Your expert for questions
Director, Experience Consulting at PwC Germany
Tel: +49 30 2636-4479
If you knew that your business was forfeiting profits every day, wouldn't you try to do something about it? Every time one of your products is thrown away, valuable resources are wasted, too. Those who are CE savvy can recapture some of these resources. Not just the business, but the organisation as a whole can profit from a circular business model.
The linear economic model, which still dominates the industry today, is designed to use resources once and then discard them. However, in recent years there has been a growing recognition that the global demand for resources exceeds what the Earth itself can supply. The concept of sustainability and the principle of circularity will become increasingly relevant going forward. This trend is being fuelled by regulatory developments.
"The German Packaging Act offers companies the opportunity to tackle the subject of the circular economy by focusing on sustainable packaging and conserving resources. The law creates incentives for ecological design and with it economic value as well."
Various interest groups are demanding that companies consider alternative approaches to climate protection and sustainability. Investors, consumers and lawmakers are the primary drivers of this trend:
In a circular economy, resources are used efficiently and product benefits are maximised. The aim of circularity is to keep everything in a closed-loop cycle, using and reusing raw materials in a way that avoids as much waste and emissions as possible, and to make maximum use of products through sharing models or "upcycling".
Many industries and companies have already recognised the opportunities that the circular economy offers for their own business. They are investing in sustainable development, for example, by replacing plastic packaging with paper or by recycling plastics. This allows them to save material costs and make efficiency gains, while at the same time creating new value add and opportunities for growth.
Businesses across all sectors are approaching the way in which they procure, produce, use, dispose of or recycle materials in a variety of different ways. Those companies willing to re-evaluate their supply chains and re-assess where waste is most prevalent in their operations will discover innovative new CE strategies that will give them competitive advantages and make them a more resilient enterprise.
The benefits of the circular economy are brought most to bear when companies develop a holistic concept and integrate it into their corporate strategy. The big challenge for most companies lies in the fact that transitioning to a circular economy often means transforming their existing business model. The transition to a circular business model generally begins with developing a robust and comprehensive strategy.
This is based on three principles:
1. Optimising the use of renewable resources: renewable resources are prioritized in procurement and production.
2. Maximising product usage: changing the business models to offer products as a service, thus extending their life cycle.
3. Leveraging by-products and waste: reusing, reprocessing or recycling materials allows value to be recaptured that would otherwise be lost.
Our sustainability experts have devised a method to help companies develop and implement CE solutions.
This model is founded on four pillars:
Reduce resource dependency and increase system stability: use renewable energy to optimise each "cycle".
Turn consumers into users: shift responsibility or even ownership to the manufacturer by creating incentives to retain product value.
Manage waste: consider potential new sources of income and profit from them.
Differentiate between consumables and durable goods: consumables are predominantly biodegradable and can be returned to the biosphere; durable goods are designed for extended and / or multiple life cycles.
10 strategies that companies should pursue if they want to incorporate these principles into their business model and processes:
Our experts will help you on your foray into the circular economy – from developing a strategy to transforming the business model to reporting.
The transition to circular business processes is a powerful driver of innovation, creativity, commitment and enthusiasm. But the sheer number of changes it brings often prevents businesses and organisations from taking circular action on their own, simply because they are also bound by the rules of their existing production chains.
Our CE experts will help you tackle the issue holistically, without losing sight of regulations, international climate accords, new customer requirements and market initiatives in the circular economy.
Companies in the energy, utilities and resources sectors have the potential to play a huge role in the development of a circular economy.