Businesses and the ‘bet’ of Circular Economy

Businesses and the ‘bet’ of Circular Economy

The stats are clear, and the signs are growing: Frequency and ferocity of climate change related events are growing all around the world. Severe draughts and strong storms make up the forever changing and unpredictable reality we are experiencing.  You don’t even have to believe in climate change to see and accept these occurrences. Resilience and ability to address these challenges-which are directly affecting us as part of the ‘environment’- gain more and more importance for business and society. Take the recent destructive hurricanes in the US and the Caribbean, for example. Or the catastrophic floods in Nepal, India, Bangladesh—they represent a clear sign of this new reality and our increasing vulnerability.

The role that businesses must play in the context of this new reality is different than it used to be. Companies are called to play a crucial role in solving the problems which we face, they are called to offer services and solutions that support this new society. The fact is, companies that fail to adjust their business models accordingly, run the risk of losing their customer’s trust.

Uncertainty in the world, be it from the emergence of extreme phenomena or the depletion of natural resources and the change in skills required for employment, presents innovative business executives with an opportunity to adopt a ‘conscientious capitalism’, by incorporating key elements such as trust, cooperation and the focus of the stakeholders on day-to-day business practices.

As consumers increasingly demand that brands reflect these goals, companies that wish to remain competitive will have to adjust by being part of the Circular Economy.

In her most basic form, Circular Economy, replaces the current linear and wasteful economic model: business organisations seize to rely on resources that are finite and, instead, become sustainable businesses. They find sustainable resources. They remove waste at every stage—from procurement to recycling, creating, thus, a business model that replaces and regenerates instead of wasting to the points of exhaustion and waste. They examine how they produce, who and where everything is produced. They even examine how these products are recycled or viably withdrawn.

In fact, adopting such an economic model, is not only about products and services. It is about the way we do business as well. The model offers us the chance to take mere sustainability models to the next level. Towards a solution which transforms the current business model and creates a competitive advantage for leaders.

Top businesses continue to be innovative, but now they do it while also taking responsibility of their impacts on people, our environment and the current state of the world. These are the organisations that have understood what is going on—that, in contrast to popular opinion, doing something like that CAN be profitable, too. Accenture conducted a research. It showed us that there is going to be a potential of a 4.5 trillion-dollar benefit from building viable business by 2030. Furthermore, that some companies are already making progress towards that direction. 

Take Rubicon Global, for example. This progressive waste management company, that brings customers in direct contact with independent waste carriers, is disrupting the current waste management model, saving, at the same time, 1 billion dollars for her clients in 80.000 locations!

While Circular Economy and ‘conscientious capitalism’ start emerging, management's consciousness is changing too: 64% of the directors who have joined the UN Global Compact argue that sustainability issues play a core role in the strategic planning and their development of their business. At the same time, 59% of the CEOs report that their companies can accurate quantify the business value that their sustainable initiatives create. In year 2013, the equivalent percentage was a mere 38%.


Author: Peter Lacy