The wheel of innovation and circular economy

Rising sea temperatures, greenhouse gas emissions, loss of biodiversity, climate refugees – 2015 saw the highest temperatures in 1,500 years. And the biggest sceptics will tell you that things aren’t about to improve any time soon. The planet cannot get better all by itself – and that’s the problem. Yes, it’s easy to say you’re green, but no-one really wants to change their behaviour as consumers. When it comes to turning off the lights so your electricity bill isn’t as high as Times Square’s, everyone’s on board. On the other hand, when it comes to buying a new mobile phone, no-one cares about the impact that it has on the environment.

But it’s not just consumers who should take the blame. Companies also have a responsibility to protect the environment. They’re also the ones who are best placed to instigate real change. But why change? What are the solutions? How can we combine competitiveness and sustainability? We explain how major groups can take action by implementing a circular economy approach.

The disastrous consequences of our current economic model on the environment

In the 18th century, industrialists thought that natural resources were unlimited. Those were the glory days. You know, the days of Lucky Luke, when any American with a pickaxe and a bit of courage could head out and find some gold. The same thing happened with oil. First discovered when it emerged at the surface, it is now hidden in the depths of the earth, where it is difficult to access – and worse, it is of lower quality than the oil extracted by our ancestors.

Increasingly rare natural resources, higher levels of waste

The fact that resources are becoming rarer is not our only problem. Some cities, such as Hong Kong, are overflowing with waste. It’s so bad that the city authorities now have to send the waste to mainland China because they can’t store it themselves. And don’t even talk about recycling it. Another example? The new continent of plastic that has formed in the north of the Pacific Ocean. This heap of detritus is six times the size of France! Imagine the disastrous consequences for biodiversity. To give you a rough idea, the current rate of species extinction is at least 100 times higher than its natural pace, and this is simply down to human activity. Food for thought…

Natural resources in a mine

The good news? There are solutions. We are far from doomed. It’s time to show that we’re optimistic and to demonstrate our imagination, creativity and innovation in order to initiate change and inspire more flexibility within businesses. To do this, we need to revise our current model and move from a linear economy to a circular economy.

The circular economy: a sustainable solution

Also called the closed-loop economy, the circular economy is an innovative business model that takes inspiration from nature, where one creature’s waste becomes another’s resource. In the current economic model, companies produce goods in a linear fashion: extract – manufacture – throw away. The disposable culture has become widely accepted, and is now considered normal. But there is nothing natural about it at all. That’s why proponents of a circular economy suggest that we should return our focus to nature and set ourselves a key goal: to limit the waste of raw materials, water and energy sources.

The aim of this new economic model is to adopt an eco-friendly approach, from extracting raw materials to processing the product at the end of its life, while retaining a number of performance criteria. This is called eco-design.

Innovative production and consumption methods

For this model to be a success, new production methods need to be put in place. But for this to work, we have to change our behaviour as consumers. The circular model promotes an economy of functionality, where ownership is replaced by usage. In other terms, the consumer “borrows” an item rather than owning it. Instead of throwing away a product that would be considered useless today, it will be possible to re-use it, to repair it and give it new value, or to recycle the materials it is made of.

To encourage the creation of second lives for products, it is essential to implement new synergies and to promote industrial ecology. This involves a global approach to the industrial system, promoting collaboration and complementarity between companies. As well as optimizing resource efficiency, it ensures that the system is sustainable in the long-term.

Infography representing circular economy

Innovation and company reorganization

Although the expansion of this circular model still seems like a utopia, it’s important to remember that a number of big groups have begun to make changes in that direction. Why? Well, in addition to protecting the environment, a number of studies agree that this innovative business model is profitable and creates jobs. It reduces the risks linked to fluctuating raw material costs, optimizes material flows and allows full control of a product’s life cycle. Finally, this new economic model strengthens the links between businesses and consumers, improves consumers’ opinion of companies, and develops an employer brand.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” – Charles Darwin

Major groups are integrating the circular economy into their business

Because of the obvious benefits of including the circular economy in their business model, several big groups have taken the plunge. Interface, the world leader in B2B modular carpet, was the first company to take advantage of the benefits offered by this new economic model. In 1994, the chairman of the time, Ray Anderson, launched Mission Zero. The aim? To eliminate all negative impacts on the environment by 2020. Thanks to this initiative, the amount of CO2 released during manufacture of a carpet tile has now been reduced to 3 kg per m2, compared to 12 to 60 kg for tiles produced using traditional methods. Using renewable energy, recycling, optimizing transport and recovering end-of-life products are all tools the company uses to achieve its goals. And it pays off! As well as being the market leader and protecting the environment, the company projects a good image to its customers, creating sustainable links with them. All of these positives will give Interface a long-term advantage and ensure it remains competitive.

Combining economic performance and environmental protection

Industry actor Colas, a subsidiary of Bouygues, is also leading the way. In 2005, the company benefited from the use of eco-design when patenting Végécol, one of the first plant-based binding agents, made from pine resin and rapeseed oil. This innovative bitumen replacement is part of the ‘Green Chemistry’ project, which places the circular economy at the heart of the company’s research and development department. More recently, in partnership with the French national solar energy institute, the Institut National de l’Energie Solaire (INES), the company has just launched Wattway, the world’s first photovoltaic road surface. Placed directly on existing road surfaces, Wattway tiles take advantage of the fact that roads are only used by vehicles 10% of the time. Their yield? One kilometre of road is enough to provide lighting to a town of 5,000 people. In January 2016, Ségolène Royal, French minister for the environment, energy and the sea, announced that 1,000 km of photovoltaic panels would be installed on French roads by 2020.

The Wattway by Colas, an example of a circular initiative

However, it must be said that these companies are still the exception rather than the rule. Given that it’s impossible to reorganize a company’s whole business model overnight, the launch of initiatives inspired by the circular economy allows a progressive transition to this new economic model.

Impossible as a big group? Not necessarily. You might not know it, but a great many of them have decided to make use of the circular economy. Their actions might yet seem minimal, but they do reveal their genuine desire to become a driver of change.

IKEA and Philips open the door to the circular model

IKEA, for example, is currently focusing on the benefits of the economy of functionality. Continuing on from the campaign “Give your furniture a second life”, which encouraged customers to bring back any furniture in good condition that they no longer needed, the company is now considering offering long-term hire-purchase kitchens. Customers will have to return their end-of-life products to IKEA, who will process them and reuse them to manufacture new furniture.

In the same spirit as the initiative launched by IKEA, Philips has decided to sell light as a service. How? By billing its customers not based on how many light bulbs or lamps they buy, but based on the lighting performance provided by the company’s products. In addition to guaranteeing a fixed-price contract for its customers, the company also promises significant energy savings. They have even committed to providing financial compensation to customers whose consumption exceeds their estimates. Thanks to LED lighting, the company is offering greater transparency regarding its offering and is helping to abolish planned obsolescence.

As you’ve seen, our current model is starting to reach its limits. The transition is under way, and now it’s time to think about new alternatives. Any company can adopt circular initiatives, regardless of their sector, and the long-term benefits are certain. It’s high time to look to the future and innovate so we can stay competitive while saving the planet.

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