A circular economy promotes sustainability and equity. Did you know it can also polish your brand’s reputation and drive profits? Find out how!
As the current linear economy strains Earth's resources with its cycle of produce, use, and discard, newer alternatives loom on the horizon that can significantly impact global sustainability.
A circular economy that prefers to reduce consumption, reuse components, and recycle materials, stands poised to supplant the linear model as we move further into the 21st century. Understanding how a circular economy benefits the environment, society, and your company is crucial if you want to stay ahead of the competition.
Experts have thoroughly documented the benefits of a circular economic system. The lower carbon emissions and resource consumption are a boon for sustainability initiatives, especially in underprivileged industrial areas. Furthermore, circular production models increase the demand for jobs, stimulating economic growth in these exact locations.
Finally, besides its implications for social and environmental justice, a circular economy can benefit your business in 3 fundamental ways.
A Circular Economy is Sustainable And Efficient
The allure of a circular economy rests mainly in how it improves the security and stability of supply chains. As a proactive member of the economy, your business will use fewer virgin resources in production. Instead, a circular economy's recycle, repair, and refurbish mentality will present new, more eco-friendly ways to source materials.
Furthermore, the overall transportation costs of materials will go down, primarily if your company actively collects used products back from its customers. Finally, the more diversified your sourcing is, the less susceptible your supply chain to natural and geopolitical disruptions.
As part of a circular economy, your business will enjoy the benefits of further digitization. Going paper-free will obviate the need for on-site data storage. Moreover, you will require fewer staff members to arrive in person. These factors will reduce your local carbon footprint and space requirements, possibly saving you money. Finally, most of your employees will have little to no commute, increasing productivity.
Sustainability And Equity Cultivate Loyalty
Modern consumers are changing their expectations and needs. Sustainability and equity are on their mind, and many people only want to work with companies that share their eagerness to engage in ethical, eco-friendly activities.
Moreover, businesses with a proven track record of innovation are particularly attractive to the socially and environmentally conscious marketplace. By positioning your business in a circular economic model, you will build its reputation and authority within your industry and satisfy the changing requirements of consumers.
Consumer loyalty is the hallmark of a thriving business. A circular economy promises to deepen your relationship with current customers by increasing the value you provide to them. For example, long-term maintenance plans or high-end leasing products will increase the number of touch-points and offer more opportunities to engage with your existing clients. Furthermore, longer-lasting products will keep consumers in your ecosystem for longer. Familiarity breeds confidence, and a circular economy will deepen the relationship between your business and its customers.
Finally, employees are like consumers in several ways. Most importantly, they want to share values with their employer. As part of a circular economy that focuses on sustainability and equity, your employees will become more engaged in their work through shared purpose. As a result, your company will cultivate its human capital over the long term, which will, in turn, increase efficiency and productivity.
A circular economy's recycle, repair, and refurbish mentality will present new, more eco-friendly ways to source materials.
A Circular Economy Drives Profits
An essential part of any for-profit business is the bottom line. Although the primary goal of a circular economy is sustainability, it nevertheless presents several opportunities for profit that savvy businesses can explore. Companies taking an active role in the circular economic model can expect to deliver their investors a higher return at lower risk.
As your business begins to source from recycled materials or repaired components, its expenditures will decrease. It will no longer be as reliant upon materials pulled from the Earth or components built from scratch. Instead, you will work with products that are already partially built but in need of repair or retrofit. In most industries, it is much less expensive to repair and retrofit than to produce every unit de novo.
Different revenue streams will open depending on where your company fits in the supply chain of goods and services. For example, as an end-user-facing business, your position would allow you to directly retrieve used or spent products from the customer. Your company could save by performing repairs or refurbishing in-house, depending on its size. You could also sell parts to businesses specializing in those activities for a profit. Regardless of where a company sits, a circular economy offers cross-industry partnerships to any business willing to increase the lifespan of raw materials, whether that's as part of a component or as a final product.
Switching to a circular economic model will help your business reach and exceed its sustainability goals. It will lower resource consumption, curtail waste production, and increase efficiency across the board.
Companies that enter the circular economy early will cement their position as innovators in ethical and eco-conscious production. This reputation will have tremendous effects on brand loyalty, both within the company and without.
A circular economy presents novel avenues of profit, especially to early adopters. Whether they are heading towards the customer or back towards production, products and components will change hands for modification, repair, or retrofitting. Every stage of a product's life is an opportunity for savings or profit for participating businesses.