Is the Circular Economy the silver bullet for small(er) companies?
I know first-hand that becoming more sustainable, that is reducing your usage of natural resources, can save business and individuals money. Crucially it can also provide stimulus for developing new and innovative ways of doing things.
An area rapidly emerging (but yet still nascent) is called the ‘Circular Economy’. As a sustainability consultant I know this could be a way for business to differentiate and to develop new and more profitable income streams. As they are able to rapidly react it could also be well suited to smaller local players, like regional food producers and manufacturers.
If you don’t work in this space you probably don’t even know what I’m talking about. Essentially the Circular Economy is short hand for breaking linear supply models. Let me give you some examples. Currently the way we manufacture and utilise products uses the ‘make’, ‘take’ and ‘dispose’ model.
By this we mine ore, use it to produce components for a mobile phone, make a phone, use said phone until it breaks / is out of date and then leave it in a drawer or just maybe recycle it. Then we produce and buy another one. In a Circular Economy model the phone would be designed in a way that at the end of its first use, instead of being thrown away, critical components such as the screen, memory or chip, can be upgraded. The phone is then ready for its second life.
So instead of thinking of a process from start to finish we now think of a process that goes round and round, like our constantly being upgraded phone. In fact Google are offering this exact service right now.
Not only does this design out waste but it also offers new business models around leasing and not buying phones – lease it for a year, get it upgraded for free then lease for a further year from the same company, and so on. I’m obviously simplifying and Circular Economy ‘geeks’ will already be tutting at this article but hopefully you get the point.
Sainsbury’s has a great industrial example. They have partnered with British Sugar so that they now buy both sugar and a refrigerant gas (eCO2) derived from waste beets that would otherwise have gone into low value uses. This is Circular Economy thinking.
B&Q are excited about the prospect of combining different Circular Economy thinking by making a drill that can be upgraded and repaired, just like our phone above, but which they lease not sell. Do you really need to own a drill or is it sufficient to save your money by borrowing one from B&Q for a weekend when you actually have a job that requires it?
Many large companies, including my old employer ASDA, have aspirations to develop and embed circular thinking. Main proponents include Kingfisher, Unilever, Philips, Vodafone and Renault, amongst others. In essence its about designing out waste, producing in a more environmentally friendly manner and keeping materials at their highest level of value, ie a glass bottle is best re-filled/re-used than melted down.
This is all great but what’s the link to small businesses?
As someone who has worked for two of the largest companies on this planet and still supports many household names I know they have teams looking at gaining competitive advantage from this kind of thinking. However these companies also need time to change their ways of working, fleet of foot they are not! But a small or medium sized company can adapt fast.
However, for many of these types of companies to become sustainable is an aspiration left on the shelf for a time when they can ‘afford’ the time or expertise. But this means they risk losing thousands of pounds every year on inefficiency and being left behind on new business models.
However it’s also precisely these smaller companies that are driving innovation and helping to rebuild the economy of UK Plc. If they can better understand how the Circular Economy can help their profitability and innovation in these tough times then they are the ones that can make a mass movement for change, not the multi-national corporates. Though the resources and leadership of these major companies is key to mapping out this alternate future.
Is there a solution to make the Circular Economy available to everyone and quickly? Raising awareness sure helps but to truly make this dream a reality the big corporates need to share their learnings with smaller players. And to mentor them. It’s Dragon’s Den but without giving them half of your stock! And in a serious way not just activity to pad out a Corporate Responsibility Report.
