6 ways your company can join the circular economy

Entering the circular economy is not rocket science. Here are six tips for companies looking to profit from closing the loop.

Bring up sustainability in a conversation with your average business person, and it’s sometimes hard to keep their attention. But at least it’s a concept they’re familiar with. Mention the circular economy, and you’re likely to be met with puzzled frowns.

Yet the idea of the circular economy, one that reuses or restores all natural and man-made materials to eliminate waste and reduce consumption, is more important today than ever, said Malavika Jain Barbawala, Accenture’s director and ASEAN lead, strategy and sustainability at an event held at the Singapore Sustainable Academy last week.

Noting that business revenue and the use of natural resources are traditionally linked, she said that the rate at which humanity is gobbling up the planet’s natural resources is untenable.

If humanity is to consume within the Earth’s limits, we must achieve a four-fold increase in productivity, she said. 

But starting the conversation and then taking action on the circular economy requires strategy, preparation and boldness, said experts at the event organised by real estate firm City Developments Limited.

Here are six tips from the experts on how to get the circular economy rolling at your company:

1. Understand the 5 circular business models

There are currently five business models that show how circular economy principles can form the basis of a sustainable business. Jain of Accenture presented the various models, giving local and global examples.

  • Recovery and recycling: Local supermarket NTUC FairPrice sells blemished but good fruit at a discount to prevent food waste, while Singapore-based Tes-Amm is a professional electronic waste recycler.
  • Circular supply chain: Timberland partnered Singapore tire manufacturer Omni United to re-use worn out tires to make shoes.
  • Sharing platforms: Airbnb and online goods marketplace Carousell allow people to make money from resources they no longer use.
  • Product life extension: Family owned and operated Hock Siong & Co buy furniture and household items from organisations and individuals, refurbish them, and resell them.
  • Product as services: “We think we need a product, but we actually need the service,” said Jain. Consumers using music-streaming service Spotify access music through an app without having to buy CDs or players.

As a speaker at the event, Lee Hui Mien, head of sustainability at Ikea Southeast Asia gave this advice: look at your business, identify which of the five business models fits it best, and convince yourself that the circular economy is not just a fancy phrase but a way to look at doing things differently.

2. Sell your products as a service

Companies can start dipping their toes in the circular economy without disrupting the supply chain, introducing new materials to production, or investing in innovation, said Erin Meezan, chief sustainability officer at US-headquartered carpet market Interface.

“There is an entry path for companies to start to explore the circular economy approach, which is quite cheap and doesn’t require any innovation,” she said. “The first piece of advice we give to companies is to ask yourself, what products can you lease?”

3. Solve your customer’s problems

Circular economy products and processes can gain more traction among customers if they are positioned as solutions to their problems. While Interface can talk about its sustainability credentials and why it designs modular flooring using recycled fishing nets, “oftentimes our first entry point into a conversation with a building owner or decisionmaker is that we’re solving a problem,” said Meezan.

The company’s customers are mainly designers and architects who, when renovating a space, need a way to dispose of old materials in a sustainable way, which Interface can do through its carpet recycling programme.

Another way to frame the conversation is to point out that sustainable sourcing has the potential to help solve major environmental issues such as climate change, Meezan said. 

4. Get the right people involved

Sustainability must be driven from the heart of the business, experts concluded. With reference to Apple’s announcement earlier this year that it will use 100 per cent recycled materials in its products in the future, Jain said: “That kind of fundamental decision has to come from the core of the business, not someone sitting separately [outside regular business operations], because he has to get agreement from everybody.”

Dedicated sustainability teams play more of a facilitating role and still rely on employees in other departments to execute a project, said Lee. Retail employees, for instance, would need to be part of the discussion about implementing a circular solution such as a used furniture takeback programme, she added.

From left: City Developments Limited’s Esther An, Accenture’s Malavika Jain Barbawala, Interface’s Erin Meezan, and Ikea’s Lee Hui Mien

5. Use the right metrics

Adopting circular economy principles can yield benefits beyond the traditional quarterly growth rate, so why peg success to that one figure? While all businesses hope for continued economic growth, companies such as Ikea, Interface and Unilever are looking at other indicators to measure success.

Meezan said Interface had not seen exponential growth after going circular, but the carpet tile manufacturer was measuring success in other ways, such as employee retention and the frequency of workplace accidents.

Amita Chaudhury, regional director, sustainable business, Southeast Asia and Australasia for fast moving consumer goods giant Unilever shared that her company uses a value framework to measure its returns, including the performance of its more sustainable products.

6. Be ready for haters

Corporate investors today still want to know what the business case is for sustainability and the panellists were asked how they would respond to such queries.

Calling this one of her favourite questions, Meezan said that, as a publicly traded company, Interface tells investors that there are sound financial reasons to make investments in circular solutions.

But this approach often fails to satisfy. Meezan shared: “If I’m asked what the business case is for sustainability, I sometimes turn it back on them and say, ‘What’s the business case for destroying the planet?’”

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