The Seven Pillars of Circular Economy Transforming Business for a Sustainable Future

Brought to you by IBEC Intelligence

The concept of circular economy is heard and referenced more and more frequently these days.  This is welcome news as it is gaining momentum with businesses striving to reduce waste and promote sustainability.  Contrary to the traditional linear economy, which follows a "take, make, dispose" model, the circular economy emphasizes a regenerative approach.  This calls for minimizing waste and making the most of resources.  Circular economy has seven pillars. 

1.    Design for Longevity – Designing products for longevity involves creating durable goods that can withstand wear and tear, reducing the need for frequent replacements.  These days, IKEA focuses on developing furniture that is easy to repair and upgrade.  Their "IKEA Circular Hub" offers products designed for longevity, which has resulted in a 20% reduction in product returns due to damage.  According to a study by Ellen MacArthur Foundation, extending the life of products by just one year can reduce carbon emissions by 10-20%.

2.    Resource Recovery – Resource recovery emphasizes recycling and reclaiming materials at the end of a product's life.  As part of its resource recovery efforts, Dell Technologies has implemented a take-back program that allows customers to return old electronics for recycling.  This initiative has helped Dell recycle over 2 million pounds of electronics annually, turning waste into valuable raw materials.  The World Economic Forum estimates that transitioning to circular practices in electronics could save the industry $4 trillion by 2030.

3.    Business Model Innovation – Innovative business models, such as leasing or product-as-a-service, can reduce waste and encourage sustainable practices. For instance, Philips Lighting adopted a "pay-per-lux" model, where customers pay for the light they use rather than purchasing the lighting system outright.  This model has led to a 50% reduction in energy consumption for clients, promoting efficiency.  Research by Accenture suggests that shifting to a circular business model could generate $4.5 trillion in economic benefits by 2030.

4.    Industrial Symbiosis – Industrial symbiosis refers to the collaboration between businesses to use each other’s by-products and waste materials.  A classic example of industrial symbiosis is Kalundborg Symbiosis in Denmark, where companies share resources, such as water and energy, reducing waste and costs.  This collaboration has resulted in annual savings of over $30 million for participating companies.  According to a report by the European Commission, industrial symbiosis can lead to a 30% reduction in resource consumption.

5.    Product Life Extension – Extending the life of products through maintenance, repair, and refurbishment promotes sustainability.  Patagonia encourages customers to repair their outdoor gear through its "Worn Wear" program, which offers repair services and second-hand products.  This initiative has diverted over 45 tons of clothing from landfills since its inception.  Additionally, Patagonia has stopped creating branded merchandise using other companies’ logos because their analysis showed that such products did not get long wear out of their owners, and were headed to landfills sooner.  The Ellen MacArthur Foundation notes that extending the use of clothing by just nine months can reduce carbon, water, and waste footprints by 20-30%.

6.    Circular Supply Chains – Implementing circular supply chains involves sourcing materials sustainably and ensuring that products can be recycled or reused.  Unilever has committed to sourcing all of its agricultural raw materials sustainably by 2025. Their sustainable sourcing initiatives have already reduced greenhouse gas emissions by 30% across their supply chain.  A report by McKinsey indicates that circular supply chains could create a $1 trillion opportunity for companies by 2030.

7.    Consumer Engagement – Engaging consumers in sustainable practices is essential for the circular economy.  Education and awareness can inspire responsible consumption.  Thankfully, Nestlé has launched initiatives to educate consumers about recycling and sustainable practices.  Their campaign has reached over 2 million consumers, promoting the importance of reducing plastic waste.  Research from Nielsen shows that 66% of global consumers are willing to pay more for sustainable brands, highlighting the demand for circular practices.

The transition to a circular economy is not just a trend; it’s a necessity for sustainable development.  By embracing the seven pillars of the circular economy – design for longevity, resource recovery, business model innovation, industrial symbiosis, product life extension, circular supply chains, and consumer engagement – your organization can significantly reduce waste and promote sustainability.Organizations like IKEA, Dell Technologies, Philips, and Patagonia are the torch bearers of circular economy.  They are leading the way, demonstrating that sustainable practices can also drive economic benefits. As the global economy increasingly shifts toward circularity, the potential for innovation and growth is immense.  This is also an opportunity for every single person to step in and have a positive impact on the planet with their behaviors.  This is a massive task, though, because for decades our consumption-focused economy has promoted a culture of rapid acquisition and disposal.  But with consistent effort and growing awareness, we can all do better in this area.  Embracing these principles not only helps protect our planet, but also creates a foundation for a resilient and prosperous future for businesses and consumers alike.

Reach out to our IBEC experts to guide you on the path to R2 Certification and other sustainable practices. 

Talk to Us Now