Dell makes its computer cases out of plastic recovered from its computers. Caterpillar remanufactures oil coolers, engine blocks and other parts, recovering 93% of their core value. TerraCycle teams up with major manufacturers to invent ways of reusing difficult-to-recycle plastics—then shares their stories.
These were some of the revelations of a webinar titled Implementing a Circular Business Strategy in June, featuring pioneers of the circular economy, and me – a business strategist and author of a new Circular Economy Business Toolkit, published by Canada’s National Zero Waste Council.
$4.3 trillion by 2030, according to Accenture.
As a business-person, decision-maker or engaged citizen, you’ve heard about the circular economy. How it’s a sustainable alternative to our linear “take-make-dispose” economy, and how much this next industrial revolution could be worth: $4.3 trillion by 2030, according to Accenture. And you want to be part of it, but are daunted by the complexity of transitioning and risks.
Don’t despair, if you feel this way–you are not alone. Instead, check out the new Toolkit, which describes practical approaches to understand the risks and benefits of embarking on a “circular journey” and figure out where to begin.
The answer is pretty much anywhere, as I told the webinar. Remember though to be strategic and that in this transformative process “no one size fits all”. The best approach will be determined by the sort of business you operate and your products, services, eco-system of customers and stakeholders, resources, etc.
The Toolkit draws on the latest research from on-line sources and interviews with business leaders
The Toolkit draws on the latest research from on-line sources and interviews with business leaders taking the leap out of linear into more circular business models.
It focuses on three areas: business strategy, design innovation and stakeholder engagement.
Many businesses, large and not so large, begin with a workshop, bringing together leaders from management and operations to uncover ideas for new business model applications. You might organize this around five areas of inquiry, proposed by Accenture:
- Value chain opportunities: What are the opportunities for adopting circular economy approaches in our value chain?
- Linear economy risk: What is the risk of continuing to operate in a linear fashion? What would our business look like in a circular world?
- Customer-value creation: Can we help our customers increase the lifetime and utilization of our products?
- Technology and industry innovation: What is the potential to disrupt our business model with new technology?
- Business benefit: What benefits can be realized in the short and long term?
The Toolkit identifies five common business models for circular approaches and directs readers to excellent case studies for each, on the Council’s website. There is the products-as-a-service model, which offers usage-based services (rather than ownership), such as selling driving time instead of cars (Case study); and the product-life extension model, which relies on remanufacturing, repairing or upgrading and reselling used products and components (Case study).
By contrast, circular supply chain models allow suppliers and partners to use recycled, recyclable or renewable materials instead of non-renewable resources (Case study); and recovery and recycling models allow some companies to re-use 100% of the waste generated in manufacturing (Case study). None of these is as well known, and controversial in some cases, as the sharing platforms model, which uses digital technologies to maximize the use of underused assets: hotel rooms, consumer goods, vehicles, etc. (Case study).
Designing for a circular economy demands new thinking in favour of different—some might say old—values (adapted from Products that Last: Product Design for Circular Business Models):
- Customer attachment and trust, so products are loved or trusted longer;
- Standardization and compatibility for ease of maintenance and repair;
- Adaptability and features that upgrade;
- Disassembly and reassembly;
- Reuse, remanufacturing and remarketing;
In the early phase of your circular initiative you will have mapped your value chain and material flows in and out of your business, identifying parties and actors who help bring your products to the market. The final section of the Toolkit helps you understand the importance of engagement and collaboration with these different groups and individuals to help your company transition successfully.
“The more you can make closed loop products with a story … the easier it is to sell them” –Anthony Rossi, TerraCycle
John Disharoon, Director of Market Access for Remanufacturing at Caterpillar, described “remanufacturing” as a “very substantial part” of his global company’s repair services, with capacity to do this devolved to local dealerships worldwide. “Each time a component comes back, it is returned to the field with updated engineering for new life cycles,” he noted.Many firms take smaller steps rather than leap. In the June webinar, Steve Roberts, Dell’s Global Sustainability Marketing Manager, describes how senior management in his company, including some who refused to use the term circular economy, discovered the “good business” of, first, reusing compact-disk cases and plastic bottles, then their own plastic computer cases – even though the vast majority of their customers don’t know the origins of the plastic in their devices.
Anthony Rossi, VP, Global Business Development of TerraCycle, said his company has built a global business out of working with major stakeholders and manufacturers – Frito-Lay, Garnier, Rubbermaid, etc — to reengineer the economics of recycling difficult to reuse products.
If it doesn’t pay to make a Frito-Lay bag out of the blended plastics that go into them, TerraCycle will make fleet of Frito-Lay chip trucks out of them, or dog bowls or car bumpers—and help its partners tell their story.
“The more you can make promotional and closed loop products with a story from that recovered plastic, the easier it is to sell them and make the business case as to why you are recovering and recycling this garbage,” says Rossi.
This article first appeared on Circular – A blog for preventing waste and building circular economies.
Coro Strandberg is the Principal of Strandberg Consulting, which provides strategy advice to companies and industry associations that seek to integrate social and environmental considerations into their purpose, governance, operations and supply chains to create business value and societal benefit.