In our August 31 post, we included circularity, or circular-economy practices, as the first of five building blocks in Homera's Holistic Value Chain (HVC) sustainability toolkit for small and midsize businesses. It is first for a reason, as it ought to be the starting point of any strategy that aims to create a more sustainable business.
But what is circularity? What does it consist of? It is a question we are often asked and just as often address. At Homera, we feed off the pivotal work of the Ellen MacArthur Foundation, an organization based in the United Kingdom that has become the clear thought leader on this front. We encourage you to visit their website and go through the practices and case studies from around the world.
Circularity is clearly a next-level sustainability best practice for your business, no matter your industry or size. To date, it has been implemented primarily by large enterprises, but our mission, shared by the Foundation and others, is to mainstream it among SMBs, where most business and economic activity is found. There is absolutely no reason you cannot enjoy the same huge benefits the larger players are realizing, while contributing to society and the planet as a whole, which in turn also strengthens your bottom line!
Circularity applies primarily to physical, tangible goods as you purchase materials, consume them in the day-to-day of your business, and in the case of manufacturers, use these goods to manufacture your products.
We like to summarize the concept in Six Big Options and Nine Big Gains. The former are the six things you can do, or the six options you have, when you make a purchase and what you do at the end life of everything you own and buy. As you read through the Options, think process and system design, or redesign. It is the first thing we do in HVC Circularity. You have to step back, look at your whole company from end to end, and connect the dots from the moment each material enters your consumption/manufacturing stream to the day it exits. Let's take a look.
The Six Big Options
REDUCE. You've no doubt heard this one. If your end-to-end process scope reveals a reduced need for certain things, buy less of them. We'll get into the Nine Big Gains later, but here's a spoiler: buying less saves a ton of money. But wait, there's more! Reduce doesn't just apply to fewer things. It also refers to reducing the toxicity and externalities of what you do buy. Take a closer, deeper look at your supply chain, and start buying stuff that harms fewer people or none at all, that preserves or regenerates natural resources, and that slashes fossil-fuel-energy use and carbon emissions. (More on all below.)
REUSE. The moment you buy something, it enters your company's stream. The same applies to everything you own today and is already in your consumption-production-waste stream. At one point, when you think that material has reached its end-of-life point, your existing process would probably have it thrown out and another one purchased. So let's redesign that process to have your teams spot when something is still useful, for some purpose, even if not the same one. Redesign means we envision the life of that material from the moment it is bought. Your new system would track it, or at least flag it at the end and already have a reuse for it. This way, you circulate it back into the company.
RETURN. The next four Big Options will have you do something with your materials outside the company, when they do finally reach their end-of-life, other than simply throw them out. This one entails returning them to your supplier. That requires you buy from suppliers that actually take the stuff back, whether free or paying (preferably the latter, so you can generate revenue from your "garbage"). And that, again, calls for some system redesign at the purchasing end, when we take a deeper look at your supply chain. When you do, you'll likely be pleasantly surprised at the number of suppliers who will go along, since they, too, are looking for ways to save! Here, you'll be circulating back into your suppliers’ production process.
RECYCLE. There is a bit of misconception about this practice. Reuse is typically confused with recycle. In HVC Circularity, the latter happens when you send or sell end-of-life materials to recycling companies that loop them into their manufacturing to create other products. And again, this can be envisioned and planned at purchasing time.
SELL. When you no longer have any use for certain materials, and you can't return them to suppliers or sell them to recyclers, try selling them to another end user. There are now robust communities of people, companies and organizations, not to mention such developed resale markets as Craig's List and eBay, that stand ready to buy your...yes, your "garbage".
DONATE. And if you can't figure out a way to sell it or do any of the above, give it away. If it is still in good shape and relevant, no doubt you’ll find someone who will use it. A school. A church. A non-profit. A low-income family. A government agency. They're out there. Bring your Community & Public Relations team to the table. Make them an integral part of this front. The branding and goodwill gains to be had are big. If you don't already have the relationships, this, too, is part of the redesign!
Nine Big Gains
SAVE MONEY. We spoiled this one in the first Big Option. But did you add up all the ways you can save money across the other options? You save by buying less with Reduce and Reuse. The lower your toxicity and externalities, the better your risk management and therefore the lower your loss liabilities. In fact, saving money runs across other Big Gains below, so let's go there.
PRESERVE RESOURCES. This is where circularity can become regenerative, one of the biggest and most hopeful trends in sustainability today. By buying less and helping the other end users of your materials also buy less (your suppliers when they buy them back, the recyclers, community groups, etc.), you reduce the need for new-material extraction and production, and that in turn helps regenerate previously impacted natural resources and preserve those yet untouched.
REDUCE EMISSIONS. On the energy front, as a general principle, the lower the extraction, production and long-haul transport of stuff, the lower the associated carbon emissions, and therefore the reduced risk of catastrophic climate change. This is a Big Gain not just for you, since climate change will hurt your business, as well, but for society as a whole, which leads straight into Big Gains 5-7 below.
REDUCE EXTERNALITIES. We mentioned this as part of Big Gain 1 above, and it, too, leads right to 5-7 below. One thing to understand about circularity is that it helps your company do no harm, or less harm, to other people and the planet. When you redesign your processes and production to use less land, you enhance the surrounding urbanism. If you're into food and make it less toxic, or make your agro-land practices non-toxic, you improve public health. And we've already mentioned climate change.
ENHANCE INNOVATION. To begin with, this entire redesign exercise is a form of innovation as we uncover better, leaner, more profitable ways of doing things. As proven by countless case studies, the path to preserved resources, lower emissions and reduced externalities invariably produces ideas that save money (#1 above) and/or new products you can make and sell, which in turn represent new revenue streams (#8 below).
ENHANCE MOTIVATION. This is a much-underappreciated benefit of circularity and sustainability more broadly, yet it might turn out to be the biggest gain of all. Your people become absolutely impassioned toward the company, more so than they may already be. That yields greater retention of top talent, easier acquisition of new top talent, lower absenteeism, stronger teamwork, and enhanced productivity and innovation. They care more when they see you care as much as to implement a holistic approach such as this. And that is freaking priceless, though we know some HR pros who are actually able to put a dollar value on it! Because it is, in fact, a dollars-and-cents benefit.
STRENGTHEN BRANDING. In addition to the brand benefit from the community relations piece mentioned earlier, your public relations team will have a feast pitching your corporate message when your circularity is up and running. This is as socially responsible as a company can get, regenerating resources, reducing emissions, improving public health, enhancing urban landscapes, innovating non-toxic products, motivating employees, giving stuff away. And since your brand and message translate into far more loyal customers and more meaningful relationships, the result is higher sales, which leads us to the next Big Gain.
GENERATE REVENUE. Yes, from branding-driven higher sales, but also from selling end-of-life materials to recyclers, back to suppliers, through Craig's List, etc., as well as innovation-driven new-product sales. Let's just say circularity sells!
BECOME NIMBLE. Finally, though certainly no less important, if this entire project achieves anything, it is to make your company more responsive to market changes, which in this Age of Disruption (from new technologies, kitchen-table entrepreneurs, global competitors from emerging markets, etc.) cannot be underestimated. When you can take this sort of end-to-end holistic view of your operation and assign several teams to the task, or all your team if you're a small company, you are lean and mean and ready to respond and adjust course at a moment's notice. Nimbleness saves companies these days. It makes you a stronger competitor. You become the one to watch and perhaps fear. You're the innovator, the beloved company everyone will want to work for, buy from and do business with.
When you go over these lists of the Big Six and the Big Nine, you'll understand why we call our method Holistic Value Chain, because the only way to do this right is to look at your value chain as an integrated, holistic whole. It's all connected, end to end, all the inputs that create value for your company and the ouputs your company creates. Which is why we say: for best results, go circular.