We talk to the people and players who believe the circular economy is a way to create sustainable growth and also generate profit.
The 'circular economy' has become one of the most used phrases in business. It refers to all the work involved in recycling, reducing waste and creating new sustainable jobs.
The World Economic Forum cites figures from the consultancy firm Accenture, which says the job of introducing such changes could represent a market worth €4.1 trillion between now and 2030.
The International Labour Office estimates that transitioning to a circular economy could create six million jobs worldwide as companies get to grips with replacing traditional ways of making money by “extracting, making, using and disposing”.
Circularity also brings with it the promise of efficiency. Accenture, predicts that car makers taking a circular approach to manufacturing could enjoy a 150% boost in profits.
So does the reality justify the buzz? In this edition of The Exchange we talk to the people and players who believe the circular economy is a way to create sustainable growth and also generate profit.
We speak to Nestle, the world’s biggest food and beverage company about how they are leading a worldwide transformation in recycling, sustainable job creation and waste reduction.
In France, we visit what Renault claims is Europe’s first fully circular auto factory.
And we also speak to the Design Lead at the Ellen MacArthur Foundation, a charity that’s working to accelerate the transition to a circular economy.
Nestlé: The quest for harmless packaging
One famous company wrapped up in this quest for sustainability is Nestlé. The maker of Nespresso, San Pellegrino and Kit-Kat is the largest food and beverages company in the world. The 150-year-old firm has over a quarter of a million employees, hundreds of factories and sells products in 186 different countries. So how can Nestlé make sure that business conducted on such a colossal scale doesn’t damage the planet?
Global Lead for Packaging and Sustainability Jodie Roussell says headway is already being made.
"Our vision is that none of our packaging ends up in landfills or as litter," she tells us from Lausanne. "In terms of reduction, we're looking to reduce our use of virgin plastic, and we're on track to reduce it by one-third by 2025. We have some really good examples today in the European Union where there's a harmonisation exercise that's starting today on labelling and bins as well as setting shared targets. And these types of examples of legislation give us hope that we can simplify participation for consumers as well as compliance for businesses, and focus on what's most important, which is getting the right result and ensuring that no packaging ends up as litter or in landfills."
Renault: Putting recycling at the heart of strategy
Another firm at the forefront of making circularity its main business strategy is French auto giant, Renault.
Eleven million cars end their life every year in Europe and the auto industry dumps massive amounts of waste, toxic chemicals and metals into landfills. Yet 85% of the materials used to make cars can be recycled.
At its Refactory plant just outside of Paris, Renault wants to turn the tide. Renault is presenting Refactory as the first European circular economy site dedicated to mobility. It launched the project two years ago and hopes it will generate 200 million euros in turnover by 2025.
Part of the project is a new workshop able to refurbish 150 old cars a day. From the mechanical elements to the paintwork, in less than a week, the cars look like new. They're photographed and sold again.
In another building, 200 workers remanufacture over 1 600 different car pieces.
"Not only do we produce engines and gearboxes with the same quality requirements as the new ones by using refurbished materials coming from old engines," says François Evrard, head of the Refactory Project at the Renault Group. "At the same time, it allows us by the cost reduction in the value chain to provide our customers with an alternative 30% cheaper than a new one."
To federate an ecosystem around its brand, the group has just launched a start-up hub dedicated to the circular economy.
"The idea between Renault and the startups is to share all together," says Nathalie Rey
Head of the Refactory Hub at Renault Group. "Renault brings its knowledge in the industrial and circular economy, startups bring their agility and the way they want to innovate."
The Ellen MacArthur Foundation: Circularity by design
One of the main ways circularity can be efficiently applied is through design. The Ellen MacArthur Foundation is a London-based charity committed to promoting and developing the circular economy.
Joe Iles is the Design Programme Lead at the foundation. He argues circularity needs to be in the first line of every design brief.
"Everything around us is designed from the food that we eat to the clothes that we wear, the buildings that we live and work in, and the systems which provide those things that provide food or energy or mobility or medicine," he explains. "And when we design, whether we know it or not, we’re really making decisions about how those things work. It's not just about treating the symptoms of an economy that's broken or systems that are broken, but about designing by intention so that products and services and systems are circular, regenerative. And what that means is when we engage in design, what's the first line on the design brief? I believe it should be: 'Does this creation, does this service fit within a circular economy?'"
Business in 60 seconds
Here are some of the headline stories from the business world this week.
- The World Economic Forum’s annual meeting takes place in Davos
More than 2,500 world leaders and business executives are gathering to discuss and debate topics under the theme, ‘Cooperation in a Fragmented World’. It also marks the event's return to being held in January, after having been moved to the spring during the pandemic.
- Schlumberger posts its results for the fourth quarter
The oil drilling giant had a bumper year of earnings in 2022, as equipment sales surged on high oil and gas prices. The firm has cited the Middle East as a region that will drive the next phase of growth over the next few years.
- United Airlines releases its fourth-quarter earnings
The carrier has been seeing a sharp increase in bookings despite growing risks of an economic recession. US airlines are enjoying the strongest consumer demand in three years. The reopening of travel and the strong dollar are encouraging more Americans to travel overseas, especially over the holiday season.
The global companies that make our food, clothes and cars have a gigantic responsibility: feeding the world affordably, giving people the products they love, creating new jobs and at the same time solving the climate crisis. It’s one of the biggest tests business has ever faced. And at a time when millions fear a lack of food, energy and security - boardroom leaders must surely do more to square the circle.