The circular economy: A framework for doing business in the 21st century

Features - Circular Economy Perspectives Series

The circular economy decouples economic growth from resource constraints.

August 31, 2016
Jennifer Gerholdt
© Mario Lopes | Dreamstime.com

The linear take-make-dispose economy—highly successful in delivering economic development throughout the 20th century—is no longer viable for advancing progress in the 21st century.

Our current systems of commerce and production largely follow the linear model, in which very little attention is paid to how a product—and its components—will be used and reused. As a result, most resources are used merely once or for a single purpose and then discarded as waste.

But a new model is gaining traction. Companies are embracing the circular economy as an alternative that decouples economic growth from resource constraints, all while driving performance, competitiveness and innovation and stimulating economic growth and development. Simply put, in the circular economy, waste does not exist. It is a restorative or regenerative economic model in which resources are cycled back into supply chains.

“At its core, the circular economy is an economic innovation opportunity with sustainability co-benefits.” – Jennifer Gerholdt, U.S. Chamber of Commerce Foundation

This concept of eradicating waste is not new but is being revitalized by global megatrends, including rapid population growth, resource constraints, climate change, urbanization, price volatility and uncertain commodity markets and shifting consumer preferences and attitudes.

At its core, the circular economy is an economic innovation opportunity with sustainability co-benefits. It is an opportunity where we are rethinking and redesigning the business models and material choices we make so products and materials can be upgraded, refurbished, kept in production longer and redesigned so they can be produced and used in new products, services and revenue models.

The business case for the circular economy is clear and compelling. The U.S. Chamber of Commerce Foundation and Trucost report “Trash to Treasure: Changing Waste Streams to Profit Streams,” available at http://bit.ly/2aXH9kT, found that the 5,589 largest publicly traded companies in the U.S. sent 342 million metric tons of waste to landfills and incinerators in 2014. For every $1 million in revenue, companies on average generate 7.81 metric tons of waste. If those companies reduced their paper waste by just 1 percent, they would collectively save nearly $1 billion only in resource costs. Adopting circular, closed-loop methods is the most comprehensive and profitable way to eliminate waste and recapture its value.

At the U.S. Chamber of Commerce Foundation Corporate Citizenship Center (CCC), we work with the private sector to help make the world a better place. Our nonprofit provides a powerful platform for learning, networking, sharing and capacity building to accelerate business-driven innovation to solve global challenges. A few of the key initiatives illustrating how we are working with our corporate partners to transition to the circular economy follow.

Oct. 20 and 21 we are hosting our annual business delegation tour (http://bit.ly/2aH8QSF) to inspire new ideas and actions for how companies can eliminate waste by design and intention. In partnership with Arizona State University, the city of Phoenix and the Greater Phoenix Chamber of Commerce, this event will bring together business leaders and other industry experts to explore practical and profitable opportunities for making the leap from linear to circular models and practices and how to apply those practices to achieve a world—and a future—without waste.

We are teaming up with The Sustainability Consortium (www.sustainabilityconsortium.org), a global organization dedicated to improving the sustainability of consumer products, to build practical circular economy tools for companies. The ultimate goal of the toolkit is to take the circular economy out of the theoretical and into the practical. It will address how to develop and communicate circular practices, provide actionable metrics to access progress along the circular path and illustrate specific tools companies have used to develop their own circular models.

In our case study publication, “Achieving a Circular Economy: How the Private Sector is Reimagining the Future of Business,” available at http://bit.ly/1GVNF8Y, we present best practices and approaches for how companies are leveraging the circular economy, and doing so profitably. Examples featured in the report include:

  • Dell, which is enabling a waste-free tech industry by creating a closed-loop recycled plastics supply chain to recycle computers back into new computers;
  • Philips, which is applying circular thinking to advance its business models, including providing lighting as a service and refurbishing health care imaging systems; and
  • Tetra Pak, which is leveraging circular economy principles to guide best practices around renewable sourcing and use of raw materials at the beginning of a package’s life cycle.

For the past two years, CCC has organized a circular economy summit (http://bit.ly/2bsxS4J), bringing together hundreds of private and public sector leaders to explore how the circular economy approach can translate into positive environmental impacts, real cost savings and greater profits. Attendees explored how to make the business case for the circular economy, examined new circular business models, learned how disruptive innovation technologies are being applied in the circular economy, discussed how circular thinking can achieve the sustainable development goals (SDGs) and much more.

Finally, we are working with a number of our partners to launch pilot projects to tackle the recycling and recovery gap in the U.S. and to accelerate infrastructure development. Pilot projects can provide a blueprint for how companies can rethink and redesign products, components and materials to keep them flowing in continuous, profitable and sustainable loops.

Through CCC’s research, tours, case study reports, conferences and pilot programs, we are demonstrating how the circular economy offers a compelling and coherent framework for doing business in the 21st century.

Jennifer Gerholdt is senior director, environment program, U.S. Chamber of Commerce Foundation, Washington. She can be contacted at jgerholdt@uschamber.com.