4 industry leaders on what it takes to become circular
- The economy’s transition to circular requires major changes in businesses, supply chains and consumer behavior.
- The Forum interviewed senior executives on the main lessons learned from the circular transition.
- The Forum is organizing its annual Summit on the Impact of Sustainable Development from September 20 to 23.
We take the resources of the earth. We make it for use. And then we throw away whatever is left. The cost is borne not only by landfills, but also by emissions, as our consumption is fueling the climate emergency.
Yet companies have been optimizing the linear economy for over 200 years. Shifting the economy towards circularity requires major changes in business and operating models, supply chains, and B2B and B2C consumer behavior. This level of disruption of the status quo often hurts the most vulnerable, and circular solutions must contribute to a just and inclusive future.
More and more companies are taking up this complex challenge. As part of the 2021 Sustainability Impact Summit, we interviewed senior executives prioritizing the circular economy from four sectors on their lessons. Here’s their advice on where to start, what to avoid, and how to build momentum to kickstart a company’s circular transition.
This is an annual meeting showcasing the best examples of public-private cooperation and Fourth Industrial Revolution technologies used to develop the sustainable development agenda.
It runs alongside the United Nations General Assembly, which this year hosts a one-day climate summit. This is timely given growing public fears – and citizen action – about weather conditions, pollution, the health of the oceans, and dwindling wildlife. It also reflects the understanding of the growing business case for action.
The UN Strategic Development Goals and the Paris Agreement provide the architecture to resolve many of these challenges. But to get there, we need to change the way we produce, operate and consume.
The work of the World Economic Forum is essential, with the summit providing the opportunity to debate, discuss and engage on these issues at the global political level.
Lesson # 1: Circularity is a business decision – treat it as such.
Tanah Sullivan, Head of Sustainability, GoTo
Adopt a mindset that the flyer is a business decision and should be treated by the company as such. At GoTo, it started by socializing a common vision and understanding of what the flyer meant in our context and what “best practices” really looked like for our industry and region.
Previously, we struggled to translate our “best-in-class” roadmap (based on the knowledge and standards of other companies) into a tangible and operational transition plan for our business units. Today, we see that this common understanding and agenda leads to increased engagement from the parts of the business that drive business growth. Although still a work in progress, this is how we approach the operationalization of our Zero Waste commitment by 2030, and integrate it into the operations and objectives of each business unit.
For more mature businesses, the shift in mindset means investing in areas where there may not be direct or imminent business value or impact. For those who are just starting out on this journey, it may start with small steps towards replacing existing materials (or, in our case, packaging) with more sustainable and economically viable alternatives. These small steps can have huge short-term impacts and pave the way for more systemic changes in the future.
The World Economic Forum has created a series of initiatives to promote circularity.
1. Scale360 ° Playbook was designed to create sustainable ecosystems for the circular economy and help solutions evolve.
Its unique hub-based approach – launched in September – is designed to prioritize circular innovation while fostering communities that enable innovators around the world to share ideas and solutions. Emerging innovators around the world can connect and work together ideas and solutions across the Uplink, the Forum’s open innovation platform.
Find out how the Scale360 ° Playbook can drive circular innovation in your community.
2. A new Circular Cars Initiative (CCI) embodies the ambition for a more circular automotive industry. It represents a coalition of more than 60 car manufacturers, suppliers, research institutes, NGOs and international organizations determined to achieve this ambition in the short term.
CCI recently released a new series of circularity “roadmaps”, developed in collaboration with the World Economic Forum, the World Business Council for Sustainable Development (WBCSD), McKinsey & Co. and Accenture Strategy. These reports explain the specificities of this new circular transition.
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3. The World Economic Forum’s Accelerate Digital Traceability for Sustainable Production initiative brings together manufacturers, suppliers, consumers and regulators to jointly establish solutions and provide a supporting ecosystem to increase supply chain visibility. and accelerate sustainability and circularity in the manufacturing and production sectors.
Log in to find out more →
Lesson 2: Embed circularity in all parts of the business.
Robert Metzke, Head of Sustainability, Royal Philips
At Philips, we started by developing a clear picture of our overall end-to-end impact, including the sourcing, production and use of our material flows. We systematically integrate a mindset and principles of circularity into all parts of the business (activity, markets, functions), starting with business strategy, innovation process, capital allocation, management and HR rewards, capacity building programs, site management, brand positioning, marketing, etc. Our ambitions and commitments in terms of sustainable development are an integral part of the raison d’être and the culture of our company.
Integrating circularity into our core strategy and across all businesses, markets and functions has helped us connect many initially independent initiatives, scale best practices, and reap the economic benefits of circularity, pilots at impact. We have moved from a sustainable development strategy driven by a specific function within the company to an ambition and commitments driven by the company. This approach has fostered new solutions and ideas from many parts of the business / markets, as well as a wider sharing of best practices. Today we have a clear roadmap of programs and structural initiatives across the company at regional and global levels, which will allow us to achieve ambitious goals for 2025 and to team up with other companies, NGOs and governments on platforms such as RHYTHM.
Lesson # 3: Stay engaged in the course.
Ibrahim Al-Zu’bi, Director of Sustainable Development, Majid Al Futtaim-Holding
When embarking on a circular business model, it’s important to look at your pillars and day-to-day goals. Success is not measured overnight and each milestone is reset with a new goal. Staying engaged in the course is what ultimately changes behaviors and mindsets and achieves impactful results.
At Majid Al Futtaim, a circular business model is essential to achieve our commitment to the net positive in carbon and water by 2040. Five key pillars underpin the strategy:
1.understand our organizational resource flows to reduce waste
2.set up internal systems to maximize the value of resources
3.support our supply chain to progress towards circularity
4.interact with our customers to help them make circular choices
5.support research and innovation to accelerate the global transition to a circular economy
Despite a difficult year, we are on track to meet the milestones on our roadmap and continue to forge partnerships to maximize the value of our waste. For example, since early 2020, Carrefour Kenya has been working with a local partner to recycle paper, plastic, metal and organic waste. As a result, 92% of their operational waste is now recycled and offset 581,221 kg of CO₂ emissions during the year, which is equivalent to saving a forest area the size of 810 football pitches. Carrefour Georgia has forged a unique partnership with the Caucasus Bears farm to provide their bears with older fruits and vegetables that can no longer be sold in stores.
We have also undertaken a strategic review of the extent to which circular economy principles are integrated into the supply chain of our products and have started measuring our sources of waste to identify opportunities for improving the measurement and reduction of waste production. Based on this, we will provide training and opportunities to close the loop across our business. We hope to be able to systematically extend this work.
Lesson # 4: Engage the whole business behind circularity in both actions and mindset.
Dr. Christian Haessler, Global Circular Economy Program Manager, Covestro Germany AG
The most important thing is to get the whole company to commit to a circular both in the ACTIONS and in the SPIRIT. Clear goals and action plans are important, along with a clear commitment from senior management and guidance for all employees on how to participate in and prioritize such a transformation.
The transformation to a circular economy is comparable to the path to climate neutrality. It spans decades, so there is a “before” transformation, but not yet an “after”. To initiate the transformation, it will make it possible to define circular objectives for the company as a whole as well as for all areas of the company, so that all areas of the company can contribute. Particular attention should be paid to sustainability and defining circular economy KPIs, complementing financial KPIs and balancing the two. The messages must be consistent and repeated by the hierarchy. Information and question-and-answer sessions should be offered in abundance as well as HR-focused change programs.
A version of this article was originally published on Forbes.