Role of business leaders in achieving a circular economy

circularity recycling reusing in business

According to the UN, just 7.6 percent of used materials are cycled back into our economies after use. Our current linear economic model, which follows a make, take, and dispose approach, significantly impacts the planet and drives pollution, climate, and biodiversity issues. Adopting a circular economy is a key element of an effective business sustainability strategy, enabling us to address these issues by promoting the sustainable use of natural resources and minimising waste through smarter product design, recycling, reusing, refurbishing, and regenerating nature.

Research shows we are already using more than the available amount of Earth’s natural resources. If we continue at our current rate, we would need three planets by 2050. Businesses can be significant drivers of positive change and play an important role in helping us to make the world more circular. Leadership is vital to enable the transition towards a circular economy. Continue reading to learn why achieving a circular economy is important and how circularity opens up opportunities for business leaders. 

Why is achieving a circular economy important?

The circular economy is a vital instrument to fight the current triple planetary crises on biodiversity, pollution, and climate. Our current linear economic model involves creating and disposing of products which is no longer working. In the face of a climate crisis, we desperately need a model that identifies ways we can keep items in circulation for longer. Extending the lifespan of products greatly reduces our use of precious resources and creates more value for customers. 

Continuously creating new products, by contrast, further heat the warming climate. This economic model looks to minimise waste and encourage sustainable use of natural resources, which is what we need to do to protect the world and combat climate change. A circular economy drives us in closing the linear material cycles and allows us to address resource scarcity. 

The business opportunities of transitioning to a circular economy

There are an array of ways to start embedding circularity into a business model. Numerous frameworks exist to help businesses do exactly this. However, there are many drivers for doing so, particularly opportunities for businesses. Below are some of the opportunities circularity opens up for businesses. 

Increase market share and enter new markets

The need of maintaining original product functionality for a longer period of time is emphasised by circular business models. Refurbishment, reuse, and remanufacturing all extend a product’s life cycle and can offer a viable alternative to new products for consumers. This potentially expands existing customer relationships. It can lead to a greater range of new kinds of customers. 

For example, those who want to find circular services and products. Additionally, circular business models can expand markets by making room for innovation in a means whereby businesses meet customer demand. This can change how products are created and make customers feel more valued. Identifying the circular business model that best aligns with a company’s operations is essential for developing new, cross-sectoral partnership with suppliers and a better relationship with customers.

Future-proof the business and de-risk

It is always important to future-proof and de-risk your business. Implementing circular practices helps you do exactly that. For instance, reducing the need for and reliance on virgin resources and materials will decrease supplier dependency and limit the risk of volatile and rising prices for materials utilised in products. 

Shifting entirely to the use of renewable, refurbished, or recycled materials can help to future-proof your business. This is because you are prepared for future consumer demand for circular services and products. This will increase your chance of winning business, particularly as people shop more consciously for products and services that do not harm the planet. 

Cut costs

Moving your focus to reuse components, products, and materials via closed-loop programmes can help to enhance economic performance. Mapping out the current component and material flows in existing business models determines where there are opportunities for items to be refurbished and reused in cases where they could otherwise be wasted. This creates a benchmark for improvement whereby what has previously been deemed a cost driver and waste is now a valuable cost-saving resource. 

Spark innovation

Implementing circular business practices can also spark innovation, particularly in the development of sustainable products. Focusing on driving value through circular business models and determining potential solutions can trigger unique new ideas on how to address crucial market and societal demands. 

For instance, how to extend the lifespan of products and reduce waste. This can have an impact on creative opportunities and organisational energy for scaling up new circular solutions also. 

Attract new talent and retain staff

Businesses that show a dedication to sustainability will attract new talent and retain current team members. Just as environmentally friendly practices engage customers, many people are eager to work for businesses with purposes. They have strong values concerning climate action and want to work for organisations that feel the same way. 

Besides attracting new employees, businesses that prioritise sustainability may also retain staff. This is because focusing on sustainability can have a positive impact throughout the organisation. Beyond the planet, taking climate action in business also includes ensuring diversity and inclusion which can make people feel as though they belong and are valued. 

How can businesses support a circular economy?

Building a circular supply chain can help you make processes like waste management, procurement, and product design more productive and efficient. Below are some ways businesses can engage with and support a circular economy

Practice more closed-loop recycling

Closed-loop recycling is one kind of recycling that entails utilising materials that can be continually recycled. Some of these materials include steel, aluminium, and glass. The second kind of recycling known as ‘downcycling’ or open loop considers the fact that materials downgrade to lower quality with each recycling. 

Therefore, it involves either extending the lifespan of materials before recycling them or only recycling materials that will not deteriorate over time. Businesses such as Dell have begun establishing closed-loop supply chains to get more value out of the materials in their products. Plastics typically lose their value after each recycling. Therefore, businesses are unlikely to reuse them over some time. 

In addition with Dell’s business partners, they have created ways to prevent some of the plastics it uses from breaking down fully. Therefore, they can continue to recycle these materials. This move is saving the company money and reducing its carbon emissions by 11 percent compared to making the same products with brand-new plastics. Additionally, it appeals to more customers who wish to be eco-conscious and want to invest in high-quality products with greater lifespans.

Rent or lease products in addition to selling

Recycling will never be enough and some businesses are entirely dependent on end users recycling their unwanted goods. Therefore, some have turned to leasing or renting their products rather than selling them to consumers. This move means companies retain ownership of the goods throughout their life cycle because consumers have to return the product to the sellers. 

Renault’s electric cars are a good example of this in action. Rather than selling the batteries to customers, they lease the batteries. This essentially means when the batteries are no longer functioning, the manufacturer can re-engineer or recycle them so they can be used again in the future. It saves money, reduces waste, and attracts a brand-new segment of eco-conscious consumers.

Provide ways to widen the use of products and increase their lifespan

Rather than simply melting unwanted products, you should consider remanufacturing the goods to extend their lifespan. What this means is they can be reused for emerging or secondary markets with a less sophisticated infrastructure. Fonebank is a great example of this practice in action. 

They purchase old smartphones and refurbish them to sell them. This gives the older technology another life. Apple also sells refurbished goods for more affordable prices. Most businesses have been replacing and refurbishing unwanted product parts so they are new, continue to be useful, and perform better. Caterpillar, the U.S. machinery business, has been remanufacturing their equipment and machines since 1973, for instance. 

A large majority of the company’s costs surround materials so with that in mind, restoring old parts is a lot cheaper than creating new ones. The savings are passed on to their customers to make sure they send their used parts back to Caterpillar. This practice is beneficial for the planet. It is estimated that remanufacturing a cylinder head brings down greenhouse gases by 61 percent, and reduces 93 per cent of water and 86 percent of energy.


Transformation into a circular economy calls for new skills in leadership. A circular economy transition will provide us with the tools to fight worldwide challenges and the power to grow prosperity and create resilience. Moving towards a circular economy will have significant advantages for businesses. From enhancing the security of raw material supplies to triggering innovation, attracting the best talent, boosting sales, and increasing competitiveness. 
Our current economic model is not working; we need innovators to take the lead and increase global circularity. The climate and business case for a circular economy couldn’t be stronger and there is no better time to act. If you want to start implementing circular economy practices in your business, online sustainability Diploma includes a specific module on how to get started on your circularity journey.

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