The circular economy: integrating restorative concepts into your brand
As traditional business models start to become obsolete, the world’s corporate leaders are looking to a more restorative way of doing business; one in which resources are not presumed to be unlimited and are not cheap, and one that moves decisively away from the ‘take, make, dispose’ mindset that has been the status quo until recently.
We came across an interesting report penned by JWT Intelligence authors about the circular economy and how corporate attitudes are changing. It describes how businesses are taking steps towards operating in a fully circular fashion, whether it is changes to rethinking how products are designed and manufactured, or how their relationships with customers work.
Here’s a look at what this qualitative and quantitive report found.
What is the circular economy?
The vision: a smarter, more regenerative and restorative way to create, use and dispose of products that designs out waste from this cycle. An alternative to the “take, make and dispose” model that predominates today, the circular economy is an old concept that’s steadily gaining ground among influential entities and corporations.
The circular economy provides a framework that weaves together new practices, such as collaborative consumption, and older ideas like recycling so that businesses and consumers alike can adopt a new approach.
Key principles of the circular economy include:
- Design out waste.
- Understand that everything within the economy has value.
- Design with disassembly and reuse in mind, with minimal changes required to reuse components of a product.
- Differentiate between consumable and durable components. Biological materials go back into nature; durable, or technological, materials stay in use for as long as possible.
• Find ways to reuse materials across the value chain. (For instance, Nike uses recycled plastic bottles in its polyester products.)
• Eliminate toxic chemicals, making it easier to reuse components without risk of contamination.
• Fuel the system with renewable energy.
• Build resilience through diversity.
• Adjust prices to reflect the true cost of the effort required to produce a product.
• Think in systems, taking into account how one action will impact the whole.
Linear vs. Circular
In today’s linear system, manufacturers typically take resources from the earth to make products that are soon discarded in landfills. (In other words, “take, make and dispose.”) The negative environmental impact is clear. At the same time, there are disadvantages for businesses. Variable resource costs and supply chain disruptions expose companies to risk, and they can’t extract the embedded costs of labor and materials at the end of a product’s lifecycle.
How brands are becoming more circular
The shift to a fully circular system is complex, but many brands are taking steps toward this vision by rethinking elements of the status quo: instituting new ways for customers to use goods, seeking ways to extend the life of goods or their components, finding value in waste, or designing for more circular use. In some cases this involves catalyzing existing behaviors such as selling secondhand products or repairing worn goods, while in others it means embracing new concepts, like car-sharing.
For example, care manufacturers are embracing the idea of leasing cars on a short-term basis for those who don’t own their own vehicles; mobile operators are leasing phones; lighting companies including Philips are allowing customers to purchase the exact amount of light they will need for a task rather than buying products such as lamps; European carpet companies are leasing carpet; Renault is leasing electric car batteries on a monthly basis; Mud Jeans (a Dutch brand) is leasing jeans to individuals.
One of the easiest ways to eliminate waste is to give goods new life in the secondhand market without recycling or remanufacturing. With consumers looking for bargains, the secondhand market has been flourishing around the globe. Smart brands are facilitating the resale of their goods, turning a practice that’s already underway into a brand-building experience.
Patagonia, a clothing label, offers customers the chance to return their used clothes, with some stores reselling the items inshore in a used clothes section.
Ikea had a similar idea. In 2010, they set up a website for people who wanted to sell used Ikea items, and last year the company expanded this with ads that featured only secondhand furniture.
To give old clothing extra life, British department store Marks & Spencer has been partnering with Oxfam on an initiative dubbed “Shwopping.” Customers can drop off unwanted clothing at Oxfam outlets for £5 credit at M&S stores or bring old garments to M&S. The clothing is then resold, reused or recycled, keeping it out of landfills. Marks & Spencer says that 7.7 million garments have been collected since 2012. The company’s ultimate goal is to recycle as many textiles as it sells.
Next week we’ll look at more ways businesses are operating in a circular manner. The full JWT Intelligence report is available here.
What do you think about these ideas? Could they work in your business? We’d love to hear your thoughts.