- Shifting the economy towards circular requires major changes to business, supply chains and consumer behaviour.
- The Forum asked top executives about key lessons learned in the circular transition.
- The Forum is hosting its annual Sustainable Development Impact Summit from 20-23 September.
We take resources from the earth. We make things out of them for use. And then, we throw away whatever is left. The cost is borne out not only in landfills, but also through emissions, as our consumption fuels the climate emergency.
Yet, companies have been optimizing for the linear economy for over 200 years. Shifting the economy toward circularity requires major changes to business and operating models, supply chains, and B2B and B2C consumer behaviour. This level of disruption to business as usual often harms those most vulnerable, and circular solutions must contribute to a just, inclusive future.
More and more companies are taking on this complex challenge. As part of the Sustainable Development Impact Summit 2021, we asked top executives prioritizing the circular economy from four sectors about their lessons learned. Here’s their advice on where to start, what to avoid and how to build momentum to jumpstart a company’s circular transition.
What is the World Economic Forum’s Sustainable Development Impact summit?
It’s an annual meeting featuring top examples of public-private cooperation and Fourth Industrial Revolution technologies being used to develop the sustainable development agenda.
It runs alongside the United Nations General Assembly, which this year features a one-day climate summit. This is timely given rising public fears – and citizen action – over weather conditions, pollution, ocean health and dwindling wildlife. It also reflects the understanding of the growing business case for action.
The UN’s Strategic Development Goals and the Paris Agreement provide the architecture for resolving many of these challenges. But to achieve this, we need to change the patterns of production, operation and consumption.
The World Economic Forum’s work is key, with the summit offering the opportunity to debate, discuss and engage on these issues at a global policy level.
Lesson #1: Circularity is a business decision – treat it as such.
Tanah Sullivan, Group Head of Sustainability, GoTo
Adopt a mindset that circular is a business decision and should be treated by the company as such. At GoTo, this started with socialising a common vision and understanding of what circular meant in our context and what “best practice” actually looked like for our industry and region.
Before, we were struggling to translate our “best-in-class” roadmap (based on insights and standards from other companies) into a tangible and operational transition plan for our business units. Now, we see this common understanding and agenda leading to more engagement from the parts of the company driving business growth. Although still a work in progress, this is how we're approaching the operationalisation of our Zero Waste by 2030 commitment, and integrating it into every business unit's operations and objectives.
For more mature companies, the mindset shift means making investments in areas where there may not be direct or imminent business value or impact. For those at the beginning of this journey, it can start with small steps towards replacing existing materials (or, in our case, packaging) with more sustainable and economically viable alternatives. These small steps can have huge short-term impacts and set the path toward more systemic changes in the future.
What is the World Economic Forum doing about the circular economy?
The World Economic Forum has created a series of initiatives to promote circularity.
1. Scale360° Playbook was designed to build lasting ecosystems for the circular economy and help solutions scale.
Its unique hub-based approach - launched this September - is designed to prioritize circular innovation while fostering communities that allow innovators from around the world to share ideas and solutions. Emerging innovators from around the world can connect and work together ideas and solutions through the UpLink, the Forum's open innovation platform.
Discover how the Scale360° Playbook can drive circular innovation in your community.
2. A new Circular Cars Initiative (CCI) embodies an ambition for a more circular automotive industry. It represents a coalition of more than 60 automakers, suppliers, research institutions, NGOs and international organizations committed to realizing this near-term ambition.
CCI has recently released a new series of circularity “roadmaps”, developed in collaboration with the World Economic Forum, the World Business Council for Sustainable Development (WBCSD), McKinsey & Co. and Accenture Strategy. These reports explain the specifics of this new circular transition.
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3. The World Economic Forum’s Accelerating Digital Traceability for Sustainable Production initiative brings together manufacturers, suppliers, consumers and regulators to jointly establish solutions and provide a supporting ecosystem to increase supply chain visibility and accelerate sustainability and circularity across manufacturing and production sectors.
Connect to Learn More →
Lesson #2: Embed circularity across all parts of the company.
Robert Metzke, Head of Sustainability, Royal Philips
At Philips, we started by developing a clear picture of our global end-to-end impact, including supply, production and use of our material flows. We consistently embed a circularity mindset and principles across all parts of the company (business, markets, functions), starting with business strategy, innovation process, capital allocation, HR management and rewards, capability-building programs, site management, brand positioning, marketing, etc. Our sustainability ambitions and commitments are an integral part of our company’s purpose and culture.
Embedding circularity in our core strategy and all businesses, markets and functions helped us to connect many initially independent initiatives, scale best practices and reap the economic benefits of circularity from pilots to impact. We moved from a sustainability strategy driven by a specific function within the company, to company-driven ambition and commitments. This approach fostered new solutions and ideas from many parts of the company/markets, as well as a broader sharing of best practices. Today, we have a clear roadmap of programs and structural initiatives across the company at the regional and global levels, that will allow us to deliver on ambitious 2025 targets and team up with other companies, NGOs and governments on platforms like PACE.
Lesson #3: Stay committed to the course.
Ibrahim Al-Zu’bi, Chief Sustainability Officer, Majid Al Futtaim-Holding
When embarking on a circular business model, it is important to look at your pillars and targets day by day. Success isn’t measured overnight, and each milestone resets with a new target. Staying committed to the course is what ultimately changes behaviours and mindsets and garners impactful results.
At Majid Al Futtaim, a circular business model is crucial to reaching our commitment to Net Positive in carbon and water by 2040. Five key pillars underpin the strategy:
1. understanding our organisational resource flows to reduce waste
2. implementing internal systems to maximise the value of resources
3. supporting our supply chain to progress towards circularity
4. engaging with our customers to help them make circular choices
5. supporting research and innovation to accelerate the global transition to a circular economy
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Despite what was a challenging year, we are on track to meet the milestones in our roadmap and continue to forge partnerships to maximise the value of our waste. For example, since the start of 2020, Carrefour Kenya has been working with a local partner to recycle paper, plastic, metal and organic waste. As a result, 92% of their operational waste is now being recycled and over the year has offset 581,221 kg of CO₂ emissions, equivalent to saving a forest area the size of 810 football pitches. Carrefour Georgia has taken on a unique partnership with the Caucasus Bears farm to provide their bears with older fruit and vegetables which can no longer be sold in store.
We have also undertaken a strategic review of the extent to which circular economy principles are embedded into our goods’ supply chain and started to measure our sources of waste to identify opportunities for improved measurement and reduced waste generation. Based on these, we will provide training and opportunities for closing the loop throughout our business. We hope to be able to systematically scale up this work.
Lesson #4: Get the entire company behind circularity in both actions and mindset.
Dr. Christian Haessler, Head, Global Circular Economy Program, Covestro Germany AG
The one most important thing is to get the whole company behind circular in both ACTIONS and MINDSET. Clear objectives and action plans are important, along with clear commitment from top management and guidance for all employees on how to participate and prioritise in such a transformation.
The transformation to a circular economy is comparable to the pathway to climate neutrality. It spans decades, so there is a "before" the transformation, but not yet an "after". To start the transformation, it will help to define circular objectives for the company overall as well as for all areas of the company, so all areas of the company can contribute. Attention has to be paid to sustainability and circular economy KPI setting, supplementing financial KPIs and balancing both. Messaging has to be consistent and repeated by line management. Information and Q&A sessions have to be abundantly offered as well as HR-driven change programs.
A version of this article was originally published on Forbes.