Requirements for Circular Economy Success

June 8, 2018

Last month, leaders in business and sustainability met for the U.S. Chamber of Commerce Foundation’s Fourth Annual Sustainability and Circular Economy Summit, discussing effective implementation and communication of circular business strategies. The diversity of backgrounds, industries and perspectives made clear two things: 1) Adoption of circular economy principles is expanding rapidly, and 2) Radical innovation is required for the circular economy to succeed.

Adopting circular thinking

In the early days of corporate sustainability, companies invested in corporate social responsibility programs and looked for incremental efficiencies that simultaneously reduced environmental impact and increased profits, such as implementing energy savings or waste reduction programs. While such programs remain important, companies are widening their vision and setting more ambitious targets that address both environmental needs and untapped economic opportunity. As President and General Counsel of DSM North America, Hugh Welsh, noted in his presentation, “It’s time to move from a sustainability strategy to sustainability as strategy.”

In 2016, the United Nations issued the Sustainable Development Goals (SDGs), a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. Often referred to as the Global Goals, the SDGs have inspired businesses, governments, and nonprofits to incorporate climate change, economic inequality, innovation, sustainable consumption, peace and justice, and other priorities into performance metrics. In so doing, many organizations are beginning to build the foundation for a more circular economy, a radically different economic model that is regenerative by design and utilizes systems thinking to turn waste into raw materials.

Radical innovation in action

Faced with this shared responsibility to address the enormous social, economic, and environmental challenges detailed in the SDGs, organizations are responding to the need to transform business models and economic systems by rethinking traditional models and investing in large scale radical innovation. Instead of sustainability strategy adapting to the business model, business models are adapting to the sustainability strategy.

As proof of such a movement toward radical, circular innovation, the American Chemistry Council (ACC) announced at the summit a circular economy commitment to recycle or recover 100 percent of plastic packaging by 2040. The ACC made this bold announcement with full transparency that neither the council nor its members have all the answers yet as to how the goal will be achieved. Such ambitious announcements may appear to be hot air to many skeptics, but it is this near-impossible goal setting that proves to ignite radical innovation in industry and leads to substantive change.

Similarly, in light of The Coca-Cola Company’s January 2018 announcement of its World Without Waste packaging vision, the company participated in a panel discussion on sustainable packaging. In its vision, Coca-Cola has committed to collecting and recycling a bottle or can for each one it sells globally by 2030 and renewing its focus on the entire packaging lifecycle. This will require not only changes in infrastructure, but also in consumer habits. As a result, the company is solving both for the challenges of packaging materials and the beverage distribution system overall. For example, the company’s Dasani PureFill pilot program is testing water filling stations on the Georgia Institute of Technology campus, tapping into fountain distribution through refillable water bottles, rather than single-use plastic packaging.

But plastics are not the only materials turning circular. EILEEN FISHER’s Renew line, a take-back program through which garments are refurbished, redesigned, and resold is also driven by circular economy principles. Managing the program out of their “tiny factory” in Irvington, NY, the Renew team is creating a reverse supply chain, from material acquisition and design, to remanufacture and resale. In so doing, EILEEN FISHER is becoming a recycler of its own products, meanwhile gaining increased control and diversification in its supply chain. While such radical transformation is not easy for a traditional linear business model, Amy Hall, Vice President of Social Consciousness for EILEEN FISHER, attests, “The hardest part is taking the first step and not having all the answers.”

There is no question. Innovations like Renew, PureFill, and those that may result from the ACC’s plastics commitment are required to achieve the SDG’s, to bring about carbon drawdown and to improve the state of our world for generations to come. The days of incremental efficiencies are over. It’s time to think radically, circularly about how we conduct business, and as demonstrated at this year’s summit, that transformation is rapidly gaining momentum.