How to Begin Your Circularity Journey
We are collectively living as though there are 1.7 earths. By 2030 it will be 2 earths. It’s no surprise this level of consumption is unsustainable, but there remains a debate on how we are going to collectively solve this problem. Whether you’re a sustainability guru or not, the market is demanding that businesses evolve to remain relevant, profitable, limit the impact of regulation, and address customer needs.
One of today’s central sustainability themes is the circular economy. Now becoming a more mainstream concept, term circular economy describes an economic system that has no waste or emissions, keeps products and materials in use, and regenerates natural systems. What many businesses have enthusiastically embraced is the $4.5 trillion opportunity it presents. While it may be hard to conceive how this concept can equate to 20% of US GDP, eliminating waste, it turns out, is pretty big business. And we have a lot of waste. Like the 40% of food that is thrown away each year.
Imagine if products or packaging were endlessly reused, if supply chains were perfectly efficient, or if all natural resources were regenerated. When we can recover and reuse the materials, nutrients, and energy that power our world, all of that can be reinvested, fueling tremendous economic growth.
But where does a company begin?
Here are 3 insights from those already making progress:
It’s a journey, so take baby steps
When we live in a world that is single-use oriented, one that is designed to maximize consumption and disposal, it’s hard to envision a different way. The first step is simply to take a first step. Target has begun to explore ways of making it’s business model more circular by using Lifecycle Analysis to optimize store signage, and implementing a popular carseat trade-in program. They have admitted that it was almost overwhelming to design a truly circular economy, given their current business model, but they are working to define what “circular” means for Target innovation and operations.
A more closed loop approach has been adopted by Adidas, who recently launched its FUTURECRAFT.LOOP shoe, which is made from a single material (reusable TPU) so that it can be a fully recycled. Customers return the shoe, which is ground into pellets and eventually transformed into a new one. However Adidas didn't start with such a complicated technical challenge. They have been learning how to design a more circular approach since 2017, when the company produced 1 million shoes made from recycled ocean plastic in the Adidas x Parlay line. Sales were so strong that Adidas made 5 million in 2018 and have committed to 11 million pairs in 2019.
Image Source: Adidas
Eileen Fisher is generating sales on slightly damaged inventory through a “not so perfect” offering, a concept that unexpectedly attracted a new set of price conscious customers who are unable to afford their full price clothing. The progressive clothing manufacturer has also been incentivizing shoppers to return used clothing since 2009 through it’s RENEW program, either reselling the clothing or recycling the fabric for future designs.
Image Source: Eileenfisher.com
Design your innovation to be irresistible
An essential component of success with any innovation, especially sustainable or circular, is making it irresistible. This can be challenging for sustainable solutions because they must fight the commonly held perception of being less effective, inefficient, or more complicated. As William McDonough, one of the fathers of the circular economy, said, “The circular economy should be a better alternative, not a sacrifice.”
Loop, a TerraCycle project, is bringing back the milkman concept by providing popular brands in reusable packaging delivered to the home. “People sign up because it’s no waste, but they stay because of the premium experience. Its thoughtful, delightful,” said Virginie Helias, Chief Sustainability Officer of Procter & Gamble. The program is still in pilot phase, having just launched in Paris and New York, but the participating companies informally said that the initial results (albeit 2 weeks of them) were promising.
Image Source: loopstore.com
Plant-based meat is no longer an oxymoron thanks to Beyond Meat and Impossible Foods. After decades of “tasteless” veggie burgers or an entire portabella mushroom sadly attempting to substitute for a beef burger, these companies have designed against the promise of parity to meat on all fronts, except the carbon footprint. “If you don’t have a product that’s just as delicious and craveable as meat from cows, you’re not even allowed to play in this space,” said Rachel Konrad of Impossible Foods.
With ~90% reduction in carbon footprint vs. beef, these plant-based protein companies are committed to making global food consumption more sustainable. The skyrocketing stock price of Beyond Meat after going public last month and the recent $300 million investment round for Impossible Foods seem evidence enough that the product is irresistible, and so is it's equity.
Image Source: Impossible Foods
Crowd Source Your Innovation
BigCo’s are eager to capitalize on the potential of circular models, but recognize they often struggle with in-house innovation. This challenges represents a growing opportunity for startups and smaller companies to partner with larger organizations to deliver innovative solutions. Google and SAP have launched the Circular Economy 2030 Challenge that provides funding, services and mentorship to businesses with a revenue generating idea that advances a circular economy (and also uses Google Cloud and SAP services).
Meanwhile BASF created the Circularity Challenge, a six month accelerator for startups to enable a circular economy, focusing on plastics, energy storage, and recycling value chains. These companies are recognizing that good ideas can come from anywhere, not just organizations with million dollar R&D budgets, and they are actively searching for transformative solutions from around the world.
Image Source: BASF.com
While sustainable innovation can be viewed by some as an additional expense or a less profitable investment, the circular economy is already fertile ground for disruption. It requires new business models, new behaviors, and new cultural norms. However, companies must challenge the status quo and start asking new questions to advance. When they do, there is ample room for growth and good.
