Are organisations overlooking the commercial lens of the circular economy?
For edie’s Circular Economy Week, Murray Sayce & Neil Coole of BSI look at how developing a customer understanding of the circular economy could create new commercial opportunities while building towards sustainability goals.
The circular economy, is one example of how purpose-driven organisations can lead the charge towards more sustainable systems and solutions.
When discussing the circular economy the focus can tend to be on the environmental impacts of the current linear economy, for example by showing emotive images of the destructive effect of material waste and pollution on wildlife and our environment. This is certainly an important story, and one that purpose-driven organisations will wish to share. However, there is also value in reminding ourselves the circular economy is, at heart, also an economic model – and that delivering on this as part of an organisations purpose can actually commercial yield benefits too, for example with consumers demonstrating greater loyalty.
By creating a closed-loop system that keeps materials in use for longer, the circular economy can increase the value of these materials to organisations and their bottom lines, and can deliver economic benefits for society. In Europe alone, the total waste generated by all economic activities and households amounted to 2,153 million tonnes in 2020. Today’s linear economy, involving the extraction of finite resources, the production of goods, and the disposal of waste, is inefficient and expensive. Equally, it can put organisations at risk of failing to meet regulatory requirements, such as the European Waste Framework Directive, and further stakeholder expectations both around increased profitability and sustainability goals.
As Accenture has shown, the transition to a circular economy has the potential to improve an organisation’s bottom line. For sustainability leads, communicating this alongside the fact that it helps organisations deliver on their purpose could be helpful. Showcasing financial benefits and other economic advantages in the narrative of the circular economy could aid in selling a story that commercial leaders can buy in to. These advantages can not only provide commercial benefits to organisations, but also deliver benefits to society. These can include new business designs, opportunities for waste minimisation and end-of-life innovation, job creation to boost local economies and support economic growth, and competitive advantages through reduced costs and resource efficiency.
Of course, a key benefit of gaining commercial buy-in to make the circular economy happen is realising the environmental benefits for organisations and society alike, including reduced waste, reduced GHG emissions, conserving resources. The creation of more sustainable systems by designing products for reuse, repair, recycling, and promoting closed-loop production processes can have huge positive impacts. But by first focusing through a commercial lens and ensuring their message resonates with commercial business goals, sustainability leaders can turn ambition into action. This can ultimately help to close the gap between achieving those goals and realising the environmental and societal benefits.
Developing customer understanding can also help to make the circular economy happen. By promoting a narrative that goes beyond waste management, organisations can reinforce the commercial lens to their customers. Encouraging people to purchase remanufactured products, and showcasing the commercial benefits of this, can help build supplier confidence in demand and ultimately support the market to transition to a circular economy.
After gaining that essential commercial buy-in, what are the practicalities of making the circular economy happen? There is significant research and information out there around material and waste reuse, reconditioning and recyclability of products. But it can be challenging to know where to start.
As a trusted partner for organisations looking to make the circular economy happen, BSI provides guidance across the circular economy journey. BSI’s guidance on Principles of the circular economy in organisations (BS 8001) acts as a framework for organisations of any size or type to follow in implementing a relevant and transformational approach. Through six main principles, it provides practical ways to secure ‘quick-wins’, through to re-thinking holistically how resources are managed.
BSI has since gone a step further with its ‘Kitemark™ Remanufactured and Reconditioned Products’ scheme. It is based on the standard ‘BS 8887 – Design for manufacture, assembly, disassembly and end-of-life processing’ and a user of the scheme is awarded the Kitemark™ if its established remanufacturing and reconditioning processes result in products that are equal to or better than new in terms of quality, function, and durability.
What this means in practice is consumers can be confident in using repurposed products, thus reducing waste. For example, Circular Computing is an IT supplier that remanufactures laptop products at volume, to a consistent high standard which represents one single grade in the market: new.
Circular Computing achieved the BSI Kitemark for remanufactured and reconditioned goods, meaning their customers are assured of the quality of their remanufactured products. To date, their sales have generated economic savings to their customers of circa £15-21 million. In addition to this, Circular Computing themselves have benefited from a profitable circular business model and experienced operational cost savings, the market has benefited from a wider range of product and pricing choices, and society has benefited from job creation leading to taxable income, skills enhancement, and ‘green’ upskilling. The environmental benefits that have followed because of their circular economic model include approximately 316kgs of Carbon avoided, 1,200 kgs of virgin resources preserved, and 190,000 liters of water saved for every remanufactured laptop.
Evidence is mounting of the commercial, societal and environmental benefits of accelerating the transition to a circular economy. Indeed, recent BSI research has found that businesses are struggling to prioritise sustainability, in light of the cost-of-living crisis. Where we place the emphasis in the circular economy narrative can be the difference between making the circular economy happen and not.
Even today, research suggests many organisations still misunderstanding the business case for sustainability measures. Focusing on the commercial aspects of the circular economy and the assurance of best practice from schemes like BSI’s Kitemarks, and ultimately communicating in a language those focused on the bottom line understand, offers the potential to shift the dial and accelerate progress to a sustainable world.