Sustainability, Business Transformation and the Circular Economy

Estimated reading time: 5 minutes

Forward-thinking businesses are abandoning the traditional linear economy – in which inputs and manufacturing processes move in a single direction, and end products ultimately end up in landfills and oceans. With each passing day, more are gravitating toward the circular economy – a model based on the recovery, reuse, and regeneration of materials, to ensure they are kept at their highest utility and value at all times. Released by The Conference Board, Business Transformation and the Circular Economy lays out the risks and rewards of undertaking this shift. The report offers real-world case studies and recommendations, drawn from companies that are leading this transition.

“The conventional ‘take, make, waste’ paradigm not only is unsustainable from an environmental standpoint, but also from an economic standpoint,” said Thomas Singer, the report’s author and principal researcher in corporate leadership. “Businesses can reap impressive savings by adopting attributes of the circular economy – and at the same time, secure revenue opportunities by winning over the growing number of customers who seek products and services that align with their own sustainability goals.”

The report profiles the strategies and successes of seven companies at the forefront of the circular economy. Examples include but are not limited to the following:

Dell: Circular economy initiatives at Dell are currently focused on driving out waste from processes and products. To do so, the company has been working on two key initiatives: extending the life of products through reuse and refurbishment and closing the loop on materials with a focus on plastics and metal. Through a partnership with Goodwill Industries, for example, Dell’s closed-loop recycled plastics program has expanded to over 90 product models that contain up to 15 percent recovered plastic.

DuPont: The company’s circular economy initiatives are led by DuPont’s individual businesses and pursued based on specific interest from customers, brand owners, and other value chain partners. DuPont’s performance materials business is home to several examples of these initiatives. Circular economy initiatives in the area of performance polymers, for instance, focus on source and waste reduction, waste recovery, recyclability of existing polymer streams, and reducing dependence on oil. For example, DuPont has developed solutions for meat packaging that can help customers save as much as 80 percent of the packaging weight as well as double the shelf life of the product, reducing in-store food waste by half.

HP: Circular economy initiatives at HP are focused on identifying ways to decouple materials and resource consumption from revenue growth and customer value. One example of HP’s circular economy success is its shift from selling a product to selling a service. Through HP’s Instant Ink service, which has grown to about 2 million subscribers, consumers’ internet-connected printers recognize when ink cartridges are low and automatically ship new cartridges to consumers. The new cartridges include return envelopes, which enables HP to close the loop by incorporating as much as 80 percent of the plastics from returned cartridges into the manufacturing of new cartridges. This direct-to-consumer model has also helped HP eliminate about 67 percent of materials used per printed page.

Interface: Circular economy initiatives at modular carpet maker, Interface, are focused on finding ways to reduce the environmental impacts of the company’s raw materials. The company’s initiatives revolve around examining the impacts of its raw materials and reducing those impacts by finding way to recoup materials. These issues form the foundation of Interface’s ambitious 2020 goal of obtaining all of the company’s raw materials from rapidly renewable bio-based materials or recycled waste streams, and the company is currently 60 percent of the way toward meeting this target.

Kimberly-Clark: Kimberly-Clark’s circular economy initiatives began about six years ago, when it started thinking about product take-back ideas and initiatives to help avoid landfill waste. In 2011, Kimberly-Clark launched the RightCycle initiative with the aim of converting hard-to-recycle products – such as nitrile gloves and single-use apparel – into useful new items, enabling the company to be part of the solution rather than the problem for customers that were pursuing waste reduction goals. Now Kimberly-Clark works on these initiatives with customers across more than 200 sites around the world, and the company has grown from recycling just under two tons of material in 2011 to 130 tons in 2016.

Philips: For Philips, circular economy initiatives largely hinge on the notion of switching from selling products to selling services. For example, “light as a service” is one of its primary circular economy initiatives. This business represents a shift away from selling a product (light fixtures) to providing a service (lighting solutions). On the one hand, it is about financial considerations – customers find it easier to have operational rather than capital expenditures. But it also helps Philips stay on top of the latest customer needs and learn about customer usage patterns, and it allows Philips to extend replacement cycles to longer periods. Similar models are being implemented in the company’s health care businesses. By retaining ownership and management of equipment, for example, Philips can help drive customer behavior to better resource efficiency.

Waste Management: Circular economy initiatives at Waste Management began around 2001, with a focus on ways to reduce, reuse, or eliminate materials, particularly by looking at byproducts and waste materials from large customers. One of its early initiatives involved working with US automotive companies to capture waste materials, such as scrap metal, and return them back to the production loop by finding new uses for the material. Today, these initiatives have evolved to move Waste Management further up the value chain, collaborating with product designers and manufacturers to learn how their work affects the ability to capture products at their end of use. The company’s circular economy focus has widened to look not only at capturing and returning waste materials to the production loop, but also identifying ways to produce items that are ultimately more recoverable.

About The Conference Board

The Conference Board is a global, independent business membershipand research association working in the public interest. Our mission is unique: To provide the world’s leading organizationswith the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.