Circular Economy – Good for Planet and Good for Business

Circular Economy - Good for Planet and Good for Business

Circular Economy. A set of fancy words. Who knows what it means?

The term ‘Circular Economy’ is derived from Economics, which is a study of value, the use of resources, and distribution of goods and services. It is a concept we are familiar with. However, the part of the economy we are familiar with is the linear economy. Resources are extracted, goods are created, goods are distributed, used, and thrown away. The cycle repeats. Endlessly.

Or, as we are beginning to find out the hard way, the cycle repeats till we run out of resources.

But what if there were another way of doing things? One where resources could be kept in the ‘use’ loop over and over, thus minimising the wastage that so often happens in our value chains? That is exactly what Circular Economy strives to achieve.

The Ellen MacArthur Foundation (EMF) has come up with its famous ‘Butterfly Diagram’, which outlines the flow of biological and technological resources in a circular economy. Increasing numbers of companies are heeding the call, changing their business models, and reaping the benefits of greater industry credibility, brand value, as well as higher revenues.

Who’s doing it? And does it even make business sense?

The idea of a Circular Economy has been around for quite some time, having its roots in the ‘Spaceship Earth’ and ‘Industrial Ecology’ ideas of the late 20th century. However, it truly gained popularity after EMFs 2012 report, ‘Towards the Circular Economy’. That being said, many international companies are already familiar with this concept, and have already shifted to a Circular model of business.

Interface Inc.: The US based tile flooring manufacturer started on its sustainability journey when sustainability was far from just a compliance point or reporting regulation. In 1994, it announced ‘Mission Zero’, with a goal to eliminate its environmental impact by 2020. In January 2019, they announced that Mission Zero was a success ahead of schedule, and that every flooring product that the company sold was carbon neutral across its full lifecycle.

A large part of this was due to a marked shift to a circular economy. The company:

Used Life Cycle Assessments to identify product hotspots
Partnered with suppliers to create new products from recycled materials
Came up with innovative solutions, such as piloting a project to power a facility using landfill gas
Moved to a circular business model, where offices could lease the flooring instead of purchasing it, hence incentivising Interface to manufacture longer lasting products

Over this time, the company’s share price steadily grew from US $6 in Oct 1994 to US $20.12 in Oct 2024, including multiple stock market cycles.

Much like how consumerism, planned obsolescence, and linear economy models came to define post-war global businesses, the circular economy is poised to be the cornerstone of the new age of green businesses. With the rise of new regulations such as CBAM and ESPR, companies that didn’t make the circular transition will soon be forced to reconsider their business case.

If that is you, it is not too late to start yet.

How do I start?

Transitioning to a circular economy requires a thorough understanding of the raw materials, logistics, and manufacturing processes of a company. But there is no reason to be intimidated. There are many softwares that leverage data and artificial intelligence to democratise the impact measurement, reporting, and creation process.

Bevolve is based in Auroville, a global township where research into sustainable living has been ongoing since the latter part of the 20th century. Being surrounded by the latest ideas on sustainable businesses, it is our mission to democratise sustainability for you.

With Bevolve impact platform, your company can: