Circular economy business models
A review of the business models emerging from the circular economy
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Why is circularity the next big opportunity?
- Unilever – at least 25% recycled content in its packaging by 2025.
- Nestlé – 100% recyclable or reusable packaging by 2025 and reduce use of virgin plastic by one-third.
- Danone – by 2025, aims to reach 25% of recycled material on average in plastic packaging, and 50% on average for water and beverage bottles.
- L’Oréal – all plastics in packaging recycled or bio-based by 2030 (50% by 2025).
- Johnson & Johnson Consumer Health – the brands will use 100% recyclable, reusable or compostable plastic packaging by 2025.
- Coca-Cola – by 2025 will source 50% of plastic bottles from recycled content.
- DS Smith, a paper packaging specialist, is targeting 100% of packaging product sold is recyclable or reusable by 2023 (2021: 99.2%) and that by 2030 100% of product with be either recycled or reused (note the European packaging sector recycling rate is currently 85% according to FEFCO).
- Castings, an iron castings and machining business, uses steel scrap in its foundry and, despite being a heavy energy user, the group uses 100% renewable electricity. The immediate economic benefits are limited but are more likely to come into play as customers such as Scania, a manufacturer of heavy trucks, look to assess the credentials of their supply chains.
- Carbios develops proprietary enzymes capable of breaking down certain polyesters, in particular PET (polyethylene terephthalate) and PLA (polylactic acid), a biobased polymer. This enables both enzymatic recycling and the production of biodegradable plastics.
- Envipco and Tomra both supply reverse vending machines for collecting waste for recycling making them enablers in the recycling loop.
Product life extension
- Planned or built-in obsolescence where suppliers design a product with a limited life span.
- Premature obsolescence, where a product’s life span is less than consumer, and potentially the manufacturer’s, expectations.
- Indirect, where either replacement components are not available of repair is either impractical or uneconomic.
- Incompatibility/technology where products have been usurped by technological developments either in performance or compatibility.
- Style obsolescence, where owners perceive products as out of date, despite remaining fully functional.
- Renewi (Edison client), which focuses on extracting value from waste and supplying high-quality secondary raw materials. Activities include capacity to recycle 1.5m mattresses with 90% re-use and treatment of contaminated soil. At present, 65.8% of waste collected is recycled with a target to increase this to 75% by 2025. In addition, the company produced 353,000 tonnes of innovative secondary materials from waste and is targeting one million tonnes by 2025.
- Digimarc (Edison client) provides digital watermarks that contain information about a product. For instance, on packaging this enables greater understanding of the different plastic content, facilitating deconstruction and recycling.
- Airbnb. Although the rental market has long existed, Airbnb has proved a successful facilitator, providing an alternative venue for renters/rentors and expanding the market. Airbnb connects those with spare accommodation with those looking to rent for a short period. This increases utilisation rates, reducing the waste of empty accommodation and reducing the overall level of housing required.
- Justpark has an app that matches drivers looking to park their vehicles with individuals with a space to use on their drive.