Circularity in the age of technology

Businesses today are increasingly growing environmentally conscious, embracing new and innovative ways of carrying out business processes to promote sustainability. This need to decouple economic growth from adverse effects on the environment has given rise to a new economic system called the Circular Economy. The goal is to generate zero waste throughout a product lifecycle by adopting a more restorative and regenerative approach to production and consumption.

Standardisation and circular product design

Developing industry-wide technical standards to promote modularity and interoperability facilitates sustainability in product design. An example of this is the landmark judgment passed by the European Union mandating electronic devices such as phones, tablets, and cameras to come equipped with USB Type-C charging ports by 2024. By adopting USB C as the standard, the EU made sure that consumers do not need to buy a new charger every time they buy a new device, thereby reducing e-waste. The effects of this law can be seen in the fact that even Apple, a company known for its closed ecosystem, had no choice but to ditch its proprietary lightning port in favour of USB-C.

In contrast to the traditional ‘take, make, dispose’ approach of the linear model, circularity in product design looks to keep the materials in use for as long as possible. The prevailing school of thought in circular product design currently involves:

• Designing to phase out waste i.e. removing wasteful elements of a product
• Then one of two paths can be chosen – designing the product for durability or
• Designing it with repair and reuse in mind

Technology also plays a crucial role in advancing circular business models. AI-powered design, for example, offers immense potential by optimising product design for recyclability and efficient resource usage. Machine learning models can provide valuable insights and suggestions regarding the optimal material mix, facilitating the creation of modular products with extended lifespans.

Furthermore, 3D printing emerges as a game-changer, enabling real-time and on-demand manufacturing, rapid prototyping, and customisation. These technological developments not only simplify production processes but also contribute effectively to the sustainability goals of circular business models, promoting resource conservation and waste reduction.

Circular business models

Minimising environmental and social costs while creating, delivering, and capturing value is the underlying theme of circular business models. While the initial focus was on refining and incorporating methodologies like recycle, reuse, reduce, etc, technological advancements became enablers for large-scale business model innovations. As defined in a July 2018 paper titled ‘Business Models and supply chains for the Circular economy’, at an abstract level, we can have business models that are:

• Closing resource loops
• Slowing resource loops
• Narrowing resource loops
• Intensifying resource loops
• Dematerialising resource loops

Circular business models include several key characteristics that are essential for their success. Firstly, they involve products and services operating within a closed-loop system, for example, through subscription models where consumers pay for product usage. This incentivises businesses to design durable and easily repairable products, prolonging their lifespan. Secondly, these models prioritise resource efficiency and minimise waste generation and energy consumption throughout operations. Thirdly, effective collaboration among stakeholders within the supply chain, including suppliers and consumers, is crucial. This ensures the smooth implementation of circular strategies, fostering sustainability and resilience in the business ecosystem.

Beyond theory

Numerous companies worldwide have successfully implemented circular business models, demonstrating their dedication to sustainability and innovation. One such example of this is Patagonia, a leading outdoor apparel company, that pioneered this shift with its Worn Wear programme. Through this initiative, Patagonia empowers its customers to repair and resell their used gear by offering repair guides, and replacement parts, and facilitating customer-to-customer sales. This not only helps in extending product life, but also reduces waste, and fosters brand loyalty among customers appreciative of the company’s sustainability efforts.

Philips, the Dutch multinational, stands as another example in this arena by offering a "pay-per-use" lighting system for businesses. By transforming the linear model of traditional lighting businesses into a subscription service, Philips retains ownership of the lights, incentivizing them to manufacture durable and longer-lasting products that can be maintained and upgraded easily. This model not only extends product lifespan but also encourages efficient resource usage and reduces waste generation.

Additionally, IKEA, the global furniture retail giant, offers a take-back program, enabling customers to return their used furniture for a voucher. Through this, IKEA then refurbishes or dismantles the furniture, thus either reselling usable components or recycling the materials. This extends the lifespan of the furniture, reduces the waste going into landfills, and effectively allows customers the opportunity to purchase the furniture at a discounted price.

Circular economy

In the latter half of the 20th century, concepts like ‘closing the loop’, ‘industrial ecology’, etc. began to emerge, marking the origins of today’s circular economy. Throughout the 20th century, the 3Rs model (Reduce, Reuse, Recycle) gained traction, becoming a significant part of environmental conservation. A significant milestone came in 2009, when The Ellen MacArthur Foundation, championing the cause, published its widely influential report ‘Towards the Circular Economy’ and launched initiatives to promote circular practices.

Subsequently, the European Union in 2015 adopted its Circular Economy Action Plan, setting clear goals and laying out ambitions, which was another pivotal moment. Today, the rapid expansion in this space can be attributed to emerging technologies like Artificial Intelligence (AI), Internet of Things (IoT), 3D printing, etc.

Platform for Accelerating the Circular Economy (PACE)

Launched in 2018 by the World Economic Forum and hosted by the World Resources Institute, PACE is a global initiative dedicated to accelerating the transition to a circular economy. It provides a collaborative platform for connecting leaders from different faces of society – business, government, civil society, and so on, and also has launched and published several pilot projects as well as reports showcasing the benefits of a circular approach across various sectors, thereby providing valuable insights and recommendations. It has also produced a comprehensive roadmap outlining detailed steps to accelerate the transition to a circular economy.

In the field of circular business models, technology plays a pivotal role in offering innovative solutions to enhance efficiency and effectiveness. Technologies like Virtual and Augmented Reality (VR/AR) are revolutionising up-skilling programs by offering immersive learning experiences. These programs empower workers with complex skills, such as product disassembly for reusing components, through simulated environments, thereby reducing the need for specialised training facilities and enhancing workforce proficiency.

Additionally, AI-powered sorting systems represent a significant advancement in waste management and remanufacturing processes. Leveraging artificial intelligence, these systems accurately sort waste into correct categories for recycling, thus minimising contamination and maximising material recovery rates. AI also enables intelligent remanufacturing, which includes identifying reusable materials and components, optimising resource utilisation, and reducing wastage throughout the production cycle. By using technology for repurposing, circular businesses can streamline operations, improve resource efficiency, and contribute to a more sustainable future.

What can consumers do?

To sum up, the transition to a circular economy calls for participation across all sectors of society. As consumers, we play a crucial role in bringing this transition by adopting a circular mindset and integrating sustainable practices into our daily lives. This includes supporting businesses that have embraced circular practices, opting for products with sustainable packaging, prioritising repair and maintenance over replacements, and practising minimalism to curb impulse purchases. Also, advocating for policies that promote circularity and drive social change is crucial to promoting the circular economy agenda.

Using technology as the primary driver, we can collectively close the loop and pave the way for a more sustainable future. With collaborative efforts and a commitment to sustainability, we can create a more sustainable future for the generations to come.

References

An introduction to circular product design and business models. (n.d.). https://www.circularise.com/blogs/circular-product-design-and-business-models

Atasu, A. (2021, June 15). The Circular Business Model. Harvard Business Review. https://hbr.org/2021/07/the-circular-business-model

Circular economy introduction. (n.d.). https://www.ellenmacarthurfoundation.org/topics/circular-economy- introduction/overview

Hub, I. S. K. (n.d.). WEF Launches Public-Private Platform on Circular Economy | News | SDG Knowledge Hub | IISD. https://sdg.iisd.org/news/wef-launches-public- private-platform-on-circular-economy/

Long-awaited common charger for mobile devices will be a reality in 2024 | News | European Parliament. (n.d.). https://www.europarl.europa.eu/news/en/press- room/20220930IPR41928/long-awaited-common-charger-for-mobile-devices-will-be-a- reality-in-2024

Geissdoerfer, M., Morioka, S., Mm, D. C., & Evans, S. (2018, July 20). Business models and supply chains for the circular economy. Business Models and Supply Chains for the Circular Economy. https://www.repository.cam.ac.uk/items/ccf4e5a0-141e-40aa-bdae- 81fbe5dfe771

Bowles, R., Abbott, L., & McIvor, M. (2022, October 14). The Circular Economy, Your Business, and Your Future – GLOBIS Insights. GLOBIS Insights. https://globisinsights.com/purpose/sustainability/circular-economy/