Circularity innovation and scale – opportunities to accelerate sustainability progress
This article was written by Cory Skuldt, of recent SLR acqusition Corporate Citizenship. Corporate Citizenship provides ESG strategy, reporting, social and environmental impact and other sustainability consulting services to multi-national companies. Visit the Corporate Citizenship website to learn more.
While sustainability leaders have been steadily advancing circularity strategies, progress on fully implementing circularity at scale has not yet met expectations, invoking increasing concern about “pilot-washing” and a failure to execute.
Like greenwashing, pilot-washing refers to a company implying greater significance of sustainability-related activities than their impact actually warrants. The expectation from increasingly well-informed consumers and other stakeholders is that not only does a company demonstrate that it’s moving in the right direction, but that it’s demonstrating a rate of progress in line with the urgency of our environmental and social crises.
When the Ellen MacArthur Foundation launched the first economic report on circularity nearly a decade ago (in 2012 at the Davos World Economic Forum), it shone a spotlight on this challenge. Since then, circularity research, pilots and investment have been a focus for the responsible business community, but many argue the progress has not been fast enough to scale. A fully circular economy requires a massive shift in technologies, business models, designs and customer engagement strategies, that do take time to develop and refine – but a decade later, we should see more strong performance on circularity overall (beyond a pilot), and circular solutions that are accessible to more companies.
In our work with clients over the past year, we’ve found opportunities to harness circularity and embed it into a core ESG (and core business) strategy that drives value for the company. For example, through a materiality assessment with an intermediate packaging supplier, we uncovered silos that were preventing full execution of a potential competitive advantage. By better articulating the circular economy opportunity, and connecting those elements – both within the company and in how they connect to various customer roles – they could a) become the only company in the industry offering a fully closed-loop solution to its customers and b) decrease its own costs (along with customer costs) in the process of doing so. A regional leader said:
“I’m realising that if we invest in building these connections, we’ll be the only company that could go to [global petrochemical customer] and say – ‘Every drum I sell you, I’ll come take it back, I’ll regrind it into your new drum. Your recycled content will come from your own output in a fully closed-loop solution, and we’ll increase recycled content over time while reducing your costs per use.’”
Another leader pointed out that existing capabilities, initially developed purely in response to cost drivers and customer demand, could be reframed and refined to cement a leadership position on circularity, despite the company being fairly new to focused sustainability efforts:
“I’m starting to see that our ability to provide reconditioning services across our entire industrial product range is a phenomenal opportunity that we’re not taking full advantage of.”
Leaders saw that these opportunities for efficiency, growth and customer loyalty require “commitment from the customer, and a lot of communication”, representing a common challenge: while we continue to advance circular technologies – from recycling process to resale platforms to artificially intelligent material sorting – the real hurdles are in change management. To go from linear to circular, a business must rethink its fundamental mental models, calling into question:
- Can we generate revenue through an entirely different model, while delivering the same function outside a “take-make-waste” cycle?
- Can our customers or end-users become key partners in our value chain?
- Can our business function as part of a healthy closed-loop system that regenerates rather than extracts?
This type of change, at its heart, is a leadership challenge – not an economic or technological one. When we work with clients who are ready to engage with that challenge – whether by making a bold commitment to circularity targets at scale, or just by dipping their toes in the water for the first time with a pilot that will truly be expanded when successful – we see an accelerated path to sustainability leadership. A few more examples in our recent client work:
- A cosmetics packaging company had not yet developed a strategy on sustainability, but saw an urgent need to align with a key customer’s sustainability goals. We built on the company’s strong product innovation function, to position it as an essential partner in those goals through lightweight, recycled content, bio-based and mono-material packaging products, allowing it to leapfrog ahead of competitors in positioning as a partner of choice on circularity targets.
- A textile manufacturer was on par with similar-sized competitors on most sustainability KPIs, but through prioritising a rapid shift to renewable and recycled inputs, we enabled it to pull ahead as a leader on aspects of circularity, and compete with much larger players. Customers in several markets it serves had begun to set their own targets in those areas, so identifying a niche where our client could advance quickly, was key to keeping it close to those customers.
- A speciality retailer, aiming to move quickly from building momentum on sustainability to establishing a leadership position for its industry, came out with a bold product commitment. In developing a roadmap to delivering on that commitment, it has been able to leverage our knowledge of circular business model innovation, certifications and evolving customer demand, to bring creative, novel ideas to inspire product development and merchant teams.
If you are interested in how your company might accelerate progress on sustainability, please reach out today to discuss how we can embed circular strategies and impact measurement into a targeted area of your business, or your overall approach to ESG. In addition to the core services you’ll find on our website, we develop custom interactive training on circularity, and will support your teams on strategy, product development, business model innovation, and more.
We typically include a guest contributor article. This month, we suggest a few recent conversations we’ve conducted on resources and strategies related to scaling circularity:
- Circularity Tools and Certifications, World Ethical Apparel Roundtable (WEAR) webinar series with Adriana Galijasevic (Cocircular Lab and formerly G-Star Raw), Ina Budde (circular.fashion) and Gwen Cunningham (Circle Economy)
- Habits & Hooks: Ensuring Consumer Engagement session at Circularity 21 with Dr Natalie J Hallinger (Litterati), Javier Guillot (Mayor’s Office of Bogotá) and Bob Gedert (National Recycling Coalition)
- Deep Dive on Circularity, Textile Exchange and Corporate Citizenship, with Liesl Truscott (Textile Exchange)