Curious about circular economy examples? You should be: In 2020, the circular economy is the single biggest driver for business transformation, thanks to shifting consumer attitudes that are forcing businesses to change.
In simple terms, the circular economy assumes the implementation of dynamic systems, where there’s no specific endpoint for the business processes across the supply chain or across all consumer touchpoints. Consumers want a circular economy not only because it’s a responsible, sustainable way for brands and retailers to stay in business, but also because it’s convenient for consumers.
Convenience means having a way to put a product back into the supply chain, either via recycling, renting, or selling again. Convenience means that companies selling the clothing, food, electronics, flights, and all the other stuff we buy operate with manufacturing and distribution best practices, are innovative, and completely focused on holistic solutions – not on siloed problems.
What are the barriers to sustainable commerce?
So what’s the biggest factor underpinning operating models’ transition from linear to circular?
As Retail’s Big Show, NRF, kicks off, I met with several influential global retail brands to discuss circular strategies and projects with potential to scale.
In a world where only 9% of the economy is circular, it’s calculated that the opportunity to profit from the conversion of the remaining 91% sits around $4.5 trillion. This means the circular economy is the biggest wave of business transformation that companies are embarking on since the industrial revolution. Moreover, the companies willing to invest in the circular economy are industry game changers.
Technology is seen as an accelerator facilitating the transition to a circular economy at a global scale. But does this mean companies need to wait for technology yet to be invented, or wait to better understand technology that exists, but is so new that no one knows how to scale?
There’s no need to reinvent the wheel – technology currently available is more than capable of delivering the desired outcomes and more. According to global leaders in consumer industries the issues lies in change management, so that’s the most important aspect they’re willing to address over the course of the next decade.
5 fundamental changes required to balance human ecosystems in circular economy organizations moving forward
- Specialists or efficient generalists? A linear economy is based on specialized workforces whose tasks are segmented into small and simple components. The circular economy, to the contrary, requires every single employee to take a holistic approach on where they sit in the organization.
- Scarcity or abundance? The linear economy is based on scarcity of a commodity, which may be in demand in the market. In a circular economy, the focus is constant innovation; therefore any available abundant source can be considered to solve a problem.
- Competition or collaboration? The linear economy is based on competition; a circular economy is based on collaboration.
- Quantitative or mixed methods? The linear economy key performance indicators are based on quantitative metrics, while circular economy KPIs use mixed methods that rely on qualitative data captured at various touchpoints in the ecosystem.
- Which team structure works best? Linear economy teams are mainly top down; circular economy teams tend to be matrix. Different team structures also require different types of leadership.
All the points above require new ways of working and technology that fosters collaboration between companies, but in practical terms, what does this look like in the circular economy?
After analyzing the largest brands and retailers by market-cap and their focus on change management, I came up with a list of six circular economy examples of game changers to watch closely in 2020.
Circular economy examples: Brands to watch
- ASICS – Product lifecycle assessment to reduce C02 emissions: Through Life Cycle Assessments (LCAs), ASICS investigates the environmental and social impacts of their products at every stage of their lifecycle, from the sourcing of materials all the way to recycling or disposal. The findings from these assessments are then used to improve ASICS approach to product design and product development. For example, in 2018 ASICS conducted an LCA on their GEL-KAYANOTM 25 running shoes and compared the results with a previous model from this style. The analysis showed that ASICS have reduced CO2 emissions per pair by around 24%.
- Pentland Brands – Reducing microfibres in the manufacturing process: Pentland Brands has been part of the conversation around microfibres since 2017. For example, the Berghaus fleece range for AW18 is made using Polartec fabric, which is made of recycled bottles. More than two million plastic bottles were diverted from the landfill to make these fleeces. The Speedo H20 range is recycling nylon, made partly from fishing nets recovered from the oceans. They’ve been able to rapidly integrate new brands, keep operational costs low through process automation, and provide a one-stop-shop for its business-to-business customer to engage with all of its brands. Additionally, Pentland has significantly reduced the lead time to deliver personalized products.
- doTERRA – Co-Impact Sourcing: doTERRA partners with local plant growers in over 40 countries around the world through co-impact sourcing. This model implements long-term, mutually beneficial supplier partnerships where skilled rural farmers oversee plants and growing environments. In return, doTERRA provides jobs with fair payments, leading to stronger local economies and healthier, more stable supply chains. While the temptation for a company in this industry may be to buy large plots of land and mass produce oils, doTERRA places great value on the expert knowledge of local farmers, many of whom have nurtured essential oil plants for generations.
- TOUS – Giving a second life to jewelry pieces: TOUS has been in the jewelry business since 1920, honing the skill of giving pieces of jewelry a second life, excelling in restoring, reusing, and recycling. 40% of the brand’s collections are produced in a workshop with 90 multi-disciplined artisans specialised in electroforming and micro-casting. The facility has adopted a thorough waste management policy that has resulted in the proper management of waste and the recycling and reclamation of metals and raw materials. It has a treatment plant that treats contaminated wastewater so that it has no environmental impact.
- Levis – Collaborating and sharing best practices with the industry: Levis is deeply engaged in scientific dialogue with a lot of different people. There are ideas that Levis is bringing to market that might never even be noticed, because above all their concern focuses on creating clothes that last and reducing environmental impact whilst doing so. When Levis unlocks proprietary data about water or waste for example, they share it with everybody. Last year, they hosted a conference with competitors and anyone in the industry who was interested to share every bit of knowledge they had about water-saving best practices.
- Natura (Body shop) – Constant re-evaluation of business practices: In almost 50 years of existence, the Brazilian cosmetics multinational has built a reputation for treating the environment, suppliers, and customers responsibly. It’s evident through the company’s many actions, from promoting the biodiversity of the Amazon, where many of the raw materials used to make its products come from, to campaigns celebrating the diversity of women’s beauty.
There are many other circular economy examples and companies working with purpose, but somehow the narrative that often gets media attention is of a different nature, either speculative on solutions that can’t scale, or simply about the problem, urging people to get in panic or crisis mode.
The important fact is that businesses and consumers are ready to evolve. The game changers are the companies that will have a voice and a business for the next decades to come. Based on the empirical evidence of being in service consumer industries for more than 15 years, doing the right thing always pays off.