OM in the news: What it takes to move to a circular economy

We take resources from the earth. We make things out of them for use. And then, we throw away whatever is left. The cost is borne out not only in landfills, but also through emissions, as our consumption fuels the climate degradation.

 Shifting a “linear economy” toward circularity requires major changes to business and operating models, supply chains, and B2B and B2C consumer behavior. Yet circular solutions can contribute to a better future. We discuss this “circular economy” in Supp. 5 (see p. 197).

The World Economic Forum recently brought together four industry leaders whose ideas on what it takes to go circular are summarized below:

First exec: For mature companies, the mindset shift means making investments in areas where there may not be imminent business value or impact. For those at the beginning of this journey, it can start with small steps towards replacing existing materials (such as packaging) with more sustainable and economically viable alternatives. These small steps can have huge short-term impacts and set the path toward more systemic changes in the future.

Second exec: Start by developing a clear picture of global end-to-end impact, including supply, production and use of material flows. Embed a circularity mindset and principles across all parts of the company, starting with business strategy, innovation process, capital allocation, HR management and rewards, brand positioning, marketing, etc. Sustainability commitments then become an integral part of a company’s purpose and culture.