3 Steps to Help Your Business Adopt a Circular Model
Today, most businesses and governments follow a linear model of production and consumption, where they take finite resources from natural ecosystems to make products they eventually discard as waste. In 2021 alone, this model consumed over 100 billion tonnes of materials and wasted over 90% of all materials extracted and used, widening social inequalities, and exacerbating other global challenges such as biodiversity loss, pollution and waste, climate change, and resource scarcity (Circle Economy, 2022).
Currently, only 8.6% of materials are returned to the economy. Yet, the circular economy could yield up to $4.5 trillion in economic benefits by 2030 (World Economic Forum, 2022). Companies that adopt circular economy business models stand to maintain or gain a competitive advantage by creating new products and services, lowering costs, and meeting stakeholder expectations.
With 70% of global greenhouse gas emissions (GHG) emissions released into the atmosphere directly linked to material processing and use (from extraction, transportation, and manufacturing to the use of products such as clothing, food, and phones), implementing “closed loop” practices will also be critical in enabling businesses and governments to meet their net-zero targets and in aligning with a 1.5°C pathway (Circle Economy, 2022).
What is the Circular Economy and why is it good for your business?
The circular economy transforms linear models by decoupling growth from extraction and is underpinned by 3 principles:
- Elimination of pollution and waste
- Circulation of materials and products at their highest value
- Nature regeneration (Ellen MacArthur Foundation, 2022)
It provides solutions for businesses and governments of all sizes to tackle the root causes of global challenges and achieve sustainability targets across all three dimensions of sustainable development:
- Environment: Different strategies can be adapted to progress towards a circular model, including a) (re)designing products to be easily maintained, refurbished, and disassembled; b) reusing and recycling products and resources which cannot be returned to the environment; c) more efficient use of renewable resources and sharing of resources and services. These strategies help minimise the environmental impacts of the products and services we use and contribute towards GHG emissions reductions, pollution reduction, and waste minimisation.
- Economic: The economic benefits of a circular model include lower production costs, economic growth, reduced investment in resource extraction, lower cost of recycled raw materials compared to virgin raw materials, growth in technological development investment, and creation of high-quality jobs in the new sectors of industry focused on converting the linear model to a circular model. With consumers and other stakeholders increasingly focusing on the impact of their purchases, incorporating the circular economy into your business model can lead to a competitive advantage.
- Social: With new job opportunities, higher economic stability, and a cleaner and better community to live in, the circular economy increases the standard of living, helps improve the health and wellbeing of workers throughout a company’s supply chain, encourages community development, and creates a pathway towards a sharing social economy.
How to get started
Adopting a circular economy business model will take time but following these steps can help you get started:
Step 1 – Consider the lifecycle of your products and undertake a waste audit (PwC, 2021) – look at your own operations as well as waste generated throughout your value chain (e.g., in supply chains and by the consumer).
Step 2 – Set time-based, measurable targets that will support your transition to a circular economy business model (e.g., waste minimisation, GHG emissions reductions, recycled content, packaging, etc.) and identify and implement initiatives to deliver on these (PwC, 2021).
Step 3 – Engage your supply chain. This could include:
- Working with suppliers to redesign products or services
- Embedding circular economy requirements into your procurement strategy and processes (Bland, 2022)
- Mapping preferred or mandatory supplier credentials to your targets – more on this below!
- Educating and incentivising your supply chain to adopt circular practices and improve sustainability performance.
Finding suppliers with credentials that advance the circular economy is essential, not only for moving away from the take-make-waste model, but also for ensuring that raw materials, goods, and services are produced, and/or sourced, in a sustainable manner. The increasing number of sustainability credentials means that it is now possible to set preferred or mandatory requirements and maintain an acceptable level of supply. However, each credential has a different focus and set of metrics, creating confusion for procurement managers.
givvable is an AI-driven technology platform helping businesses to identify preferred or mandatory sustainability credentials aligned to their targets and discover and track the credentials of their suppliers and trading partners. The platform covers over 1 million credentials across 800+ local, regional, and global sources, such as certifications, accreditations, ratings, commitments, and initiatives, automatically mapped to sustainability targets and widely used global frameworks (such as the UN Sustainable Development Goals). By capturing data in an easy-to-access platform, givvable helps companies screen existing suppliers for preferred or mandatory credentials, and continuously grows pools of credentialed suppliers.
Credentials that advance or support the circular economy
The list below provides examples of credentials captured on the givvable platform, that suppliers may register, and users can track, which indicate supplier practices or initiatives advancing the circular economy.
Name: Cradle to Cradle certified
Issuing Organisation: Cradle to Cradle Products Innovation Institute.
Description: Cradle to Cradle Certified® is a globally recognised measure of safer, more sustainable products made for the circular economy. To be certified, products are assessed for environmental and social performance across five critical sustainability categories: material health, material reuse, renewable energy and carbon management, water stewardship, and social fairness.
Name: Certified B Corporation
Issuing Organisation: B Lab
Description: B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.
Name: Australian Packaging Covenant Organisation member
Issuing Organisation: Australian Packaging Covenant Organisation (APCO)
Description: APCO’s vision is a packaging value chain that collaborates to keep packaging materials out of landfill and retains the maximum value of the materials, energy, and labour within the local economy.