Circular Economy: Shaping Sustainable Global Supply Chains

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The circular economy is different from the traditional linear model, which is based on a throw-away pattern.
A report from the World Economic Forum, University of Cambridge and Bain & Company finds a 40% increase in companies prioritising circular solutions

The circular economy is rapidly evolving from a trendy concept to a fundamental business necessity, with 75% of companies now prioritising circular solutions.

This represents a significant 40% increase over the past three years, according to the Circular Transformation of Industries (CTI): Unlocking Economic Value report, produced by the World Economic Forum (WEF), University of Cambridge and Bain & Company.

Circular partnerships

Companies are increasingly forming strategic alliances to maximise sustainable circularity. For instance, Hydro and Porsche have collaborated to recycle aluminum, significantly reducing carbon footprints in their industry. 

Hanne Simensen has worked at Norsk Hydro for 18 years

Hanne Simensen, Executive Vice President of Hydro Aluminium Metal, states: "Hydro is pursuing multiple paths to decarbonise our operations. With this pilot we take another step on our path to zero-carbon aluminium. Green hydrogen is an exciting potential option to decarbonise aluminium and other hard-to-abate industries".

Circular feedstock

Adopting recycled materials as primary resources is gaining traction, particularly in packaging and consumer goods industries.

Indorama Ventures is actively engaging in PET recycling, while Dow Chemical is partnering to advance the recycling of pyrolysis oil into new plastics.

Companies like Rockwell Automation are offering repair services that not only extend product lifespans but also significantly reduce emissions. These repairs can cut emissions by up to 90%.

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Economic opportunities

Revenue growth: The circular economy is opening new revenue streams through repair, refurbishment and capacity-sharing models. These initiatives are attracting environmentally conscious consumers and niche market segments.

Job creation: The International Labour Organisation (ILO) projects the creation of 7-8 million jobs by 2030, driven by circular industries.

Cost savings: Businesses are experiencing reduced material acquisition and waste disposal costs. Additionally, increased product lifespans are leading to lower replacement expenses.

Environmental Impact

Resource conservation: The CTI report highlights alarming statistics: humans are consuming 1.7 times the Earth's annual replenishable resources. The overuse is driving material shortages, cost volatility and environmental degradation.

Emissions reduction: Circular models have the potential to reduce emissions from new products by 40% by 2050, particularly in industries using plastics, aluminum, steel and cement. Notably, recycling aluminum can cut emissions by up to 90% compared to virgin production.

The circular economy is based on the 5 R's: reduce, reuse, refurbish, repair and recycle.

Challenges and barriers

Despite the clear benefits, companies face significant challenges in transitioning to circular models.

These include high initial costs for infrastructure and new supply chains, the need for innovative logistics and collection systems and the complexity of tracking emissions, resource use and product lifecycles.

Tech giants are leading the way in circular initiatives. HP is monetising refurbished devices to support sustainable IT procurement, while Dell is incorporating recycled or renewable materials in its products. 

Cassandra Garber, Chief Sustainability Officer at Dell.

Cassandra Garber, Chief Sustainability Officer at Dell Technologies, highlights: "I've often said our sustainability strategy is as simple as 'integration everywhere.' A perfect example of that in action is the incredible list of circular design examples we can share that span so many aspects of our new AI PCs".

The shift towards circular economies is no longer optional but a critical strategy for businesses to address sustainability challenges, drive environmental and economic change and build resilience in an increasingly resource-constrained world.


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