Why it’s time to rethink business models to embrace the circular economy
Reconomy Director, Harvey Laud, explains why the move to a more circular economy continues to be hindered by the prevalence of outdated business models and silo thinking.
A significant challenge for most businesses striving to be more sustainable is that they are managed, operated and measured across diverse profit centres. When change is proposed, the primary consideration is the financial impact by department and rarely is the cost of doing nothing considered. Similarly, the cost / benefit is generally measured in financial terms. Environmental or social value is rarely factored in or given appropriate gravitas.
Most businesses have taken some steps to become more sustainable, but we regularly see businesses that are stuck on this transitional path. Often, the cause of this stalling is the emphasis placed on individual cost centres which frustrate holistic decision-making. What you see, is an environment where departments make polarising decisions based upon what works for them and their financial performance. This fragmented decision-making often fails to recognise and consider the entirety of a business’s resource cycle and the wider benefits of adopting a unilaterally different approach.
Meaningful progress will be realised by businesses who successfully embed sustainability within their culture, structure and strategy and for many, this remains some way off. This is evident when we are still having conversations around ‘how to influence the board’ when seeking improved sustainability and the audience profile at most sustainability forums continues to be those with sustainability in their title who are charged with influencing change and not the CEOs, MDs, FDs and Property Directors with accountability for change.
From a procurement perspective, businesses must be willing and able to make decisions that impact across the entire organisation. Until relatively recently this has been a challenge as each businesses unit would procure for their own requirement, and to be fair, there was a lack of comprehensive solutions available that could encompass the entire resource cycle. Now, more innovative procurement opportunities exist, such as REVOLVE from Reconomy. REVOLVE is a comprehensive solution suite supporting the whole resource lifecycle with a single partner, offering bundled efficiency, improved insight, and enhanced strategic control.
Another challenge for procurement is closing the ‘sustainability contract gap’. Too often we see tender documents which heavily focus on sustainable solutions but ultimately, we see price beginning to dominate. The result is a gap between the aspirations of the tender and the service being delivered.
To accelerate the move to a more circular economy, businesses need to evolve more relevant measures of value and performance and more appropriately balance the environmental and social value of the decisions they make.
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