Marketing Viewpoint by Ruth Winett
Circular Business Models: Less Stuff, Less Waste
Landfills and recycling centers are overflowing with our discards, and third-world countries will no longer accept our unwanted stuff. Adopting circular business models would help reduce the amount of unwanted stuff that is overwhelming the planet. Circular models are making their way into the fashion and food industries and into companies that provide services. Are circular business models right for your company, either in respect to what you offer customers or what you use in your business?
What Are Circular Business Models?
The three stages of the traditional linear economy are Take, Make, and Waste, with people often discarding goods before the end of their useful life. In contrast, in the circular economy, "Companies and individuals … extract additional value out of our existing materials and resources. By focusing on re-using and recycling, circular economies get closer to creating a closed loop system that minimizes the use of resource inputs and, in doing so, reduces …waste, pollution and carbon emissions…." according to Veolia North America.
The Fashion Industry-- Better for the environment, less so for clothing companies
Access to cheap clothing manufactured overseas encourages us to buy more garments than we need. However, many younger people now seek sustainable clothing, according to McKinsey. Clothing production strains the environment: To produce one cotton T-shirt requires about 713 gallons of water. Moreover, cotton production accounts for 22.5% of all insecticide use. Fashion industry experts project changes, such as using fabrics that require fewer resources to produce, that are made of materials that require less water and fewer pesticides, and that don’t require toxic dyes. Garments could eventually be repaired and resold. Now, one Land’s End coat is made of 14 recycled water bottles, and a jacket is filled with down that is not "live-plucked" and that comes from an "ethically sourced supply chain." (Land’s End catalogue)
Food Industry—What happened to biodegradable packaging?
Most grocery stores and take-out restaurants still pack food in plastic packaging or clamshells. In contrast, McDonald’s has, "set goals to source 100% of [its] guest packaging from renewable, recycled or certified sources, and to recycle guest packaging in 100% of McDonald's restaurants, by 2025." But, challenges remain: straws, and also coffee cups, contain both natural and technical components that are hard to separate for recovery of materials.
Services that save resources and money
"Is making, using, discarding the most cost effective way of producing goods?" poses Veolia North America. Adopt a Product as a Service business model, urges Veolia. A familiar example is renting a car, which provides transportation, not cars; another example is renting an office copier to get copies, not a copier. Customers achieve desired results without having to make a costly purchase and without having to house and maintain equipment. Companies that rent equipment benefit from the ongoing rental revenue; the planet benefits because fewer goods are manufactured, often from scarce resources.
It is time to replace the Take, Make, and Waste linear economy. As sustainability becomes more important, companies could consider sharing portable equipment with neighboring companies, just as neighbors share lawnmowers. Opportunities also exist for companies that find new ways to reduce waste. One example is harvesting reusable components from electronic equipment and safely disposing of depleted components. A lower tech example is refurbishing, reupholstering, and selling discarded furniture.
Best Wishes for a Happy Healthy New Year!
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