Today, there is increased pressure to be eco-friendly. This pressure stems from many factors: a government push to meet net-zero targets and consumer priorities to buy more ethical products.

It is now essential to incorporate sustainability into your business. By doing so, you will reap the rewards of improved reputation, access to further opportunities and even increased sales.

However, when you have been operating in the same way for a long time, it is hard to go against the status quo. You need to step away from traditional models of business which are often associated with a ‘throwaway economy’ of waste and minimised prices, no matter what the consequences are.

The circular economy aims to address this issue, emphasising processes that support the environment and reduce waste. Through it, you maintain performance and meet customer requirements while facilitating sustainability.

Below, we explain the circular economy and its role in business in more detail.

• What is the circular economy?
• Why do people favour a circular economy?
• What is a circular economy business model?
• Examples of the circular economy in business

What is the circular economy?

The term ‘circular economy’ refers to an economic framework that has three main principles:

1. To eliminate waste and pollution
2. To circulate high quality and long-lasting products
3. To regenerate nature

The framework also seeks to progress the transition to renewable energy and materials, enabling the regeneration of nature and environmental protection.

The overall aim of the circular economy is to encourage economic activity that does not rely on finite resources or environmentally unfriendly processes. It also pushes to reduce waste by making products that last, ending a cycle of waste and reproduction of low-quality items.

With it, you unlock a scenario that equally benefits businesses, customers, and the environment.

Why do people favour a circular economy?

The many benefits of a circular economy have made people prioritise it. The most significant is reducing damage to the environment, which will further minimise climate change and protect biodiversity. This is particularly key given the high level of attention paid to environmental causes and the need to address issues.

There are also advantages for a business that sticks to a circular economy model. These include:

• Access to new commercial opportunities, particularly from customers and partners who favour eco-friendly brands and solutions
• Incorporate sustainability into operations and meet net-zero targets
• Generate positive press through environmental support
• Reduce costs with renewable supplies and less waste
• Increase sales by targeting ‘green’ customers
• Contribute to business growth through efficient processes and improved demand
• Protect your business and the broader world against resource shortages and rising material costs
• Creating products that last – and exceed customer expectations as a result
• Attract sustainable investment

By identifying appropriate processes for your business that incorporate circular economy principles, you will improve efficiency and cost-management across your company while playing your part in the global effort to tackle climate change.

What is a circular economy business model?

To embody the circular economy, you need a business model that shares the same values while enabling you to operate effectively and meet customer demand.

Any model you use should focus on regenerative resources (such as renewable energy sources for equipment or sustainable supplies) and processes that minimise emissions and pollution. Essentially, you need to consider your operations’ effect on the environment and identify ways to reduce the impact.

You also need to focus on generating long-lasting results. The emphasis is delivering products and services that stand the test of time, offering customers increased value and reducing the need for waste.

Examples of the circular economy in business

There are many ways you can incorporate the values of the circular economy into your business whilst promoting results. We’ve listed some examples below.

• Leasing and hire purchase. Leasing and hire purchase enables you to access the equipment you need, with the choice to upgrade after the leasing term has finished rather than buy it outright. This prevents the need to constantly buy and discard equipment while also reducing the cash flow pressure of an upfront payment.
• Sharing equipment. An alternative to leasing equipment is to access assets owned by other companies who may share a workspace with you or be located nearby, especially if you do not need it all the time. Peer-to-peer networks will often operate such schemes to give more people the tools they need while minimising costs and waste.
• Create high-quality output. By focusing on creating quality goods through effective materials and processes, you will reduce the need for consumers to throw away and repurchase items. Even if you need to charge more, this will typically offer more value to customers and satisfy their needs to warrant the price.
• Offering incentives for the return of products. Many brands implement schemes that encourage customers to return old products or even packaging, with incentives such as discounts or freebies. The aim is to better manage waste stemming from the business – though in some cases, old products can be recycled and reused. It may also improve brand loyalty.
• Asset management. Through asset management, you maximise the lifetime of equipment and resources. It is best done by monitoring your assets, maintaining them and considering where equipment can be reused or repaired to prevent waste. It also minimises the need to repurchase, saving you money.
• Using better resources. To improve your environmental impact, you must work with suppliers and partners who are equally green. Start by identifying resources you can use with a limited carbon footprint or eco repercussions and finding appropriate suppliers. Simultaneously, check that any providers you work with source their materials in eco-friendly ways while maintaining the quality you need for productivity.
• Recycle and reuse. The circular economy aims to limit the use of finite resources. A great way to achieve this is recycling and reusing materials rather than throwing them away. Consider areas where you can either reuse resources rather than buy or recycle waste to have a new purpose in your operations.

Conclusion

It is rapidly becoming necessary for businesses to account for sustainability in their operations. By doing so, you will win over customers, improve cost and waste management practices and contribute to the fight against climate change.

However, to have a sizeable impact, you must overhaul how you run your business. Abiding by the principles of a circular economy is one method for doing so, allowing you to protect the world while still reaping economic benefits and meeting the market’s needs.

First, it is crucial to understand the implications to the world from your business and whether a circular framework allows you to mitigate them. From there, you focus on making the necessary adjustment that suits your requirements and encourages ongoing success.

If you need support in understanding the implications of net-zero or a circular economy in your business, including raising finance to manage change, we can help.

Our team of advisors will talk you through your best options and the support available to guarantee results.