While industrialization has brought with it prosperity and improvement in quality of life, it has failed to take into consideration the interconnected nature of our world. Our consumption patterns have contributed greatly to this exhaustion of natural resources, through systematic generation of ‘waste’. Over the past five decades, the global population has doubled, and extraction of natural resources has tripled. Almost all our existing processes are linear in nature. They take in resources and change their form by concentrating, altering and synthesizing them into products, which at the end of their intended use cannot be reused or recycled. If present trends continue, by 2060 global resource use will more than double again, and greenhouse gas emissions will rise by 43%. Currently, humanity − all 7.8 billion of us − produces around two billion tons of waste every year, representing around 256 kilograms per person.
Circular Economy: Driving purpose and creating value
Often it is cheaper and easier to replace an article than to get it repaired. This pattern is furthered by product designers who design products (such as electronics) with a built-in obsolescence. These products eventually either end up in a landfill as technical waste, since raw materials cannot be recovered, or they get recycled with similar products resulting in a down-cycling of precious metals and other resources. Else, they may be incinerated or released in a water body leading to air and water contamination.
The path forward towards a circular tomorrow
Building products in isolation, without considering their environmental impact is clearly a short-term approach, that is resulting in material scarcity on the one hand, and excessive waste creation on the other. A new framework must be set in place, one that considers the external, environmental impact of corporate action. The concepts of ‘sustainability’ and ‘responsible growth’ have emerged out of this quagmire.
Sustainability means circular systems: Forward looking companies are building circularity into their product and service offerings. Take the example of IKEA, which is looking to become circular by 2030. IKEA is building systems to support customers to care and repair, rent, share, bring back, donate and resell their IKEA products to prolong product life.
Not just companies, but countries are adapting to this new way of thinking. In 2016 Switzerland became the first country to vote on the need to implement a green economy.
Sweden has set the bar high with its ongoing recycling revolution. Less than one percent of household waste in Sweden finds its way to a rubbish dump, as the rest of it is recycled in various ways. Circular systems however are not that easy to create. They need significant efforts from stakeholders and the commitment to make a change. The corporate world functions as a part of global supply chains. Hence companies are mostly following a step by step approach, where they begin by understanding the business risks of the changing environment and then make plans to mitigate these risks. To create a sustainable model of growth; companies need to map the system they exist in. This implies a thorough analysis of internal and external aspects:
- What resources do we depend on? – Materials, Energy, Transport, Land, People
- Will we be able to source these over times? What are the risks?
- What waste do we create during production? How is it disposed?
- How are customers, communities, suppliers and other stakeholders impacted through our services and policies?
Key Discussion Points
How could circular strategies align with − and advance − our organizational vision and strategy?
Which circular models could generate reciprocal value and incentive for our customers and our business?
Have we identified existing and new potential partners who might share our sustainability objectives and have a similar risk tolerance for new ideas?
What metrics and tools will we use to measure our progress?
How will we define success internally, and are there relevant external recognition goals that we should aspire to?
The upcoming webinar “Circular Economy: Driving purpose and creating value” will feature a panel of renowned business leaders from different sectors to explore how companies can identify and build the action plan for circular economy.