Circular business models gaining recognition

A new survey of sustainability professionals in businesses has revealed that the vast majority believe the circular economy will be important to their business within the next two years.

The survey, conducted by logistics firm, UPS, and sustainability specialists, GreenBiz, questioned over 400 professionals, predominantly from the US.

The vast majority (86 per cent) believed that circular business models, which ‘close the loop’ of resource use by reclaiming and reusing materials at end-of-life, would be important to their business within the next two years.

This is nearly double the 47 per cent who thought it would be important two years ago, showing that the circular economy is moving up the agenda for businesses.

Nearly three in five of those surveyed said that their business was implementing circular economy principles in at least one their product lines or service offerings.

Key sectors

According to the respondents, the biggest adopters of circular business models are likely to be in the technology sector, especially in electronics such as computers and mobile phones, where take-back can be most easily integrated and rare metals can be reclaimed.

A recent example is Apple’s unveiling of ‘Liam’, a robot designed to carefully deconstruct more than one million used iPhones a year for reuse and recycling. 

The logistics sector was also seen as essential to supporting circular business models by providing so-called ‘reverse logistics’ services to return used goods to the original manufacturer. 

Business case

An insufficient business case for implementing a circular business model was cited as the greatest current barrier to progress, followed by increased logistics costs to reclaim goods, lack of understanding from business leaders and lack of understanding from customers. 

Providing sufficient incentives to business customers and consumers to engage in the circular flow of goods was seen as essential for progress.

Respondents cited cash back, the convenience of returning a product at a brick-and-mortar location, pre-paid shipping and discounts towards future purchases as the best incentives for end consumers.

For business-to-business customers, respondents cited the convenience of the producer physically reclaiming the product, turnkey packaging and pickup services, refurbishment and repair services, discounts towards future purchases and cash back as key incentives.

Recognising the opportunity

Senior director of global sustainability at UPS, Ed Rogers, said he was “not surprised” to see the growing importance of circular business models to customers.

“Our customers are recognising the environmental and social impact of their products and operations across the entire value chain, from raw materials and design through manufacturing and logistics. They recognise the opportunity to move towards a model that keeps resources in use for as long as possible.”

In December 2015, the European Commission proposed a package of measures for EU law that could encourage the growth of the circular economy in Europe.

Posted under Material and Packaging Efficiency, Waste Management, Creative and Digital Industries, Other Manufacturing and Other Service Sector on 5 April 2016