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Circularity for Sustainability: Adopting Circular Business Models

By 
Keslio Team
5
 minute read  
|  
March 19, 2024
A conveyer belt lined with plants leading to a city encompassed in a yellow circle.

Introduction to Circularity

Climate change and the rising amount of waste has continued to affect our way of living. The growing concern for proper waste management and reduction poses new challenges for governments and businesses. While laws and regulations are being developed to mitigate waste and hold producers accountable for waste stemming from their goods and services, companies can take the initiative to make an impact through changing the way they do business.

Circularity occurs when products or resources are reused, recycled, or renewed rather than ending up as waste. Compared to a linear business model, which starts when resources are used to develop a product which ends up as waste after use, a circular business model creates a closed-loop system that prolongs the product’s life. In this system, waste is minimized as a product’s life-cycle continues after its initial use. These products could be recycled, reused, returned, or repaired, with the goal of sustainability in mind.

Circularity takes into account the entire value chain of a business and its goods and services. Through applying circularity into a business, companies would be able to reduce the use of virgin raw materials and the impact of their waste to the environment.

Adopting Circular Business Models

In applying circularity in a company’s operations or supply chain, it is important to first map out and view the process as a whole. This can then be broken down into different segments from the start to the end of a product’s life. Achieving circularity can be done by assessing product design, inputs and sourcing, waste recovery and management, and product longevity.

Circularity through design

Product design and development can set up the direction a business wants to take in achieving circularity. It determines the resources needed to develop the product, the overall design and use, and the extent of the product’s life. Embracing circularity through design paves the way for innovation as businesses come up with solutions to reduce waste in each step of the process.

Business can research what alternatives would be best to replace current resources. Teams can develop new material that can be reused or recycled. A product can be redesigned to give it another function after its initial use. Modular approaches to design can ensure versatility in form and function and the ease of replacing and assembling parts. Circularity steers innovation with impact. Innovation with impact leads to sustainability.

Circularity through sourcing

What makes a circular economy is how inputs are sourced and utilized. In a circular business model, one of the goals is to minimize the use of virgin raw materials. Manufacturers can achieve circularity by sourcing its resources from excess material recovered during production and recycled materials recovered from consumers and producer responsibility organizations.

Creating a sustainable supply chain through input sourcing may reduce emissions produced during sourcing and transportation. Decreasing the need for raw materials preserves biodiversity. Not only do companies create a positive impact on the environment by making use of materials already present and circulating in the system, material expenses may be reduced, thus allowing businesses to further strengthen and improve their sustainability endeavors.

Circularity through recovery

Circular business models separate itself from traditional linear models through waste recovery and management. Circularity transforms waste into a resource, an essential element in the business as it replaces the need to source for larger volumes of virgin raw materials. It then engages a business to come up with new strategies and initiatives on how to recover and manage waste.

While circular business models are regenerative, not all product waste can be brought back into the closed-loop system. Companies are then challenged to create ways to ensure that the waste recovered could still be used and those that can no longer be recycled are disposed of properly. This could be through improving the product design or through implementing waste collection programs. A circular business model does not truly remove all waste, but still relieves the ecosystem by taking away great volumes that can be repurposed and remade.

Circularity through longevity

Beyond product design, sourcing, and waste recovery, circularity extends a sustainable business model from the known practices of reusing and recycling. Circularity isn’t just about sourcing the right materials and minimizing waste. It branches off as well to the longevity of a product and the experiences and services that come along with it.

Circularity becomes a service when consumers are granted opportunities to make an impact. Tying this to product design and development, circularity can be present in the additional services provided to consumers when they purchase a product. Companies can offer repairs, refillables, and replaceable parts to prolong the use of a product that can improve customer retention and brand loyalty. Trade-up opportunities and recycling programs allow consumers to take part of the business’s supply chain by returning older products and waste back to the producer.

Through assessing the needs and opportunities of a business in growing sustainably and applying these different strategies, circularity becomes the new norm.

Challenges and Opportunities

Applying circularity into a business poses challenges and opportunities. The impact of climate change and pollution affects the pace companies take in embracing circularity. Establishing change in a company’s business model and strategy can be time-consuming and costly with the need for investments geared towards circularity. Sourcing the right materials from the right suppliers requires restructuring the supply chain and may lead to conversations and plans towards sustainable sourcing.

Challenges and opportunities also rise as companies interact with stakeholders when making steps towards circularity. Businesses also need to consider government structures in effect. With the rise of sustainability-related laws and regulations, these would shape a company’s sustainability strategy in specific markets. Consumer behavior also plays a role in the way businesses apply sustainability. Consumers are increasingly seeking sustainable alternatives and companies can seize the opportunity by redesigning beloved products in a more sustainable manner. Lastly, engaging with stakeholders, such as local communities and suppliers, can create an impact in improving livelihoods and promoting sustainability amongst consumers. Companies can collaborate with communities in waste recovery programs. Incentivizing consumer movement towards sustainability also uplifts and empowers individuals.

The Future of Business

Embracing changes within a company alone can already build barriers towards sustainability due to hesitation and having to learn and unlearn practices. A proper transition through training and education on circularity is required across all functions and levels in a business. When faced with challenges in embracing circularity, it is important a business anchors itself on their goals, values, and commitments to sustainable practices and overall impact. Through understanding the needs of its stakeholders, collaborating with communities and institutions, and innovating their products, a business can reshape the business landscape, grow as a company and make positive change on a socio-economic and environmental level.

Change drives innovation and reshapes the way we work. It creates touch points across sectors and stakeholders and minimizes the detrimental impact on the global ecosystem. Circularity is the future of doing business. The future of the global economy is circular.

At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization on its sustainability journey, please don't hesitate to get in touch with us.

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