Circular Economies And Digital Technologies Work Together

Is the linear economy headed for the trash bin? Another vestige of a wasteful approach to commerce, that, though lucrative, has contributed to the climate crisis. Environmentalists and business leaders are taking a hard look at the “take, make, waste” linear approach, particularly as the circular economy increasingly appears to be a more sustainable, eco-friendly option that supports consumer values, brand innovations and ecommerce advances.

The Washington Post defines a circular economy as “take, make, use, reuse and reuse again and again,” eliminating the waste component altogether or as much as possible, by creating a closed loop of usage. According to an article in Fast Company, “if the steel, plastic, aluminum, cement, and food industries adopted this approach, the report [by the Ellen MacArthur Foundation — a charity devoted to building circular economies] calculated that it would reduce 9.3 billion metric tons of greenhouse gases in 2050, as much as eliminating all of the current emissions from transportation.” A circular economic approach goes beyond recycling and renewable energy, but tackles the issue of production, material waste and consumption.

“We’ve been focused almost exclusively on renewable energy and efficiency, which are obviously essential, but it’s clear that we can’t meet the objectives unless we actually tackle production and consumption as part of the equation,” said Andrew Morlet, Chief Executive of the Ellen MacArthur Foundation.

The Circular Economy Is Being Embraced By City Initiatives And Entrepreneurs Around The World

Of course in order for the circular economy to work, there needs to be excitement and innovation around the idea. Cities, start-ups, product designers and brands are buying into the circular economy in different ways. 

Product design is a major player in the circular economy. Recycling is flawed. China won’t take U.S. recycling anymore, cities are running out of room and Americans toss 22 million tons of waste that could have been recycled. New designs and initiatives that allow items to be reused, fixed and saved must be a part of the circular economy, and many brands are starting to take the initiative to create truly reusable packaging, including start-ups like Bite and larger companies like Nestle.

Cities around the world are trying different circular economy solutions. By 2050, 65% of the global population will live in cities, and metropolitan areas around the world are piloting plans for circular economies better able to mitigate the environmental impact of concentrated growth. For example, Singapore’s Zero Waste Masterplan has inspired the creation of apps to help residents and businesses better understand where and how to recycle. One of the apps, RESQ, deals specifically with e-waste. (The United Nations (UN) estimates that more than 44 million metric tons of e-waste is generated every year.) RESQ helps businesses get their e-waste to proper recycling facilities. Many of the materials in computers are rare earth metals that are destructive to mine, so proper recycling of e-waste could have a lasting impact on the environment.

Car subscriptions and shares are integral to circular economies. People still love their cars, but younger generations in particular are more open than ever to car subscriptions and car shares. The World Business Council for Sustainable Development (WBCSD), an organization of business leaders committed to transitioning businesses to sustainable models, is working towards three solutions for car manufacturers who WBCSD believes can benefit in the circular economy. Those solutions include:

• Plastics and metals converting to closed loop use
• Second life opportunities for tires and batteries
• New ownership patterns

Brands Are Developing Innovative Solutions And Cautiously Entering The Circular Economy

Nick Liddell, a brand consultant in London, wrote about circular economies for The Drum, saying “These ‘circular’ relationships present huge opportunities and challenges for brand owners. The potential for greater intimacy, personalization and loyalty is huge. But in the process, marketers will have to drop traditional ‘linear’ ways of thinking. We will need to think in terms of ‘communities’ rather than ‘consumers’.”

Trusted brands may be more likely to get foothold in a circular economy than small start-ups, which is perhaps why companies like Nestle, Proctor & Gamble (P&G) and Seventh Generation are working with The Loop, a global circular shopping platform, to test the waters with consumers. The Loop allows consumers to purchase a wide range of products to be delivered by brand partner UPS, use those products and then return the containers for washing and re-filling. Loop offers an order autofill option for customers, but no membership required. The program is run by recycling company TerraCycle and is being tested in New York, Northern New Jersey and Paris, allowing brands to start small and gauge the level of consumer interest.  

Carrefour, a French retailer, is one of the companies participating in the Paris launch of The Loop. Laurent Vallee, Carrefour Secretary General, said, “It will surprise me if it works on day one,” adding that The Loop business model requires consumers “to act, to think and to buy differently.”

Digital Marketing And The Circular Economy Go Hand in Hand

Stephen J. Wright, a business leader and investor in sustainable start-ups has been beating the drum for digital disruption for 20 years and believes the circular economy and digital are natural allies. “The circular economy works to disrupt business models by separating economic growth from the use of natural resources,” said Wright, adding that businesses will be “more efficient, while also developing new sustainable relationships with customers through the use of digital technology.”

Direct-to-consumer (DTC), subscriptions, memberships and seamless mobile transactions all work hand-in-hand with new economies, including closed loop circular economies. New ways to buy, to shop, to innovate and disrupt naturally work together to introduce new ideas to consumers. For marketers this partnership presents exciting opportunities to leverage digital solutions to meet the needs of consumers in the circular economy.

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