Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

We have categorized 2 documents as Circular Economy. All documents are displayed on this page.

As John Elkington, a world authority on corporate responsibility and sustainable capitalism, once said, "The circular economy is not just about closed loop recycling; it is about closed loop design." We live in a world of finite resources, yet operate under an economic model that values consumption—a model that is no longer sustainable. The concept of a circular economy offers an alternative path.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Flevy Management Insights: Circular Economy

As John Elkington, a world authority on corporate responsibility and sustainable capitalism, once said, "The circular economy is not just about closed loop recycling; it is about closed loop design." We live in a world of finite resources, yet operate under an economic model that values consumption—a model that is no longer sustainable. The concept of a circular economy offers an alternative path.

A circular economy, as defined by Accenture, moves beyond the traditional 'take-make-dispose' linear model to one that is regenerative by design. The goal is to retain as much value as possible from resources while in use and recover and regenerate products at the end of their service lives. This shift in economic thinking presents both challenges and opportunities for companies— and their leaders— who are willing to innovate and commit to a more sustainable way of doing business.

In a report by McKinsey & Company, four key components that characterize circular economy business models were identified: circular supplies, resource recovery, product life extension, and sharing platforms. The adoption of these principles is not just right for the environment but also potentially profitable. According to the World Economic Forum, the circular economy could generate $4.5 trillion of additional economic output by 2030.

  • Circular Supplies: This entails the use of renewable, bio-based, or fully recyclable materials to reduce dependence on raw extractions. A good example of this is Apple's commitment to use 100% recycled or renewable materials in its products and packaging.
  • Resource Recovery: This includes innovative ways to recover and reuse by-products, waste, and energy. Companies like Tesla are already capitalizing on this through their energy storage and recycling programs.
  • Product Life Extension: This includes methods for extending the life of products, such as repair, upgrading, remanufacturing, or remarketing. As a leading example, Patagonia operates a repair and reuse program for its apparel products.
  • Sharing Platforms: These models are designed to maximize the utilization of assets by enabling shared use/access/ownership. Consider Uber and Airbnb, which have become global giants by leveraging the sharing economy.

For effective implementation, take a look at these Circular Economy best practices:

The Role of Leadership in Transitioning to a Circular Economy

To successfully implement a circular economy strategy, strong Leadership and Culture is vital. Deloitte's 2018 Global Chief Procurement Officer Survey revealed that 64% of CEOs cite 'circular economy' as a top priority. This requires a holistic viewpoint, where sustainability isn't an appendage but a core part of Strategy Development and Risk Management within an organization.

Moving towards a circular economy requires Innovation and a rethinking of traditional business models. In a study by MIT Sloan Management Review, it was found that organizations who engage in 'serial innovation'—the continuous and intentional process of changing and re-evaluating business models—are more likely to find success with implementing circular economy practices.

Explore related management topics: Strategy Development Risk Management Leadership

Realizing the Benefits of a Circular Economy

As digital accelerates our consumption and waste, the transition to a circular economy becomes more critical than ever. In a report by The Boston Consulting Group (BCG), transitioning to a circular model can offer companies numerous benefits, such as reducing cost, mitigating risk, and driving innovation. The shift can also foster a more positive brand image, improve customer relations, and act as a driving force for change within industries.

A Goldman Sachs report observes the circular economy as an economic opportunity, a tool for risk management, and an avenue towards achieving sustainability goals. This shift reflects not just a transient trend, but a fundamental change in the way we conceptualize and conduct business.

To close this discussion, the need for a circular economy has never been more urgent. By adopting circular economy principles, businesses can foster a culture of innovation, enhance customer and stakeholder relationships, and contribute to making the world a more sustainable place for future generations.

Circular Economy FAQs

Here are our top-ranked questions that relate to Circular Economy.

What metrics can companies use to measure the success of their circular economy initiatives?
Companies can measure circular economy initiative success through Resource Efficiency, Waste Reduction, Financial Performance, and Customer Engagement metrics, identifying improvement areas and driving sustainability, profitability, and brand value. [Read full explanation]
Can you provide examples of how small and medium-sized enterprises (SMEs) can adopt circular economy principles?
SMEs can adopt circular economy principles through Product-as-a-Service models, optimizing supply chain sustainability, and developing circular products and services for environmental and competitive advantages. [Read full explanation]
How is artificial intelligence (AI) being used to optimize resource recovery in the circular economy?
AI is enhancing the circular economy by improving Waste Management, Product Lifecycle Management, and Supply Chain Sustainability, offering significant environmental and economic benefits through innovation and efficiency. [Read full explanation]
What are the most common barriers companies face when transitioning to a circular economy, and how can they overcome them?
Overcome barriers to transitioning to a Circular Economy through Leadership, Innovation, Operational Excellence, and Collaboration for sustainable growth and competitive advantage. [Read full explanation]

Related Case Studies

Circular Economy Advancement for Ecommerce in Sustainable Retail

Scenario: The organization, an ecommerce platform specializing in sustainable retail, is facing challenges integrating Circular Economy principles into its business model.

Read Full Case Study

Circular Economy Transition for Packaging Firm in Sustainable Market

Scenario: A packaging company specializing in consumer goods is grappling with the transition to a Circular Economy model to reduce waste and enhance resource efficiency.

Read Full Case Study

Circular Economy Transformation in Maritime Industry

Scenario: The organization is a global maritime shipping company that has recognized the need to transition to a Circular Economy to stay competitive and reduce environmental impact.

Read Full Case Study

Explore all Flevy Management Case Studies

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.