Driving the Circular Economy: How Corporations Can Lead by Example.

As of 2024, only 9.1% of materials used globally are recycled or reused. This figure marks a slight recovery from the alarming low of 7.2% in 2023 but still matches the level recorded six years ago in 2018

The past five years have highlighted a troubling trend. From 2018’s 9.1% circularity, the global rate declined to 8.6% by 2020 and plummeted further to 7.2% by 2023, reflecting an ever-increasing reliance on virgin materials and inadequate progress in recycling systems. This downward trajectory has occurred despite growing awareness of the environmental and economic benefits of circularity, underscoring the urgent need for systemic change.

But what is circular economy and what drives these figures?

The circular economy refers to the sustainable model of production and consumption of goods and services. In a circular economy, materials and products are kept in circulation for as long as possible. This approach involves practices such as sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products to extend their lifecycle.

A common misconception of circularity is the reduce reuse and recycle approach. However, Ellen MacArthur Foundation CEO Andrew Morlet explained during a Leading Disruption Panel in 2020: “Recycling alone will not save us.” Circular economy is a “bigger idea” , a significant restructuring that forces us to rethink how we’ve done things since the rise of the first steam engine.

How can large businesses and corporations lead by example and what's in it for them?

Large businesses and corporations possess the resources, reach, and influence to be pioneers in the circular economy. As pressure mounts for a sustainable global economy, stakeholders - including customers, investors, partners, suppliers, employees, and NGOs are increasingly urging companies to adapt their operations to optimise resource use and reduce emissions. Transitioning to a more circular economic model is crucial for meeting this demand, especially considering that almost half (45%) of global emissions stem from materials and product manufacturing.

In 2018, the European Union and China signed a Memorandum of Understanding on Circular Economy Cooperation, which is facilitating a global shift towards a circular economic system that benefits businesses, individuals, and the environment alike.

Scotland’s circular economy strategy, titled "Making Things Last" (2018), articulates a clear vision and priorities for progressing towards a circular economy.

Scotland’s circular economy strategy, titled "Making Things Last" (2018)

Businesses are recognising the opportunities and advantages that the circular economy presents, often viewing it as a strategic pathway to enhance their competitiveness and capture market share by attracting new customers. In this context, companies can lead by example in various ways.......

Redesign products and packaging:

Adopt eco-friendly materials and create products with longevity, repairability and recyclability in mind.
Innovation with packaging to be reusable and biodegradable.

Implement circular supply chains:

Partner with suppliers who share circular economy values.
Invest in closed-loop systems that reclaim and reuse materials from end-of-life products.

Adopt Business Models Supporting Circularity:

Move from selling products to offering services (e.g., leasing rather than selling equipment).
Support sharing economies and collaborative consumption models.

Invest in Circular Innovations

Fund start-ups and technologies that enable resource efficiency and recycling.
Explore advanced manufacturing processes, like additive manufacturing, that reduce waste.

Set Industry Standards:

Collaborate with competitors to set ambitious, industry-wide circular economy goals.
Share best practices and frameworks with smaller businesses and stakeholders.

Educate and Engage Consumers:

Raise awareness about the environmental impact of consumption.
Empower customers to participate in circular systems, such as repair initiatives and recycling programs.

Commit to Transparent Reporting:

Track and report circular economy metrics like waste reduction, material reuse rates, and carbon savings.
Publish sustainability reports that highlight progress and challenges.

By adopting a circular business model can have major benefits………

Huge cost saving:

Reduction in material usage and waste can improve resource efficiency and lower product costs over time.
Circular supply chains reduce risk and dependency on volatile raw material markets

Employee Engagement:

Many employees, especially younger generations, want to work for purpose-driven companies.
Circular economy leadership can improve retention and attract top talent.

Revenue Growth

Tap into new revenue streams through services like product leasing, refurbishing, and recycling.
Appeal to eco-conscious consumers willing to pay a premium for sustainable products.

Enhanced Brand Reputation

Demonstrating leadership in sustainability builds trust with stakeholders.
Attract environmentally conscious customers and employees.

Regulatory Compliance and Risk Reduction

Stay ahead of stricter regulations on waste, emissions, and resource usage.
Mitigate risks associated with resource scarcity and climate change.

Innovation and Competitive Edge

Encouraging innovation in design and operations can lead to breakthroughs that differentiate the business.
Become a preferred partner for other companies committed to sustainability.

Access to Capital:

Sustainability-driven companies often attract more investments from ESG (Environmental, Social, and Governance) funds.
Circular economy initiatives can open opportunities for public grants and incentives.

Driving a circular economy might seem challenging, but the benefits for businesses, society, and our planet are undeniable. Whether you're redesigning products, rethinking supply chains, or embracing subscription models, every effort counts.

What are your thoughts on the circular economy? Let’s discuss in the comments below.