The Future of Business is Circular

Circularity in business continues to assume greater importance, especially as a key driver for sustainability. Factors such as easier dissemination of industrial best practices, employee and consumer awareness, policy and the larger evidence of circularity being a sound measure to prevent supply chain shocks, are accelerating the shift towards circular business. Moreover, embedding circularity at all stages of production and consumption allows businesses to extract additional value from their resources, helping make a bigger business case for the shift to a circular business model.

The Beginning of a Circle

One of the primary methods of adopting circularity is to design products and processes that allow businesses to recycle their inputs and components. It might involve short-term expenses, like the technology and human resources required to process used materials, and the cost of acquiring used products. However, over the long term, it reduces input costs and creates a more streamlined and stable supply chain. Circular business models also drive innovation. For instance, sportswear giant Adidas now uses textile threads made from oceanic plastic waste to manufacture shoes and apparel. Such innovations provide a template for the kind of collaborative efforts that could help harmonize growth and sustainability.

Apart from reducing input costs, circularity yields several other benefits too. It reduces the energy consumption and carbon footprint of companies. Adopting circularity can also have positive knock-on effects on the productivity of an entire value chain. AB InBev, for example, uses 35 percent recycled content in glass bottles and 65 percent recycled content in cans, while also encouraging suppliers and partners to optimize their use of natural resources. The company sets an example with its efficient use of water, a key component in the beer-making process. Every AB InBev plant comes equipped with its own water treatment plant, which lets the company treat effluents and reuse water.

Square Pegs in Round Holes

Despite the seemingly limitless potential, the road to circularity is also fraught with challenges, both logistical and regulatory. According to the Circularity Gap Report 2021, less than 8.6% of the 100 billion tons of raw material used across the world is cycled back into the economy. Industries have dedicated significant resources to trying to find the right set of incentives that lets producers and consumers become part of the circular value chain. Consumer awareness is the first step, which continues to spread rapidly, thanks to sustainability platforms and information campaigns. It must now be complemented by proactive measures - both private and public - that facilitate a circular way of life. A fine example of how awareness and the right infrastructure can amplify sustainability efforts is Norway, a country which recycles 97% of all plastic bottles. An environmentally conscious population is mobilized through a large retail network for bottle collection, including a government-funded scheme.

Risk is inevitable, but Success even more

While companies like AB InBev lead a strong shift to a circular business model, evolving market and supply chain dynamics will further strengthen the business case for circularity. Risks and failures are also inevitable, and almost necessary to drive and reward innovation. AB InBev's recently launched six-packs are a testament to this. Made of 100% residual barley straw, these six packs use 1/3rd of water consumed by regular packaging made of virgin paper and help reduce approx. 1400 Kg of CO2 emissions per ton of packaging produced. All this while empowering farmers to increase disposable incomes.

 

The shift can be made more rewarding through such bold corporate initiatives that fully embrace the ethos of circularity, and progressive policy support that guides consumers and businesses towards sustainability.