People, Circular Economy, Prosperity, Cities & Urbanisation, Planet, Asia Pacific

Five reasons why companies must embrace the circular economy model

Responsible Business | May 17, 2019


The Linear model has come under pressure due to rising resource prices, massive increases in the global middle-class and related consumption ideals, as well as heightened environmental concerns. Shifting a business model away from a traditional take-make-waste model to something more circular requires a real transformation in the way a business thinks and operates.

Facts about the circular economy:

  • Just around 6% of materials bought and consumed worldwide are then recycled back into new products
  • Global natural resource use is expected to double between 2015 and 2050, from 85 to 186 billion tons annually
  • 99 percent of the stuff we buy is trashed within 6 months
  • Without urgent action, global waste will increase by 70 percent on current levels by 2050

Below you will find 5 reasons why companies must switch to circular economic model:

1. Provide more return and lower risk to investors

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Business models that increase the value and use of a product during an extended life are essential to shift to a circular economy. Over time, extending product life through proper care and repair reduces the need for people to buy more. One core value opportunity lies in increasing the utilisation of an asset i.e how much of the time it is deployed in value creation. All stakeholders must understand that one of the objectives of any circular economy is to reduce the expense of waste in macro & micro environments.

2. Build your brand and reputation as an innovative organization

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With modern advances, digital technology has the ability to assist the transition to a circular economy by radically increasing virtualisation, de-materialisation, transparency, and feedback-driven intelligence. The ambition to replace one-way products with goods that are ‘circular by design’ and contruct reverse logistics networks and other systems to support the circular economy is a powerful motivation for new ideas. Smart design and production that reduce waste and recycle materials at the beginning of a product’s lifecycle are essential to ensure circularity.

3. Develop new markets and gain new customers

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Consumers will play a crucial function in transforming current processes towards a global, circular economy. Products with a capable brand could help to prompt a change in consumer behavior and therefore actuate that transition. Experts believe that the increased demand of consumers for products and services that are supportive of the circular economy will also create new business opportunities.

4. Attract, retain, and engage your employees

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The closed-loop recycling strategy requires a heightened level of organizational collaboration and communication to be effective. Higher levels of engagement and co-ordination between different departments need to be closely coordinated for a smooth transition. Retraining and upskilling staff to meet the demands of transitioning to a circular economic model will help boost motivation levels amongst employees and help them feel part of something new, exciting and environmentally friendly.

5. Increase resilience and lower costs

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Disposing of waste from the industrial chain by reusing components to the maximum degree possible ensures production cost savings and less resource dependence. The circular approach allows developed economies a route to resilient growth, a systemic answer to reducing dependency on resource markets, and a means of reducing exposure to resource price shocks.

The Responsible Business Forum on Climate Innovation will bring together more than 450 leaders from companies, start-ups, investors and international agencies, to share and discuss zero-carbon and circular economy solutions for a sustainable and climate-resilient future.


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