the business case of Circular economy
Dr. Avshalom Adam
Taking the road from cradle to grave as envisaged by Linear Economic models is leading the way to destroying our planet. Whereas for hundreds of millions of years nature has operated in a circular manner, humans have abandoned that circular flow, especially since the industrial revolution. We TAKE precious resources from nature to serve as raw materials to MAKE our products, discarding the used products and the by-products as WASTE. This waste is destroying planet Earth.
One road taken to partly slow the outcomes of a full-fledged linear economy is the recycling process in which used products are repurposed as raw materials. However, where only recycling is possible, the used products still finally end up in the waste stream.
One road taken to partly slow down the outcomes of a full-fledged linear economy is the recycling process which allows the reuse of the used products as a raw material. But if only recycling is made in the economic process, the used products finally finish at the stream of waste.
Circular economic business model begins by conducting life cycle analysis resulting in reversing the flow of supply chain. And so it leads into changes which contribute to better choices of the firms’ input and output. Choices that result in an increase of firm’s value and its competitive advantage. Taking the road less traveled by, using a circular economy from cradle to cradle, is a long road in which the business explores a change of directions in its value chain and supply chain.
Circular economic business model begins by conducting life cycle analysis resulting in reversing the flow of supply chain. And so it leads into changes which contribute to better choices of the firms’ input and output. Choices that result in an increase of firm’s value and its competitive advantage.
Innovation and reduce
The other road taken leading to alternative directions in the firms’ value chain, that make all the difference. Thus, circular economy offers open way to innovations, cost reductions, waste reductions, reducing climate negative impact (Reduce) and better services offer a resilient and a profitable business model.
Interface a case in point
In 1994, the flooring company Interface changed its business model from linear economy to circular economy. Its mission, to convert Interface into an international Restorative Enterprise, was accomplished in 2018. Its strategy comprised a circular road winding through Reclaim, Reuse, Recycle, Repair, Conserve, and Refuse. The changes made indeed transformed Interface into a global company, and the first in its industry to deliver on a commitment to having zero negative impact on the environment. And instead of selling carpets, it shifted to offering leasing services via its aptly named Source Solutions Provider Network that offered bundling of installation, maintenance, and other services with carpet sales. Adopting a circular economy model has been good business for the company and has led it to run wholly from renewable energy sources and achieve zero carbon emissions while producing zero waste and to aim beyond environmental sustainability to environmental restoration.
*This text is dedicated to the memory of Ray Anderson, the founder of Interface Inc. whose words and ideas are put in the text. The poem that inspired me when thinking about him is The Road Not Taken by Robert Frost.