How do giant companies, that are not born sustainable, tackle the issues of resource
depletion, waste management and product innovation?
Current and future generations, acutely aware of
market volatility and of just how finite resources really are, demand a
transition from the classic “take-make-dispose” value chain to a more “circular
economy”. Indeed, we have developed over the years an over-consumer “throwaway”
culture where products are not made to last, are discarded by customers when
they no longer serve their original purpose and are transformed into waste that
just keeps on accumulating; yet we begin to notice just how environmentally
impactful this model is. Each year, more than 65 billion tons of raw material
are extracted from the Earth and this number is only expected to grow. Yet, many
resources are forecasted to run out within a relatively short period, while
only few materials are recycled at scale.
Overcoming the limits of the linear economy
Many
companies have also understood that the linear model is reaching its potential
limit. With higher resource prices (commodity prices have increased by nearly
150% from 2002 to 2010), unprecedented
price volatility and increased supply chain disruptions, the business’ exposure
to risks has become much more important in the 21st century.
Moreover, opportunities for increased efficiency in manufacturing processes
still exist but are very rare and not sufficient for companies to create real
competitive advantage.
Firms
need to rethink, reinvent and reorganize the way they create value in order to
keep products, materials and nutrients at their highest possible value for the
longest possible time. Such business models will decouple economy activity from
the consumption of finite resources, take waste out of the equation and help
the earth regenerate its natural systems.
The
circular economy is not just a model that helps companies and consumers to get better
at recycling which eventually turns products into unuseful waste. In theory, waste will not exist: superior designed products are
created for durability, disassembly and reuse, ease of maintenance and repair…
And can therefore last and be transformed. Waste is no longer seen as a burden
but a resource that can be reinjected into the system.
Why should businesses care? An
opportunity worth millions
Eliminating
waste from supply chains is not just an environmental concern but also acts as
a source of efficiency and innovation for firms. As companies reuse products
and materials that are already in the loop, they will save on production as
well as waste management costs, be less resource dependent and mitigate the
risks in their supply chains.
A report from the World Economic Forum (2015) shows that opportunities
for the FCMG at the global level could elevate up to $700 billion per year in
materials savings, representing 1.1% of 2010 global GDP, net of all material
used in reverse cycles. Those materials
savings would represent about 20% of the materials input costs incurred by the
consumer goods industry.
Moreover, replacing one-lifetime
products with “circular by design” products promised to spur innovation across
industries is a strong motivation for entrepreneurs to join this vibrant
field. It also seems that a more circular economy has the potential to revive
labor markets by creating reverse sectors whose activities focus on reuse,
refurbishing, remanufacturing, recycling, composting and advances reserve
treatment technologies (e.g. cultivating waste-eating microbes, filtering
proteins out of wastewater...). The exact employment opportunity is hard to
estimate and will depend on the labor market but according to the report, as of
today, the opportunity for job creation in remanufacturing in Europe is already
superior to one million jobs.
The opportunity for businesses is therefore immense
and can only be seized through creativity.
The case of Nike
Nike
is clear example of a firm in the “take make dispose” age that might not be a
“green born” firm; but yet that aims to transition towards a closed loop vision
with its bold target for FY2020: zero waste from contract footwear
manufacturing going to landfill or incineration without energy recovery.
Nike is trying to create long lasting shoes
that are made from materials that can be revived. The
company has recycled sneakers since 1990 and has recovered more than 30 million
pairs.
They
have launched in 2018 the Nike Circular Innovation Challenge: an open and
innovative way that focuses on creating new ways to design products and on
developing new technologies to recover material. These therefore split into two
different challenges with the idea that no product ever goes to waste.
- Design with Grind Challenge: Nike is encouraging creative thinkers to prototype products using Nike Grind, a range of premium recycled materials recycled from used footwear and manufacturing scrap. Nike Grind are already used into running tracks, gym floors and other surfaces...
- Material Recovery Challenge: Nike is also opening out to designers to help them recover more pure material from recycled products. This is one of the biggest challenges of the circular economy: getting as much materials (fibers, rubber, foam for shoes…) as possible from old products that can be re-used in new products.
All
participants could enter the contest and then 30 shortlisted concepts were be
invited from Ideation to Refinement Phase to be built and tested with Nike.
Then a winner was chosen and received $30,000, and the four other best concepts
received $5,000 and further opportunities for partnerships.
Top
idea winner for the Design challenge was YOGO: a new concept to use Nike’s
recycled materials with YOGO’s products designed for yoga practitioners who are
environmentally conscious, need every day practical innovations and represent
the perfect customers that would support a shift to sustainable materials.
The
material recovery winner, SuMaRec (plastic recycling consultants), had
experience in separating plastic materials and in removing contamination from
plastic. They developed new automated technologies such as a coarse material
shredding and air classification process, and an elastomer (rubber) separation.
These processes allowed to improve the purity of the Nike Grind outputs.
New innovation systems
Nike
proves that the new economy is synonym with new innovation systems that bring
together competencies from different sources to achieve economic and social
development. Companies and startups should tackle together the development of
innovative solutions for circularity and no advances will be made by acting
solo.
An
interesting study shows that the circular economy will be achieved through a
Triple Helix concept of innovation between industries, governments and
universities, with a strong coordination between the spheres and where each
will have a special role in contribution to new innovations. In order to
achieve systemic innovation, the model shows that a stronger consensus space is
required between the three: as seen in the diagram, currently institutions
focus too much on their own role. Discussions and sharing ideas, communication
channels, experiences and findings should be promoted in order to better
accumulate knowledge.
The
need for action is stronger than ever, and as with many other difficult issues,
inclusion and collaboration from different perspectives will produce a better
outcome when trying to tackle the difficult transition that is the circular
economy. Industries, universities and governments have a unique opportunity to
work together in order to adopt a more resource efficient approach to value
creation and the time to act is now.
Written by Marie Giesler
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