A carefully considered circular business strategy contradicts consumption-based models by keeping products and resources usable for as long as possible. Success can reduce emissions, strengthen supply chains and increase customer loyalty. Which steps should decision-makers take when bringing these principles into their companies?
Understand the types of circular business models
The circular economy broadly aims to keep products and materials usable for as long as possible through measures such as repair services, recycling and reuse. However, there are five specific types of circular business models within those ideals. They are:
- The circular input model: Companies prioritize using renewable, sustainable or recycled materials to reduce or eliminate production waste and pollution.
- The sharing economy concept: Businesses share idle assets to lower the need for individual purchases.
- The product-as-a-service model: Customers use these items for limited times, incentivizing the entities owning them to keep them well-maintained and upgraded for reliability.
- Product use extension: This category includes actions such as repair, reconditioning and reusability, so the goal is not for businesses to sell as many items as possible, but to lengthen the time people can use them.
- Resource recovery: This model reclaims nonfunctional products’ materials, energy and resources, and enterprises usually have programs set up to incentivize customers to return them.
Although leaders may use more than one of these types, they should begin by choosing one to initially focus on before potentially expanding the efforts. That approach helps them proceed intentionally rather than rushing.
Set circular economy goals
Decision-makers should also determine what they hope to achieve by embracing the circular economy. Do they want to lower emissions, purchase fewer raw materials or minimize the waste processed by third parties?
After finalizing their aspirations, they should set measurable, challenging targets to meet within a specified time frame. Learning about what other companies could inspire them to pursue similar possibilities.
Apple was an early adopter of the circular economy, announcing its intentions in 2017 to eventually make its products from 100% recycled and renewable materials. It is a long-term goal, but the technology company tracks its progress. In 2024, 24% of shipped products by weight contained recycled materials
Employees have also collaborated with external consultants to learn more about the current circular economy landscape and discover untapped opportunities. This granular view of the supply chain increased their understanding.
Develop a viable circular business strategy
When leaders begin creating a feasible circular business strategy, they should consider product-related limitations that may require using specific options. If a package’s contents include consumables or other items potentially affected by light and moisture, the proposed sustainable materials must adequately protect them.
Some health and beauty product containers include plant-based polymers and refill-friendly designs, offering the excellent durability and sustainability required for things people may use daily. These may increase business costs, so leaders should prepare to pay more if they anticipate long-term payoffs.
Achieving goals may also mean partnering with new entities. If companies select compostable packaging materials, those options require processing at specific waste management facilities to break down completely.
Staying aware of the likely challenges and assessing practical, creative ways to overcome them will help business representatives find the best circular business strategy solutions. It is better to proceed slowly and thoughtfully rather than selecting possibilities too hastily.
Set metrics to track
Monitoring statistics helps decision-makers verify their progress in pursuing various types of circular business models. British cosmetics brand Lush publicizes its improvements through a report.
The one containing 2024 data revealed nearly 1 million plastic packages returned that year. The information also confirmed which shop locations received the most. Because Lush operates a program where people can exchange empty containers for new products, those are valuable insights about overall adoption rates.
If a company launches a repair or refurbishment program, its leaders might use similar statistics to gauge customers’ overall interest, awareness and satisfaction with items returned to them. Most circular economy strategies are not immediately perfect, but statistics reveal progress and areas for improvement.
Make the circular business strategy adaptable
Besides considering these actionable tips, the involved parties should look for ways to make their plans remain relevant despite societal changes, consumer trends, supply chain challenges and other aspects potentially outside a company’s direct influence. Although things change, the circular economy remains an attractive option due to the numerous benefits it brings.
Emily Newton- Editor in Chief
emily@revolutionized.com
