Circular Business Models: How Companies Benefit from Circularity

When it comes to protecting the environment, sustainability experts agree that circularity should be the highest goal. It makes sense; in order to preserve our resources, we should use everything to its highest extent and ensure that there is no waste left over. 

But, circularity isn’t just an important concept for environmentalism; businesses can also greatly benefit from adopting circularity within their business models. As natural resources are depleted, we must figure out ways to stretch these resources and make use of other materials that can be renewed. Otherwise, life and business as we know it will no longer be possible. 

While circular business models do ultimately help the environment to thrive, it offers many immediate benefits to the businesses as well. Companies that have adopted circular business models have enjoyed improved profitability and productivity among the environmental achievements that they were able to boast. 

Still unconvinced? Here are some ways that companies benefit from circularity and how your company can start making the transition to a circular business model today.

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First, let’s differentiate between a circular economy and a circular business model. If they sound similar, that’s because they are; essentially, the circular economy is the big picture goal while the circular business model is one piece of how a greater circular economy will be achieved.

Researchers who explore effective sustainability practices have two perspectives: the top-down approach and the bottom-up approach. The top-down approach relies on social and political initiatives in order to achieve circularity and, therefore, sustainability. The bottom-up approach relies upon enterprises to lead initiatives toward circularity. 

The truth is that we need both approaches in order to find success. Individuals and governments can do all that they can in order to eliminate waste and responsibly handle materials, but if enterprises continue to adopt linear economy models, the top-down approach to circularity will only go so far. Therefore, circular business models are essential if we are to achieve a circular economy.

Circular business models aren’t just good for the environment; a good circular business model uses resources to their highest capabilities, ultimately saving your business money. They also use resources and materials in a smart and efficient way, keeping materials and resources within your business rather than having to constantly purchase new materials.

It also looks good to customers; sustainability is important to today’s consumers, and if you can show circularity in your business, it will promote loyalty among your customer base. 

Benefits of a circular business model

The benefits of a circular business model are many and quantifiable. Circular business models enjoy:

  • Less environmental impact
  • Reduced operational waste
  • Efficient use of expensive resources

In this way, circularity isn’t just a step toward sustainability but an essential money-saving tactic your company would be remiss to ignore. In fact, the World Economic Forum predicts that circular economy models can incur an additional $4.5 trillion (USD) in profits by 2030. That’s not a number to ignore. Additionally, the European Commission says that a transition to a circular economy could cause a 30% increase in productivity in 2030, improving GDP growth and aiding in job creation. It’s clear, then, that effective circular business models can be beneficial for all. 

Beyond this, it’s the smart thing to do. Many governments, perhaps most notably the EU, are seeking to achieve a circular economy in the next few decades. It’s not a bad idea to get ahead of the inevitable and start implementing circular strategies in your company today. On top of this, there is a rising environmental policy approach called Extended Producer Responsibility which concludes that the responsibility for the post-consumer treatment and disposal of products falls to the producers. If your company is not currently seeking circularity, you may be facing hefty financial repercussions for unsustainable products and packaging. 

Strategies for circularity

It’s clear, then, that a circular business model isn’t just a good idea but imperative to your company’s success. However, implementation of a circular strategy is not as simple as it seems. While there are resources that can provide somewhat of a guide through the process, you will need to come up with standards that align with both global environmental processes and your company’s brand and culture. 

Harvard Business Review lists three main strategies for circularity in business, particularly in the manufacturing sector:

Retain product ownership: In this strategy, your company can rent or lease your products rather than selling them. This reduces waste by allowing your customers to use as needed, and then they can give the product back to you to use it again.

Product life extension: In this strategy, companies must design their products to last as long as possible. This may at first seem like it will ultimately harm your company—after all, how will you make money if your customers don’t need to buy new products—but it does allow you to charge premium prices for the product since your consumers know it’s built to last. It’s also important to note that many governments have introduced policies to discourage and even ban practices like planned obsolescence, so this may be a required practice in the near future.

Design for recycling: The company creates packaging and uses materials that can easily be recycled by the consumer. This also includes designing ways to encourage and educate consumers about proper recycling practices. Under the EPR policy approach, this may also be a requirement for companies in the near future. 

While there are other strategies to employ, the above three and their combinations are the most common approaches, especially among manufacturing companies. Across industries, however, the main goal of circularity is simple: to creatively use resources to their highest extent.

How TONTOTON can help your business achieve circularity

waste picker

Developing a circular business model takes time and serious strategy. Not every circular business model fits all, so your company may take years in order to develop a circular business model that works. However, there are some things that you can do today in order to take your first steps toward circularity. Partnering with TONTOTON is one of them.

We offer a plastic credit system that allows you to fund projects that eliminate an equal amount of plastic waste as your company produces. Funding these projects will give your company time to figure out the best way to eliminate your orphan plastic waste without halting production. 

Our projects are circular; we work with local waste pickers to remove single-use plastic from the environment, and that plastic is sold to cement factories to be co-processed—used for fuel and converted into raw material—ensuring that the plastic waste is used to its highest potential and eliminated with zero waste left over

While your company strategizes a circular business model, let us take care of your plastic waste for you.