Reset | 05 - Part 3: How to Move your Business to the Circular Economy
The rationale is logical: moving to the circular economy will deliver multiple benefits for the environment, the economy and society as a whole. And, while the transition towards sustainable design has been building for several years, recent acceleration driven by legislation and pressure from eco-conscious consumers shows promise for the future.
Of course, achieving this transition will require radical change: new business models, product innovation and engagement of new stakeholders. But the potential is significant. By placing an unapologetically equal bias on people, planet and profit, businesses can reduce waste, slash costs, open new revenue streams and strengthen relationships across value chains.?
Addressing the barriers to adoption
As with all change and transformation, push-back is inevitable. In the case of the circular economy, there are multiple reasons why many brands have yet to make the transition. The most common barriers include:
1. High start-up costs
Investing in new equipment, new business models, potentially new branding and a new marketing strategy can all add on the extra costs which often steer businesses away from the circular economy.
2. Complex supply chains to navigate
Setting up and sourcing new suppliers will inevitably require time and come with cost associations. Further, timings have to be well thought through to ensure a smooth transition between old and new suppliers.
3. Gaining cooperation from Business-to-Business (B2B)
For a circular economy system to work, all partners need to be on the same page, to ensure all sustainable initiatives are understood and implemented. Easier said than done, perhaps, as it can often be challenging to communicate the importance, urgency and business case for making the transition.
4. Costly and time-consuming disassembly of products
Ultimately, there will be upfront costs and time associated with the disassembly of the products. Welded joints and mixes of unknown materials will inevitably add to the time and cost required for this stage for material recapture. Designing key features, such as design to disassembly, and clearly marked material make-up, are easy wins for abating this headache.
Five things to factor in when moving your brand to circular
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1. Forecast for the future
Long-term thinking is needed when changing business from linear to circular as there will be higher initial up-front costs to your business. Looking past these to the benefits the circular economy will reap is key to success. In any case, increased costs are to be expected as material prices become ever-more versatile. This in mind, pivoting toward the CE can be a method of achieving cost stability and forecasting security.
2. Re-think your business model
Circular business models focus on a different phase of the value chain, either the design and manufacturing phase, the use phase or the value-recovery phase. In other words, the move to a circular business model is a fundamental change which requires a new way of thinking and doing business. By taking a systemic view of your offering, exploring new technologies and advance design approaches such as design for repair or remanufacture, additional value could be created.
3. Have a robust strategic plan in place
To ensure you are cutting out single-use materials, and shifting towards material recapture and or regenerative systems.
4. Prepare for the pitfalls
From problems securing the right supply chains to ensuring enough time for your new circular business to catch up with demand, it’s essential to plan for hurdles along the way.
5. Start small
Most importantly, use the circular-’ish’ approach of small stepping stones to pivot your business and products toward the circular economy.
The future is circular
Finally, business has reached a point where the future ‘winners’ will be transitioning now towards the circular economy and regenerative ways of practising business. Entire industries are transforming; it’s even predicted that clothing resale will be bigger than fast fashion by 2029.
Today, businesses have a choice: invest in new partnerships and equipment to align with the circular economy, or continue to be at the mercy of rising material prices, growing demand and geopolitical turbulence. To forward-thinking leaders, it’s a no-brainer.
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