Circularity: A New Way of Thinking, A New Business Model

Approximately 1 million plastic drinking bottles are purchased every minute and every year people around the world use up to 5 trillion disposable plastic bags. And the crazy fact is that most of this plastic is used only once.

It’s no wonder that this year’s theme for World Environment Day is ‘Beat Plastic Pollution’. The event’s goal is to shine a spotlight on the negative aspects of single use plastics and showcase how moving from a linear, single use approach to a closed loop, circular approach can have a tremendous positive impact on the environment and the economy.  In 2016, a New Plastics Economy report, found that ‘most plastic packaging is used only once’; and because of this, ‘95% of the value of plastic packaging material, worth USD 80-120 billion, is lost to the economy.’  Their report goes on to highlight how taking a circular approach can help ‘create an effective after-use plastics economy, drastically reduce leakage of plastics into natural systems and other negative externalities, and decouple plastics from fossil fuel feed stocks.’

The Circular Economy concept was conceived by Ellen MacArthur (who started the Foundation that bears her name in 2010) and aims to keep resources in use for as long as possible, extract the maximum value from them while in use, then recover and regenerate materials at the end of each service life; it is restorative and regenerative by design. As you might have guessed, the MacArthur Foundation leads the New Plastics Economy initiative by applying their forward-thinking circular strategies to the global plastics industry.

The circularity mindset and strategies are not only applicable to plastics, but rather all industries and businesses that operate on Earth.  For example, the European auto manufacturer Renault has been using remanufactured parts since the middle of the 20^th century – reclaiming the value in what others might see as waste. Today their Choisy-le-Roi facility’s output has diversified to include injection pumps, gearboxes, injectors, and turbo compressors — remanufactured parts that are 30% – 50% less expensive than newly manufactured parts. At the same time, the facility sends no material to landfills and uses far less resources in remanufacturing, compared to new production: 80% less energy, 88% less water and 92% less chemical products – the ROI speaks for itself.

Circularity is embedded in the way we do business at Schneider Electric because of the inherent ROI.  Having circularity built into our business operations and processes, we realize more efficient resource management and a resilient supply chain, while enhancing our customer’s loyalty by providing an end of life commitment to reuse and decommission products; further turning waste into worth.

While World Environment Day may be focused on defeating plastic pollution this year, there is an underlying message about moving away from linear systems; and in turn reducing waste while optimizing value and utility.  Have you explored how to apply the concept of circularity to your business?

Our new report, Living by Principles: Business resiliency through increased circularity, dives deeper into circular business models and the organizations who have applied them to realize success, savings and overall future-proofing for years to come.