Wisconsin-based Adam Muellerweiss, Chief Sustainability Officer of battery technologies company Clarios, didn’t hold back when he took to the stage in London for a keynote speech at Sustainability Live in September 2022. “If we continue living the way we do in the UK, we will need the natural resources of 2.5 planet Earths,” he said. “In the US, five planets are required.” Overall, at current resource consumption levels, the World Economic Forum (WEF) calculates three Earths will be needed by 2050.
After pausing to allow the physical and virtual audience to absorb those alarming projections, he continued: “In business terms, we’ve over budget, or over-leveraged. It’s unsustainable.” His point was simple: sustainability is a business challenge. Moreover, it’s business imperative for the future of humanity.
However, while the transition to renewable energy is essential to tackling climate change, 45 percent of global greenhouse gas emissions come from how we make and use things, points out the Ellen MacArthur Foundation.
“We must address our addiction to a ‘take, make, waste’ linear approach to resource use,” said Muellerweiss. “A paradigm shift along with new strategies, approaches, and best practices is required when your supply chain starts and ends at the same point. A circular economy is a critical part of the solution.”
The European Parliament defines a circular economy as “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.” Put another way, it is an economy designed to eliminate waste and pollution, circulate products and materials, and regenerate nature to reduce emissions.
Two of the Art of Smart’s four pillars for smarter decision-making are boldness and innovation, and leaders that explore ways to achieve this circularity are most likely to triumph.
There is much work to do, and time is running out. Worryingly, the most recent Circularly Gap Report, published in 2021, revealed that the world had an 8.6 percent circularly—a drop from 9.1 percent in 2018. For the planet to remain “liveable and thriving,” global circularity must double to 17 percent.
In 2024, it will mark three decades since John Elkington, a world authority on corporate responsibility and sustainable development, coined the terms “triple bottom line” and the “3 Ps”—people, planet, and profit. Many organizations are turning to his framework as the climate crisis intensifies. He is “excited that we’re starting to speak the language of sustainability—of the circular economy, of impact-positive and negative.”
But with political leaders worldwide seemingly reluctant to show boldness in this area, the onus has shifted. “In the vacuum of effective politicians, people are turning to businesses for leadership, so business leaders must accept that responsibility,” Elkington continues.
He points out that circular economy initiatives can be traced back almost a century. For example, Danish pharmaceutical company Novo Nordisk, founded in 1923, was involved in a group of companies that would optimize the flow of resources. “Businesses felt they had to be involved, so suddenly there was a groundswell.” Perhaps that pressure to act and collaborate is required almost 100 years later.
Encouragingly, the list of circular economies in practice is growing continuously. Clarios, for instance, designs, manufactures, transports, recycles and recovers vehicle batteries using a closed-looped system. “Our vision is a world where 100 percent of vehicle batteries are responsibly recycled and reused,” said Muellerweiss.
More recently, in May 2022, Germany-headquartered manufacturer Bosch committed almost US$500 million to drive innovation in producing green hydrogen and recycling components to promote a circular economy.
In the same month, Grupo Piñero, the Spanish company that owns Bahia Principe Hotels and Resorts, launched a circular economy strategic plan, investing around US1.5 million to achieve a 50 percent reduction in waste and zero landfill by 2050.
And three months earlier, the European Commission and the African Circular Economy Alliance met to discuss how to transform traditional production and consumption models, which are unsustainable. Josefa Sacko, the Commissioner for Rural Economy and Agriculture at the Africa Union, captured the mood by saying a shift to a cross-continent circular economy will not happen without dynamic and proactive regional collaboration.
But where should business leaders keen to improve their circularity begin? As a first step, Ben Kellard, Director of Business Strategy at Cambridge Institute for Sustainability Leadership, advises mapping the business value chains. Then, establish a cross-organization committee with representatives, and circular economy champions, from each department. These people will best understand where there is waste and what might be possible.
“You need to work out where the positive and negative impacts are, but—as Voltaire said—‘Don’t let the perfect be the enemy of the good,’” says Kellard. Once you have this greater understanding of where the most significant opportunities to drive circularity are possible, test the impacts with external stakeholders. And, possibly most importantly, engage with the supply chain. “This is often where the big wins are, in terms of the sweet spot of differentiating the business, opening up new markets, and having a positive impact,” adds Kellard.
Thomas Udesen, Chief Procurement Officer at Bayer, a German multinational pharmaceutical and biotechnology company, argues that those at the top of the supply chain have a duty to educate lower-tier partners about sustainability and circularly.
“Given that a high majority of the global economy relies on small-and-medium-sized enterprises, it makes it vital to ensure that they have mature practices,” says the Dane, who co-founded the Sustainable Procurement Pledge (SPP).
The SPP is an international, bottom-up, and non-profit organization for procurement professionals, academics, and practitioners, driving awareness and knowledge on responsible sourcing practices and empowering people in procurement. “We launched the SPP in late 2019 with a dream to ensure all the one million procurement practitioners on the planet, across different value chains, have access to relevant knowledge, so they do the right thing,” says Udesen. “There is an overwhelming challenge, but now we have 142 countries and over 8,500 ambassadors.”
A collaborative—rather than competitive—approach is essential, he stresses. “At COP26, we saw many big players come together to create more circularity in our systems, and if all industries start to map out their value chains, we can be smarter with our resources.”
Udesen is optimistic about the future and encourages business leaders across all industries to explore how their organizations can improve the globe’s circularity. “The world is waking up to the fact that we are moving from abundance to scarcity,” he concludes. “Wasteful past practices a decade ago don’t apply in a world of scarcity. So if we talk together, we’ll be okay.”