into kayaks and other products.
Local communities may struggle to manage plastics and other waste, especially in developing economies. Eco Brixs in Uganda gives trash – waste plastic – a value. Andy Bownds and his team developed an innovative plastic-sand composite paver, proven as stronger, lighter and more durable than concrete. This circular solution supports the local communities and economy, so anyone in the community can earn money from recycling. Fast-forward a couple of years, and 'Eco Brixs’ now has one of the largest recycling facilities outside of Kampala.
Build back better with circular solutions
These are just a few examples of why circular is better for planet, society and prosperity. Forward-thinking businesses are evolving their approaches to product design, material choice and business models. By closing the loop on their value-chains, they are creating and circulating value – being part of the solution, not part of the problem.