Toward a never-ending circle: The circular economy model

Toward a never-ending circle: The circular economy model

I recently read a report sponsored by the Ellen MacArthur Foundation that describes a new sustainable economic model called the “Circular Economy.” It’s defined as “an industrial economy that is restorative by intention; aims to rely on renewable energy; minimizes, tracks, and hopefully eliminates the use of toxic chemicals; and eradicates waste through careful design.”

In short, this economic premise calls for companies to 1) rethink design and 2) find a way to reuse or recycle products at end of life.

As we discussed this idea in our office, we identified an industry that might have a particularly tough time with this sort of business model: the electronics/technology industry. Tech companies must constantly create new products to keep up with their competitors. Success is grounded in obsolescence – introducing replacement technologies and encouraging people to upgrade to the newest models. So the industry has its work cut out for it to adapt to a circular economy.

But they also have a golden opportunity in that they can reclaim parts for refurbishing in a way that other industries cannot, and some are beginning to move in that direction.

For example, Dell started a partnership with Goodwill Industries called Dell Reconnect where you can donate any brand’s computer equipment (in any condition) to Goodwill, and Dell will make sure it’s refurbished or recycled responsibly. HP also has a product return and recycling program, including a retail collection partnership with Staples, which, as it cites in its 2013 Living Progress Report, has recovered 3.36 billion pounds of computer hardware and supplies since 1987.

So both companies are, in a way, supporting a circular economy model by refurbishing old equipment, rather than using new resources. And we believe companies that take steps like this will gain favor in consumers’ eyes.

Our latest Eco Pulse study revealed that half of the American population said a company’s environmental reputation somewhat or very much impacts their purchase decisions. The survey asked, “Please choose the three most important things (if any) that companies should be doing that might positively impact your purchase decisions.” We found that recycling and making recyclable products were among the top three responses.

Overall, Americans want companies to limit the amount of waste they produce, be responsible environmental stewards and look closely at what they are putting into their products:

  • 45% (net) selected answer choices centered around waste reduction: recycle, support a recycling incentive program, manufacture with zero waste to landfill, make recyclable products and make product packaging recyclable or biodegradable.
  • 36% (net) chose answers related to environmental or natural resource protection: create no chemical waste or toxic emissions, protect natural resources and habitats, reduce greenhouse gas emissions, maintain high corporate environmental responsibility standards and replace natural resources used in manufacturing.
  • 35% (net) selected an answer choice about product content: remove chemicals of concern, make products with recycled content, make all-natural products and replace synthetic ingredients with biobased ingredients.

These findings show that a growing number of consumers would likely be in favor of companies aligning their business models with the circular economy. There is a lot of talk in the sustainability community about the sharing economy and collaborative consumption, but in an industry where companies literally can’t survive without creating and selling more products, the circular economy approach seems to be the next best way to be both responsible and profitable.

If you’ve had success in implementing steps to support a circular economy at your business, please share in the comments below!


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Posted on

August 13, 2014

About the Author

Martha Wampler Behm

Martha is a former contributor to Shelton Insights.

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