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A Circular Economy Can Help Businesses Achieve Sustainability Goals

Jared Feuer
Aug 17, 2021

Guidehouse Insights Sustainability

Many companies are striving to set net-zero carbon emissions goals by 2030, some even earlier. There are numerous avenues companies can take to pursue this. One revolutionary idea is to implement a circular economy business model in which zero waste is generated by closing the product lifecycle loop. Signify and Daikin are two examples of companies making strides toward implementing this model. 

Product Recycling Creates Circularity 

Signify’s 3D Printing circular economy platform allows its customers to custom tailor luminaires. The 3D-printed luminaries are made from 100% recyclable polycarbonate, which enables them to be recycled or refurbished at the end of their life. Once a product’s lifecycle completes, the customer returns it and can choose to replace it with the same design or a new one. This program has helped Signify to champion having sent zero waste to landfills since 2020 and to move one step closer to having net-zero carbon emissions.

Daikin’s Loop initiative strives to close the product lifecycle of R-410A refrigerants. This is accomplished by recovering spent refrigerant and upcycling it to like-new quality for reuse. Loop's implementation has reduced the production of R-410A refrigerants by 250,000 kg per year while depleting few additional natural resources. In addition, Daikin claims that it is “the only comprehensive air conditioner manufacturer developing everything from refrigerant to air conditioners and engaging in the recovery, recycle and destruction of refrigerants.” While this program is in its introductory stages, Daikin plans to expand this service to other products and types of refrigerant so that it can accomplish its industry goal to reach carbon neutrality by 2050.

Circular Economies Are Good for the Planet and for Bottom Lines

Taking the time to establish and transition to a circular economy model provides the opportunity to set up a competitive advantage. Recent adopters of the circular model, such as Signify and Daikin, are busy setting the standards for the market, allowing them to position themselves ahead of their competitors. Circularity is the right direction. It is imperative for businesses to listen to their stakeholders so they can provide them with the most value. When a company decides to adopt circular measures in a way that customers can see and appreciate, not only will they become more attractive, but they will operate with more efficiency. 

Our economy primarily operates under the take-make-waste linear economy model, where humans harvest resources from the Earth to make products that we use and ultimately throw away. By transitioning to a circular economy model, we remove the concept of waste. Businesses can use that to their advantage. In many situations, it will be unnecessary to extract raw materials from the Earth, ultimately saving money. According to the Ellen MacArthur Foundation, “it is estimated that, in the sectors of complex medium-lived products (such as mobile phones and washing machines) in the EU, the annual net-material costs savings opportunity amounts up to USD 630 billion.” Company supply chains will more frequently be under less stress to source materials with the surge of available recyclable materials. With less pressure, supply chain managers will have more time to focus on other important matters, such as reaching their company’s sustainability goals.

For companies looking to differentiate themselves in a sustainable way, they should consider exploring an innovative frontier: a circular economy model. Although the roadmap to establishing this model may not be crystal clear, it is evident that it can save money, attract more customers, and be beneficial for the Earth. Yes, this idea may sound intimidating, but there are many resources to promote this transformation. Guidehouse’s case study, “Economic Opportunity Through Circularity,” has more information on the benefits of circular economy and guidance on how to integrate it into solutions.