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What is the circular economy and how can your business benefit?

You may have heard the term, but just what is the circular economy? And why should you begin to utilise it? David Cashmore, Senior Teaching Fellow in Birmingham City University’s Business School, discusses why making the change can yield long-term benefits for your business, your customers and the planet.
Photo of David Cashmore, Senior Teaching Fellow in Birmingham City University’s Business School

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What is the circular economy and how can your business benefit?

You may have heard the term, but just what is the circular economy? And why should you begin to utilise it? David Cashmore, Senior Teaching Fellow in Birmingham City University’s Business School, discusses why making the change can yield long-term benefits for your business, your customers and the planet.
Photo of David Cashmore, Senior Teaching Fellow in Birmingham City University’s Business School

A welcome change of approach

Much of today’s business adheres to a make, use and dispose approach. Raw materials are extracted to manufacture a product, which is then used by a customer and disposed of once it’s no longer desirable or functional.

As we’ve seen with petrol shortages and fast fashion, among other things, this approach has many problems.

Namely, it requires unlimited raw materials and energy for ongoing production, as well as unlimited space to accommodate the waste produced.

So, what is the circular economy and where does it come in?

Essentially, the circular economy offers an alternative approach.

Businesses aim to keep resources in use for as long as possible, thus extracting the maximum amount of value from them. They would then recover the waste and reuse it for future processes.

In other words, the circular economy is based on the idea that there is zero waste overall, as any waste from one process can be used in another.

Create milestones for your business

The starting point is for organisations to understand its sustainability vision for the future.

  • Are you looking to change in anticipation of future legislation?
  • Are you aiming to gain a competitive advantage by making sustainability a part of your brand?
  • Do you wish to take on an industry leader role and lobby government for change?

Once the long-term goals are decided, you can plan progressive steps to move towards a circular economy business model.

I would suggest creating a product roadmap. This will identify how each iteration of the product can be made more sustainable over a period of time.

In doing this, milestones can be agreed for product development, with targets established for areas such as:

  • Product packaging
  • Storage and transportation
  • Material sourcing
  • Manufacturing processes
  • Product design

Larger companies may favour a ‘big bang’ approach to transformation. However, taking an incremental approach to adopting circular economy principles can allow meaningful change to occur more quickly.

The benefits of adopting circular economy business models

Now you have answered the question ‘what is the circular economy?’, but what are the benefits to your business?

In the very short term, the move to a circular economy approach is likely to incur additional costs. However, it’s important to understand that there will be multiple benefits in the long term.

There is an inextricable link between businesses and the natural world. Businesses both affect the Earth’s ecosystems and rely upon them.

As it stands, more than half of our world’s ecosystems are in decline, which poses significant risks for organisations.

From an operational perspective, there is increasing scarcity of raw materials that will ultimately result in increasing procurement costs. 

As such, it will benefit you to extract as much value from the raw materials used in your products through development of a robust end-of-life process, as part of a circular economy approach.

Another benefit of adopting circular economy principles is that it anticipates the inevitable increase in sustainability legislation.

Given the enhanced awareness of sustainability issues amongst the general public, as well as the commitment by UN member countries to achieve the 17 Sustainable Development Goals, organisations are likely to face further regulatory pressure as the government seeks to address key sustainability issues.

Address these issues quickly and you will have an advantage over your competitors.

With over 1,200 businesses aiming to become more sustainable, now is the time to make this your focus.

Think of your reputation

More and more customers are making purchasing decisions based on what is good for the environment.

Deloitte’s recent report into sustainability and consumer behaviour tells us that consumers are now focusing on reduced waste and packaging when they do their food shop.

Perhaps the most compelling reason to adopt a circular economy approach is reputational. 

There is increasing pressure on organisations from consumers and activists. Both are demanding that organisations operate in a more responsible, ethical manner. 

In a world where non-sustainable behaviour by organisations can go viral on social media, the adoption of a circular economy approach can:

– Enhance corporate reputation

– Attract investors

– Provide greater access to financial customer

– Help you win new customers

Support in following circular economy principles

Many businesses are asking ‘what is the circular economy?’ at the moment but aren’t sure where to go for help.

A good starting point would be the Ellen MacArthur Foundation, formed in 2010 by renowned sailor Ellen MacArthur.

The Foundation aims to accelerate the transition to a circular economy through collaborations with decision makers from business, government, designers, innovators and more.

Closer to home, academics at Birmingham City University (BCU) pride themselves on using their real-world experience to provide first-hand support to businesses.

Recently, for example, a team of academics helped a number of leading car manufacturers create courses to enable their staff to make the transition to creating electric vehicles.

BCU’s research and development partnerships can really make a difference to whatever challenge your organisation is facing.

You can also pick up some handy tips on going sustainable from a number of green businesses who are currently members of the University’s STEAMhouse facility.

If you would like to utilise the power of BCU’s research and development partnerships, simply click the button below to learn more and get in touch with a member of our team.

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