What are the environmental and business benefits of changing to a more circular business model?
Opublikowano 15 czerwca 2023
Nowadays, when more and more people pay attention to environmental protection, it becomes more and more important how we do business. The traditional linear model of production, sale and disposal is starting to lose out to a more sustainable circular business model.
The circular business model is an approach that assumes minimizing the amount of waste and limiting the impact of business on the natural environment. In this model, products and materials are designed so that after use, they can be easily recycled and reused in the production of new products or in other production processes.
One example of a circular business is the company "The Renewal Workshop", which deals with the recovery and regeneration of clothing. The company works with manufacturers, retail clothing brands and stores to collect damaged garments, then recycles, remanufactures and repairs them to bring them back to pristine condition.
One example is IKEA, which has been operating within the circular business model for many years. This company offers its customers the opportunity to return used furniture, which is then regenerated and sold again as a second-hand product. IKEA also uses recycled materials in its products and works to minimize waste.
Another example is Apple, which has been focusing on a sustainable business model for years. Apple has developed a "Better Than New" program that allows customers to return a used device, which will then be refurbished and sold as a refurbished product. The company also uses recycled materials in its products and works to reduce greenhouse gas emissions in the production process.
Another interesting example is the Patagonia company, which produces outdoor clothing and accessories. This company operates under a circular business model, by producing clothing from recycled materials and offering repair and regeneration services. In addition, Patagonia is involved in various environmental initiatives, such as the fight against global warming and the protection of wild rivers.
Another example is Unilever, which produces cosmetics and cleaning products. Unilever operates as part of a circular business model by minimizing the amount of waste in the production process and using recycled materials in its packaging. In addition, this company works to protect tropical forests by reducing tree felling and promoting sustainable forest management.
It is also worth mentioning the H&M company, which has been operating within the circular business model for many years. This company offers its customers the opportunity to return used clothes, which are then regenerated and sold as a second-hand product. In addition, H&M uses recycled materials in its products and works to minimize waste.
There are many companies from different industries that are doing the same.
However, the change to a circular business model also brings many benefits for the business itself. Thanks to the use of a circular approach, companies can save on the cost of waste processing. The image of the company is also improving, which attracts customers and investors who are increasingly looking for companies that care about the environment.
It is worth remembering that the change to a circular business model is not an easy process. It requires a change in the way of thinking and doing business, as well as investment in new technologies and employee training. However, with the right strategy and planning, this change can bring many benefits and become a key element of business success.
The circular business model is an approach in which the company tries to minimize waste and use resources in a sustainable way. However, like any business model, this one also has its downsides. Here are some of them:
Change of thinking required: The implementation of the circular business model requires a change of thinking and approach to business in the organization. It is necessary to understand that profit does not have to be achieved at the expense of the environment, and innovation and creativity in resource management are key to success.
High investment costs: The implementation of a circular business model may involve high investment costs. This requires investment in new technologies and processes that will minimize waste and use resources efficiently.
Supply Chain Coordination Challenges: In order to successfully implement a circular business model, supply chain coordination is essential. This requires collaboration with suppliers, customers and partners, which can be challenging.
Issues related to the quality and quantity of secondary raw materials: The availability and quality of secondary raw materials can be a challenge for companies that want to operate within a circular business model. It is necessary to ensure that raw products meet the relevant quality requirements and are available in sufficient quantity.
Competitiveness: Enterprises operating within the circular business model may encounter difficulties related to competitiveness on the market. It is imperative that this model is profitable and distinguishable from other companies, which can be a challenge in today's business world.
There are also a number of companies that, despite good intentions, have not managed or have had problems with implementing such a business model along the way.
Here again we can mention the H&M company.
H&M: In 2018, the company announced that it plans to move to a more sustainable business model based on industrial clothing recycling. Unfortunately, in 2020, the company was accused of incinerating 12 tons of unused and new clothing worth about $4 billion. Such actions not only counteract the principles of the circular business model, but also affect the negative image of the company.
there are also more examples:
Nokia: In the 1990s and 2000s, Nokia was a leading manufacturer of mobile phones. Unfortunately, the company neglected innovations and did not adapt to the changing market trends. This allowed for the emergence of competitors such as Apple and Samsung, which offered more modern products. Nokia suffered drastic financial consequences, and on September 3, 2013, the company was sold to Microsoft.
Kodak: Kodak, which for a long time was one of the largest producers of film and cameras in the world, has not switched to a circular business model. The company neglected innovation, did not adapt to the changing digital technology and did not use its potential in this area. In 2012, the company declared bankruptcy.
However, despite the emerging difficulties in implementing such innovations in recent years, many countries have committed to becoming carbon neutral by 2050, and some are already reaching their renewables target. More and more companies are introducing innovative technologies that enable the reduction of emissions in the production process, and are looking for alternative, more ecological solutions.
Thanks to this, new markets are developing, such as the market of electric cars or solar energy. These trends are good for both the environment and the economy as they create new jobs and contribute to economic growth.
Climate change is a problem that requires immediate action, but there are positive trends and steps being taken around the world that offer hope for the future. We encourage you to continue to develop these trends and support initiatives such as the circular model that contribute to reducing our environmental impact.