We live on a planet of finite resource, but the current “take-make-waste” linear economy operates as if we could continue sourcing virgin materials forever. As waste mounts, landfills bulge, which creates a slew of aesthetic and environmental issues.
It also creates business risks, as virgin materials become increasingly difficult and expensive to source. Rising commodity prices, increasing populations and greater uncertainty with interconnected global supply chains means that companies have been struck with material shortages, pushing up material prices and threatening continuity of operations and margins.
“The take-make-waste linear economy has proven to be highly successful in delivering economic development over the past 150 to 200 years,” said Jennifer Gerholdt, director of Environmental Initiatives at the U.S. Chamber of Commerce Foundation Corporate Citizenship Center, during a recent GreenBiz webinar, “however, global trends indicate that the ability of this linear model to produce economic growth is being increasingly challenged.”
In order to help liberate their supply chains from sourcing instability, more and more companies are pursuing alternative approaches that decouple economic growth from resource constraints. Granted, recycling has become a popular move for many companies in recent years, some are taking it a step further to turn waste into a resource — managing resources throughout their entire lifecycles.
Circular thinking ‘designs out’ waste
The “circular economy” describes an industrial model that is restorative or regenerative by intent, in which products, components and materials are kept at their highest value or utility at all times, Gerholdt said.
In short: it’s a way of “designing out” waste.
“The circular economy is not about recycling in a better way at the end of the pipe,” said the Ellen MacArthur Foundation’s Andrew Morlet during the webinar. “It’s about rethinking product service solutions in a way that allow the value to be captured through longevity through greater utility through remanufacturing through reuse.”
The concept has captured the attention and imagination of many companies that see the economic opportunities of a viable model to tackle sustainability challenges, while also driving competitiveness, performance, innovation and stimulating economic growth and development.
Shrink waste, expand profit margins
The circular economy could help unlock an additional $4.5 trillion in economic growth by 2030, Gerholdt said.
“Unlocking the value of circular supply chains through business model innovation and enabling technologies represents enormous opportunity for the business community,” she said. “Whether it’s finding value in wasted resources, wasted embedded values, wasted capacity, wasted lifecycles, there’s just enormous opportunity for companies.”
At the same time, this shift to a circular economy could help restore lost ecosystem services and improve sustainability outcomes across the world.
To show how companies companies — such as HP, SunPower and Tetra Pak — are already applying circular thinking principles into their own business operations, the U.S. Chamber of Commerce Foundation Corporate Citizenship Center launched a new report alongside the webinar.
The report also identifies 10 new technologies that are helping companies embrace the circular economy: mobile, machine-to-machine communication, cloud computing, social, big data analytics, modular design tech, advanced recycling tech, life and material sciences tech, trace and return systems and 3D printing.
HP profits from circular practices
“At HP, we are approaching the circular economy systematically and at scale,” said John Ortiz, director of Product Stewardship at HP. “We’re not just looking at niche opportunities — we see this as our opportunity to decouple economic growth from the depletion of the earth’s natural resources for HP, our customers and other industries.”
The company focuses on what it considers to be the four building blocks of the circular economy: product design, new business models, reverse cycles and breakthrough innovation.
HP’s PageWide technology, for example, uses up to 94 percent less supplies and packaging waste, uses up to 84 percent less energy while printing nearly twice as fast as a comparable printing system. With the company’s takeback program, used ink cartridges can be reclaimed and reused as “food” for new products.
HP’s “closed loop” recycling program embodies several of the circular economy building blocks, Ortiz said, which entails manufacturing new ink cartridges using returned cartridge and other plastics. In five years, HP has helped divert on average more than 1 million water bottles per day. More than 2.5 billion cartridges produces using over 3 billion bottles and 40 million hangars.
Recycled plastic has up to 33 percent smaller carbon footprint than virgin plastic. This enables HP to reduce fossil fuel consumption by 54 percent and water consumption by 75 percent.
What’s key here is that HP is doing all of this because it makes business sense — it meets customer needs while offsetting costs.
“Customers aren’t asking for circular solutions, HP sees it as a need,” Ortiz said.
Circular economics help Tetra Pak build brand equity
Tetra Pak operates by the philosophy that “a package should save more than its costs,” said Elisabeth Comere, director of Environment and Government Affairs at Tetra Pak.
“For us, the restorative principles of the circular economy govern not only our environmental commitment and strategy, but also our innovation strategy,” she said.
The company, which produces packaging for dairy, beverages, cheese, ice-cream and prepared food, has found that achieving circular economy outcomes is more realistic when capturing value at beginning of a product’s lifecycle.
Pursuing circular practices creates many benefits for Tetra Pak, Comere said. It secures a long-term supply of resources that meet retailer pressures and consumer demand; creates a more reliable supply chain with less business disruption around supply of resources, and a better ability to manage costs and experience less price volatility; and allows the firm to make an emotional connection with consumers as the awareness around resource scarcity grows, and meet climate change goals.
“We’ve seen changes in consumer behavior motivated by concerns about resource scarcity,” Comere said. “Capitalizing on this feeling and sentiment builds brand equity and purchasing loyalty among consumers.”