Circular Economy- Discussions at SB’16 Copenhagen
It wouldn’t have been a true conference on sustainability if “Circular Economy” didn’t make it as a major session. Last day of the event, a few companies moving towards the CE vision presented at one of the last breakout sessions, moderated by Andy Ridley (Circle Economy). Of course I cannot miss this one…
This article was published earlier on Sustainable Brands.
Discussions on the circular economy vision always triggers great interest, even on the last afternoon of this amazing conference. A big enthusiastic audience gathered at the breakout session: How to Fill Gaps in Current Attempts at Circular Business Models.
The moderator Andy Ridley (@ANDYRIDLEY), CEO of Circular Economy first shared his confidence in circular economy’s potential to close the gap of reaching the 2 degree goal. He then introduced his company’s circular economy programs on textiles, cities and strategic partnerships both domestically in the Netherlands and internationally. Most remarkable to me is their work on the “city circular scan” of Amsterdam and Glasgow, a great demonstration of systems thinking in applying the circular economy vision.
Then five companies shared their progress towards closing their material loops, as well as remaining challenges they are facing.
Anthony Abbotts, Head of Group Sustainability from Rockwool International first took the stage. He broke down his talk in three parts: “What do we do”, “What we want to do more of” and “What are the challenges”. Rockwool International‘s products are commonly used in the construction industry and has 50+ years of lifespan. At the end of life, they are recycled or used again in the production phase. The company’s circular vision is to offer “take-back” service in 30 countries and reducing their waste by 85% by 2030. This is a complex task and there are of course, challenges. For example, one of the barriers is that recycling targets are often based on weight, therefore heavy materials are often the priority of waste facilities while light materials such as rockwool are often ignored. As Abbotts pointed out: “It takes time for the building sector to change their habits… A better understanding of their life cycle environmental impact could help accelerate this process.”
Raphael Stermann, Program Leader at Sustainable Systems Innovation at Steelcase then continued the discussion in the built environment. Steelcase has a great vision to transform from a company that only makes products, to one that also creates experiences for the customers and builds better relationships with them. Such business model optimization requires reinvention and recreation. Steelcase is now exploring the circular economy concepts and trying to co-create with their customers using the tools like design thinking, smart product design and envisioning the future internet of things to close the material loops. To transform from selling products to selling services, big organizational change is needed.
(Image credit: Longfei Wang/Sustainable Brands)
We are now witnessing LED lighting’s dramatic transformation of the entire lighting industry from 82% conventional in 2012 to 75% LED in 2020. In this time of great change, Philips sees sustainability as a great innovation opportunity to re-evaluate how they look at business. In this process, they realized that LED’s energy saving potential is great (53%) but only a low hanging fruit, as the future of lighting is not in the product but in the service, which inspired the idea of circular lighting.
By selling the service and forming a leasing relationship with the customers, they are able to focus on performance and providing better upgrading services, which then fosters long term contracts, cultivates brand loyalty by making customers feel good and retains more value in the service cycle. Earning higher margins at the same time is merely an added benefit.
The story continues with Louise Koch, corporate sustainability lead at Dell, who shared Dell’s long existing efforts of implementing strategies towards circular economy. Despite the fact that 93% of Dell’s packaging materials are from renewable sources like straw and mushroom, Dell also has the largest tech recycling program powered by its global network.
Dell computers are wiped for data at end of life with the owner, then resold or donated. If no longer usable, the products are recycled with full traceability: from collection at customer drop off, disassembly, processing (melt, mix and mold into new parts) in China, to re-assembly and sales to new customers to achieve the full circle.
In the end, Miriam Turner, Assistant Vice President Co-innovation at Interface showed us how Circular Economy is not just a solution to lower our environmental impact but also an opportunity to address social inequality.
Interface’s business model is probably one of the most widely known circular economy examples in which wastes are turned into opportunities. Now they just launched a new initiative in partnership with Geological Society of London and AQUAFIL to empower the Philippine coastal community by turning reclaimed fishing nets into carpets.
(Picture from Interface)
After the presentations, the audience and the panel engaged in an active discussion around various aspects of their circular economy ventures. A few takeaways are:
- Circular Economy is proving to be a surprisingly good business strategy both in engaging customers and business value creation.
- Technology is becoming increasing relevant for circular economy. Smart product needs be to supported by a smart system. Trends like the Internet of Things has huge potential to facilitate this transition.
- There is still huge room for improvement in product design and traceability.
- Great challenges still remains: for example, the un-recyclability of certain aged products due to stricter current regulations.
- The road to circular economy is not straightforward, the more transparent companies are at their failed attempts, the faster the whole community could learn and move forward.
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