3.fundamentals-circular-economy.pdf

FUNDAMENTALS Circular Economy From Linear to Circular Economy What is Circular Economy? Cradle-to Cradle Design Model How to employ...

FUNDAMENTALS Circular Economy From Linear to Circular Economy What is Circular Economy? Cradle-to Cradle Design Model How to employ the Strategies? Business Cases ©2023 B2G Copyright MODULE 1 : FUNDAMENTALS - CIRCULAR ECONOMY From Linear to Circular Economy ©2023 B2G Copyright Transitioning from a LINEAR … to a CIRCULAR ECONOMY ECONOMY … Natural Design Resources Retail Take Make Use Dispose Waste Recycling Consumption Collection Forcing Take, make Companies Doing more Reduce, Companies nature to and waste improve with what reuse and work produce efficiencies VS nature can recycle together to more in isolation produce increase of each other value ©2023 B2G Copyright  “A purposefully designed What is Circular Economy? economic system inspired by natural systems, regenerative of human and natural capital that works long term for all stakeholders” ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? The inefficiencies of the ‘take-make-waste’ linear economy are transformed into business value by keeping resources and products in use for as long as possible The circular economy is based on three principles: Eliminate waste and pollution; Circulate products and materials at their highest value; Regenerate natural Design out waste Regenerate nature. systems We are shifting and pollution to a system The main focus of this economy is to maintain the added value where we of material while eliminating waste as best as possible. This video by The Ellen MacArthur Foundation is explaining the Circular Economy and how society can Re-think progress. The Foundation works in Education & Training, Business & Government, Insights & Analysis, Systemic initiatives and Keep products and communications to accelerate the transition to a circular materials in use economy. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? Regenerative Economic system’s goal is to have an economy that fully regenerates any resources it uses and repairs previously done damage to the ecosystem The emergent paradigm of Regenerative ECONOMY Economy addresses the approaches for a Place - Culture - Entreprise - Government - Commons sustainable future. LESS Sustainable —approaches limiting negative Energy / Materials Holistic Thinking Required Patterns impact to the point at which the ecosystem Natural System Design get back as much as it gives; REGENERATING Restorative—approaches that restore CONVENTIONAL GREEN SUSTAINABLE RESTORATIVE REGENERATIVE ecological, social and economic systems to a DEGENERATING Mechanistic Design healthy state; MORE Reductionist Thinking Parts Energy / Materials Regenerative—approaches that enable Required ecological, social, and economic systems to flourish, resulting in co-benefits. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? The CE system aims to drive innovative actions and business models targeting sustainable economic growth while increasing resource efficiency How is the Circular Economy concept different from the Sustainability approach? Sustainability Objectives: Circular Economy Objectives: Minimize negative impact on people, planet and economy; Lack the social perspective, focuses on resource cycles; Reduce GHG emissions, mitigate natural resources consumption to reach sustainable production and VS Same as the Sustainability objectives PLUS regenerate natural and social capital AND provide an consumption of goods and services. implementation toolkit. Sustainability = Being LESS bad Circular Economy = Doing MORE good ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? The Circular Economy is a system designed to regenerate Biological, Technological and Social stocks Bio., Techno., Social Resources: Extraction Regenerate Recycle Biological Technological Capital/stock Capital/stock Refurbish / Maintain remanufacture Regenerat Production e Re use Restore Maintain Social Capital/stock Cascade Use / Consumption Protect / Maintain / Develop: Education, Health, Culture, Meaningful Jobs, Voluntary work, Equality Leakages / Waste streams (minimize) ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? The Circular Economy is a system that creates, captures and distributes value along the value chain Indirect Value Chain Value Creation: Create economic and customer value following the three pillars of sustainability and in a manner aligned with a Circular Value Creation approach, increasing resource efficiency through product circulation beyond their Circular Value Circular Value Direct Value Chain Direct Value Chain first use phase. Creation Capture Value Capture: Turn the Value Created into profits or competitive advantage. Value Distribution: Distribute the new value from circular business models in the value ecosystem and broader Circular Value operational environment of the business. Distribution Upstream Supply Chain Downstream Supply Chain Indirect Value Chain ©2023 B2G Copyright  Circular Supply Chains 01 Source materials that are fit for a CE (pure, non-toxic, tolerating long and multiple lifecycle with low value depreciation) Recovery & Recycling 02 Recovering embedded energy and resources from waste WHAT IS CIRCULAR ECONOMY? streams or by-products The Circular Economy Product Life Extension is driven by five 03 E.g. through repair, maintenance, upgrades, resale or remanufacturing business models Sharing Platforms 04 Collaborative models to increase material and product utilization ratios and asset recirculation Product As A Service (PSS) 05 Offering access over ownership, selling product functionality without change of product ownership. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? These CE business model types have the potential to help drive significantly higher resource productivity than alternative linear concept 2. Resource recovery: recycle 3. Resource recovery: remanufacture 1. Circular supplies 3. Product life extension: resell 3. Product life extension: repair / upgrade Direct Value Chain Direct Value Chain Production / Distribution / Product & Product Design Procurement Logistics End of life disposal Reverse logistics Manufacturing Sales & Marketing Service use 2. Resource recovery: waste as input 2. Resource recovery 4. Share 5. Product as a service Waste / leakages (reduce and eliminate) Other production processes in direct and indirect value chains Indirect Value chain Upstream Supply Chain Downstream Supply Chain ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? Circular supply chains are necessary to deploy the CE concept at the organization and business ecosystem levels Intensifying resource Dematerialising loops- Product Life resource loops - Proactive multi- Extension Product As A Service Sustainable Long-term stakeholder value perspective Closing resource management Slowing resource Narrowing resource loops - Circular loops - Recovery & loops - Sharing Supply Chains Recycling Platforms Sustainable Circular Business business business Model model model Solutions for Solutions for the sustainability Circular Economy ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > WHAT IS CIRCULAR ECONOMY? Each Circular Business models archetypes one demand different Circular Supply Chain setups and resource loops design Strategic Management view: Systemic view: The circular Organisation The sustainable Circular Economy Value network level Circular supply chains Sustainable (CSC) development Enable Closing, slowing, Driver intensifying, narrowing and dematerialising Conditions for sustainability: Economic, environmental and social goals; Circular Circular business models Economy (CBM) Proactive stakeholder management; Organisationa l level Long-term perspective. ©2023 B2G Copyright MODULE 1 : FUNDAMENTALS - CIRCULAR ECONOMY Cradle-to Cradle Design Model ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > CRADLE-TO-CRADLE DESIGN MODEL A design method inspired by nature, it aims to produce products of all types that can be recycled at the end of their life Current Situation: Produce, Use, Waste Solution 1: Reduce, Reuse, Recycle Solution 2: Cradle to Cradle Time Time Time Bio Bio Bio Cycle Cycle Cycle Resources Resources Resources Tech. Tech. Tech. Cycle Cycle Cycle Products Products Products Wastes Wastes Wastes The Earth’s resources are being depleted. Resources still depleting but more slowly by Completely healthy for the earth and its Population is increasing which drives up reducing production. inhabitants. production of goods. Waste recycled for new products, but waste still All power comes from renewable sources only: Increased production leads to increased waste. grows. solar energy, wind power and water current. It’s just a matter of time before resources are Production only uses harmless technical ( totally depleted. inorganic materials) or biological nutrients (Organic material). Waste re enters the system as a technical or biological resource. Cycles often combine for efficiency and better products. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > CRADLE-TO-CRADLE DESIGN MODEL The C2C model can be implemented to any industry outlining five steps, it’s a way of producing that honours the future generations Cradle to Cradle Design Model In 2002, German chemist Michael Braungart and US architect William McDonough released a non-fiction book Cradle to Cradle: Remaking the Way We Make Things. It is a manifesto detailing how to achieve their Cradle to Cradle Design model. ©2023 B2G Copyright MODULE 1 : FUNDAMENTALS - CIRCULAR ECONOMY How to employ the Strategies? ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > HOW TO EMPLOY THE STRATEGIES? The transition to Circular Economy requires various capabilities and collaborations CE deployment suggestions Develop deeper supply chain cooperation aiming for value co-creation within the extended stakeholders network (suppliers, regulator: Map Supply Chain to identify circular value creation opportunities and deployment pathways; Consider the mutualisation of resources, materials and of idle assets through Product Service System agreements (E.g. asset recirculation, sharing platforms, etc.). Deploy environmental impact and Circular Economy action monitoring tools/technology to measure the ‘material intensity’ and the ‘resource productivity’ of assets i.e. the ‘asset material productivity. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > HOW TO EMPLOY THE STRATEGIES? It is an iterative, continuous process based on the evolution of the stakeholders needs, regulations, implemented changes successes and failures 01 Define Set the goals of the organization's system, process, resource flow or serve. 01 02 Map The stakeholders: public, private actors, citizens, visitors, etc… 06 02 03 Identify The system current macro, meso and micro levels. Iterative Continuous 04 Identify Process The system leverage points: where to implementate the first changes. 05 03 05 Set Co-creation structure to re-design the system (actioning the leverage points) with the identifies stakeholders. 04 06 Assess Financial and environmental outcomes, and reiterate step 2,3,4 and 5. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > HOW TO EMPLOY THE STRATEGIES? Value Chain Canvas help the organization to collect accurate information, organize it and make sure all the steps are respected Define 01 Set the goals of the organization's system, process, resource flow or serve. Map 02 The stakeholders: public, private actors, citizens, visitors, etc… Identify 03 The system current macro, meso and micro levels. Identify the value chain actors, partners and challenges at each stage of the value and supply chains; Use a Value Chain Canvas Tool ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > HOW TO EMPLOY THE STRATEGIES? Partner Map Tool help see things more clearly! Who is acting where? On what level and at what time? In interaction with whom? To accomplish what task? Identify the supply chain: System 04 Leverage Points Identify the value chain and supply partners at each stage of the the operations and supply chain. Use a Partner Map Tool ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > HOW TO EMPLOY THE STRATEGIES? Circular Canvas Tool help keep in mind the points to watch while taking into account the system around the user and design a solution to meet the needs Set a collaborative, co-creation structure 05 to re-design the system Innovate the business model, service, process, resource flow by involving the direct and non-direct value chain actors. Use a Circular Canvas Tool. Assess outcomes 06 Develop a long-term, multi-stakeholder vision; Profile products, services, resources (tangible and intangible) that may be suitable candidates for material refurbishment, repair, parts harvesting, remanufacturing or recycling; Assess the potential for ‘sertivitization’ within the operations and supply chain, especially on the procurement part (i.e: replace materials, resources ownership by the materials and resources services); Use pilot projects to demonstrate success to senior leadership and win support to move more products, services, resources, flows on a circular transformation path. ©2023 B2G Copyright MODULE 1 : FUNDAMENTALS - CIRCULAR ECONOMY Business Cases ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > BUSINESS CASES The business case for a Circular Economy transformation will vary depending on the material intensity of the organisation The material intensity can The material intensity of the be described as the amount organisation will vary of tangible, finite resources greatly depending on the used, transformed within the industry, sector, competitive supply chain and business environment, regulations model of the organization. (especially waste management). Car manufacturers, apparel The higher the material and clothing producers will intensity, the stronger will be have much higher material the case for a Circular intensity that ground Economy transformation and transport operators and the shorter the ROI could be. business service providers. ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > BUSINESS CASES Rapidly changing regulatory regimes, environmental, social and governance (ESG) requirements and demand pressures, will reward first movers in the CE transition What are the potential benefits from a CE transformation in Supply Chain Management? Lower CAPEX Lower OPEX Additional Revenue Streams through asset optimization and upstream through resource and waste stream through asset sharing and recirculation supply chain servitization optimization and higher staff engagement and retention Increased resilience Strengthened innovation culture Optimized risk profile & brand value through localized upstream side supply resulting in new revenue streams will result in building a strong brand chain reputation, attracting and retaining customers ©2023 B2G Copyright MODULE 1: FUNDAMENTALS > CIRCULAR ECONOMY > BUSINESS CASES Plenty of organization from all sizes started implementing a circular design to their products Offers light-as-a-service instead of selling lighting Sells carpet tiles with guaranteed buy-back appliances The higher the product quality, the higher the product value is to Digitization and modularity provide information on products Interface. By evaluating the products’ condition at the clients usage ratios, their conditions, thus allowing for cost effective location, Interface knows which product to repair or change and replacement and reuse of spare parts in mult in what materials can they take back into the repairing and remanufacturing processes. Rents out set-top boxes Rent out office furniture on a subscription basis instead KPN retains ownership of its products, this incentivising the of selling organisation to design long lasting and repairable products. Retaining value through product life extension enabled by the repair and remanufacturing multiple lifecycles of the furniture products included in their leasing plans. Rents out jeans instead of selling jeans as a product as a Provides vertical mobility via elevators (including single transaction maintenance) instead of selling the lift as a product Offered on subscription basis with a repair service, MUD Jeans are By making the customers pay, in part, for the service provided by partially designed with recycled materials with vastly reduce the lift, the ’vertical movement’, the payments are only made material intensity at the production phase and at the use phase when the elevator is used, not for its idle status availability. through extension and multiplication of lifecycles. ©2023 B2G Copyright