Collaboration the catalyst for circular economy adoption, say business leaders
Businesses are beginning to understand and reap the benefits of implementing circular operating models, but adoption across numerous sectors will likely flounder unless enhanced cooperation paves the way to the "collaborative economy".
That is the view of a cross-sector panel of delegates convened by waste specialist Veolia for its London-based launch of the Imagine 2050 report on Wednesday (2 November), which highlights the £4bn economic business case for embracing the circular economy in the UK.
As part of the launch event, Veolia’s senior executive vice-president Estelle Brachlianoff was joined by representatives from BMW, Fujitsu and manufacturers 3M amongst others, to discuss how a competitive business nature was hindering the transition to a closed-loop waste management system.
With the report highlighting that the UK could reap economic gains if companies utilised technology and shared best practice when embedding the circular economy, the panel agreed that collaboration was key to unlocking more resourceful and profitable “core business models”.
"If they aren’t convinced yet, then businesses need to understand that there are great business opportunities within the circular economy,” Brachlianoff said. “It’s not only a threat if you fail to act, and you have to tackle the problems, but actually you can be a disrupter and it makes good business sense, the transition doesn’t have to be defensive, it can be proactive.”
Brachlianoff – announced as the Sustainability Leader of the Year at edie's 2015 Sustainability Leaders Awards – claimed that businesses were entering a “Galileo moment” and no longer viewed waste as a linear model, but rather one that could drive resources and finances back into supply chains.
One such company that is viewing waste a circular is IT products and services company Fujitsu. While the company’s chief executive has previously stated the need to “close loops and change attitudes towards waste”, it’s senior vice president and head of business consulting Ravi Krishnamoorthi spoke to delegates about the beginning of the “collaborative economy”.
“Everything that is being considered, such as megatrends, is absolutely feeding into the whole circular economy debate,” Krishnamoorthi said. “I think we are at the very beginning of the collaborative economy.”
“I endorse the idea of systems change and I would argue that it needs to be a culture change too. There is a big change that is needed from business leaders to understand that if we want to do business in a sustainable and circular way, then it won’t happen ‘all by myself’. We need others to help us do this. I don’t think the circular economy is viable without sector collaboration.”
Krishnamoorthi claimed that the emergence of disruptive companies such as AirBnB didn’t arise due to a lack of products in that sector, but rather a slight change in demand from consumers and insufficient levels of collaboration in the market.
For Krishnamoorthi, mounting market changes are set to be influenced by the rapid growth of smart cities, and creates the need for companies in the same sector to learn from each other’s failures and inefficiencies in order to move on from linear waste models. This would likely be achieved, Krishnamoorthi said, by the introduction of a financial system that placed a price on waste.
The panel echoed the report in agreeing that some sectors and better-equipped and more likely to reap substantial benefits from the circular economy. For others, such as the transport sector, closed-loop growth is being shackled by a competitive nature.
BMW is currently able to recycle up to 95% of the material used in its vehicles. However, efforts to improve reuse and efficiency are being damaged by the introduction of new trends – such as electrification and battery ranges – that increase competition as manufacturers strive to push ahead in these new markets.
For BMW’s environmental programmes manager Thomas Sherifi, the car manufacturer that goes out of its way to “open Pandora’s box” and actually share best practices and innovations would create a platform that allows emerging products geared to autonomous and electric vehicles (EVs) to improve in regards to efficiency.
“In the car industry as a whole circular economy is an incredibly important topic,” Sherifi said. “But you have competition and different manufacturers who are trying to get ahead of each other and absolutely don’t want to share innovations with one another because that’s what drives the profits of the business.
“It’s not like the technology [to transition to closed-loop methods] doesn’t exist, but it’s about a need for a joined-up thinking approach, where you’re levelling the playing the field in terms of profitability.
“We know what trends are emerging, but letting that Pandora out of the box would be an incredible decision for the business leaders to do - especially in the climate where autonomous vehicles are cutting into the profit share of big manufacturers.”
Sherifi argued that manufacturers are so determined to lead the way – and claim the profits – in the emerging electric and autonomous markets, that inter-sector collaboration becomes difficult to implement.
For 3M’s head of sustainability and strategic planner Andrew Hicks, this competitive “lack of trust” could be brokered by non-profits (NGOs) who can not only provide agreeable CSR leverage for companies, but could also work to unite sectors in collaborating as part of wider initiatives to accelerate the circular economy.
“There’s an issue of trust from companies that compete with each other often and if there’s a third party involved to broker that arrangement then that can really help drive things forward” Hicks said. “Academia has a lot to bring here, and it’s a great way to ensure that new thinking and trends are shared.”
Circles and shares
While non-profits such as WRAP are encouraging and steering inter-sector collaboration in waste streams such as food and plastic, Hicks mention of academia could be a viable option for the transport sector, which is currently being driven by technological advancements.
Calls for collaboration to drive resource efficiency have been issued in the past. The UK Green Building Council (UKGBC) has previously suggested that collaboration within the construction industry is crucial to ensuring that businesses can embed best practice and overcome barriers to applying circular economy principles.
At an individual level, outdoor clothing company Timberland recently told edie that cross-sector collaborative partnerships with emerging enterprises were playing pivotal roles in the company’s circular economy ambitions.