Building circular economy models in business and beyond

In a recent article written by Marissa Lee, a senior associate at public policy advisory firm Global Counsel, The Business Times looked at how companies can build circular economy business models into their operations. 

Lee points out, "reversing the environmental damage and imbalances that have become accepted as structural features of our economic system requires transformational, not marginal, solutions."

She says: "Today, many companies are characterised by so-called linear or extractive business models, where profit is maximised by selling more products and encouraging end-users to keep buying more products or increase their consumption."

To expose the elephant in the room, businesses, whether circular or linear, are both driven by the same classical bottom-line objective of profit.

"Circular business models are also profit-oriented, but the difference is that they seek to make a profit by maximising resource efficiency and cutting waste. Circular business models aim to decouple resource consumption from growth."

Delineating four models available to businesses who want to adopt circularity, Lee proposes: circular value recovery, circular product design, circular use and circular support as available options. 

1. Circular value recovery

According to Lee, circular value recovery "refers to activities that maximise value from products and materials in the after-use or post-consumer phase by cycling them through the economy for as long as possible before they exit as waste." This can include recycling, but even better: repair, refurbishment and remanufacturing.

2. Circular product design

"A more direct way to make sure that products — particularly, high-value goods — stay useful for longer is to design them to be longer-lasting, or to design them to be easily recycled or repurposed," she says.

3. Circular use

Circular use is about redefining the consumption process. "For instance," Lee says, "by encouraging consumers to choose access over ownership. At a time when consumer demand for clothes swaps and thrift shops is growing, this idea may not be as alien as it seems," adding: "Many companies have already disrupted asset ownership models with sharing models or leasing schemes that allow under-utilised assets to be used more efficiently."

4. Circular support

"Circular support refers to activities that enable the transition to a circular economy through the provision of digital tools or infrastructure," according to Lee.

She says, "Examples include predictive maintenance or asset tracking tools powered by the Internet of Things (IoT), digital marketplaces for second-hand products, reverse logistics networks, platforms for open collaboration and data sharing, as well as technologies and equipment that enable circular manufacturing or production processes."

Consumer Circularity

On the company side, circular economies fall within these four potential broad categories, but consideration must also be given to the consumer side of the circular coin.

In terms of the physical processes of consumption the process begins with company manufacturing, which has a measurable environmental impact, yet consumer behaviour also plays a part. 

In order for consumers to be successful in contributing to the realisation of circular economies, there have to be changes in consumer behaviour.

A recent article from Circular Online, a website for sustainability professionals working in resources and waste, looked at the relationship between behavioural science and circular economies.

The possibility of achieving circular economies rests, of course, on approaches to consumption and so human behaviour forms a key link in the entire chain.

On the level of social consumption behaviours, Belinda Miller, insight director at Corporate Culture, thinks that on the ‘awareness front’ although campaigns have a role to play, they don’t work in isolation. “National campaigns are effective at winning over hearts and minds, or as a call to action, but more targeted messaging is also needed to change behaviours.”

Miller explains that a behaviour-change project starts with gathering insight on the problem and understanding the local context.

This is perfectly analogous to the way in which data is absolutely essential to ESGs in the corporate world, and reflects the move to develop more sophisticated systems in understanding actors’ carbon footprints.

“You look at the customer journey, the same as any other industry, and map out every single thing – what, where, when, why and how.

“Once you understand the problem and context, you can identify your audiences and what gets in the way of them carrying out the behaviours that you want – then identify interventions that will tackle those barriers,” she says.