Organizations across every industry are increasingly expected to proactively review existing business models and processes that have a direct impact on the environment. For many organizations, they have relied on a linear economy approach, extracting resources from the environment to manufacture and sell goods to customers. This approach has been the main way of operating however, the result of this model is found across global landfills and oceans, where discarded goods contribute to ongoing environmental issues, including the release of greenhouse gases such as methane.
As climate risk pressure mounts from regulators, investors, consumers and employees, there is an increasing need for organizations to consider the opportunities found in a circular economy approach - aligning growth with core values and purpose.
The transition to a circular economy is an important journey for all organizations to embrace. Unlike the traditional linear model, the circular economy is designed to reuse material, eliminate waste and help promote a more sustainable environment. Based on three core principles; eliminate, reduce and reuse waste, the push to a circular economy has been brewing for some time as climate change awareness has grown across consumers, finance and capital markets and regulators. Taking a deeper dive into each focus area can help organizations identify and understand the opportunities of a circular future.
Consumers: Today, there is a greater level of climate impact transparency and trust that consumers demand from an organization they choose to do business with. Many leaders have struggled and continue to struggle with the capacity and processes to tackle these consumer demands. According to a GreenPrint survey, 53 percent of Americans never or only sometimes believe a company's environmental claims, and 45 percent say they need a third-party validating source.
Finance and capital markets: Investors are increasingly seeking environmental, social and governance (ESG) exposures for their portfolios which is placing a greater emphasis on how companies approach, report and mitigate their carbon footprint. A recent report from FTSE Russell notes that sustainable investments are now standard globally, with 84 percent of asset owners either implementing or evaluating for sustainability into their portfolios. From a broader global economic standpoint, organizations are also seeing a larger push to a circular economy as studies show doing so offers a $4.5 trillion economic opportunity.
Regulators: Local and national governments are increasingly putting ESG and climate-focused plans in place for industries to abide by. In March of this year, the state of Mississippi passed a law to support advanced recycling, creating new economic opportunities in the state. Nationally, the U.S. Securities and Exchange Commission (SEC) announced its potential plans on climate disclosure mandates. The SEC’s anticipated plans are placing a direct spotlight on public companies and their ESG efforts or lack thereof and revamping them.
Implementing the principles of the circular economy can allow organizations to have a measurable, positive effect on the environment, but many organizations question where to begin.
Start with what you can control: Organizations can start making changes by taking a closer look at their operational carbon emissions to identify areas for reduction. In addition to common sustainability initiatives like the reduction of energy and water consumption, organizations can begin this step by looking closely at waste reduction opportunities surrounding the use of any operational product or process that causes the emission of carbon gases.
Third-party suppliers: Being environmentally responsible also means that organizations must be aware of their suppliers' involvement. By vetting their suppliers and/or including procurement language in contracts that are in favor of sustainable products and processes, an organization can be proactive in their efforts to mitigate third-party climate impacts. For larger organizations with more influence on their suppliers, this could include implementing emission disclosure requirements as a prerequisite for the purchase of goods.
Design with reduction of waste in mind: Organizations should rethink all of their production and processes and identify areas where they can implement any of the three principles of the circular economy: eliminate, reduce and reuse waste. Specifically, priority should be on the elimination or substitution of any material that can’t be diverted from landfills at the end of the product lifecycle.
By empowering organizations to rethink their current processes and implement new tools to save money and create new efficiencies, a circular economy approach can help drive a more vibrant future, but this will require an "all hands on deck" approach to achieve success. With an eye on the circular future, organizations will quickly realize the opportunities of a new approach if they take the necessary steps today to eliminate, reduce and reuse waste.
Interested in having your voice heard on 3p? Contact us at editorial@3BLMedia.com and pitch your idea for a guest article to us.
Image credit: Matt Seymour via Unsplash
Keith Bryan leads the Built Environment Sector for BSI in America, representing the full BSI portfolio of services for clients and key stakeholders. Keith holds a bachelor’s degree in biology from Purdue University and a MBA from Virginia Tech. He is also a Certified Energy Manager (CEM), Project Management Professional (PMP), Certified ScrumMaster (CSM), and LEED AP in both Building Design + Construction (BD+C), and Operations + Maintenance (O+M).