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26 Jul 2021

From linear to circular: the business transition to sustainability

Nicolas Breyton, Electrical Distribution & Power Products Strategist, Schneider Electric
From linear to circular: the business transition to sustainability
Today’s economy has the potential to become sustainable if companies thought of the world as an island in the middle of an ocean of inhospitable space.

This island – our Earth – provides us fresh air to breathe, freshwater to produce enough food, and provides an abundant amount of energy to distribute food and to build all the necessary materials around us.

All resources on a large island can seem abundant, but they will eventually, become constrained.

Sustainability is systemic: either we all succeed together to create a sustainable business ecosystem, or we all will face shortages of critical resources.

We must decouple the production of all companies from the amount of energy consumed and the raw materials necessary to manufacture final products.


This article was originally published on The Guide - Season 3 | 2021

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The understanding of material density is key for improving sustainability. We must reconsider just how much metal, other materials, and energy are necessary to produce goods. The denser our world becomes in material used for energy and resource production, the more sustainable wealth we will keep.

Companies expected to succeed in the 21st century are those that are conscious about the limits of physics on energy and minerals. Further, they will move their core business towards the highest density and resiliency to transform the weakness of scarcity into a business strength.

And that strength will precisely come from embracing the circular economy concepts in the core business.

The concept of a circular economy is very simple: it is about closing all the loops of the linear economy to optimise resources.

It is about prolonging product lifespan by refurbishing, repairing, and remanufacturing products to extend their functionality as long as possible, and it is about reusing parts and components in new manufacturing processes.

Sustainability is systemic: either we all succeed together to create a sustainable business ecosystem, or we all will face shortages of critical resources.

It is also about maximising business turnover by reselling the same repaired product many times. And ultimately, it is about designing modular and robust products that are easy to dismantle and repair, to enable a new profitable and high- quality second-life business.

The circular economy today

We are at a tipping point. Today, we will start facing oil and plastics scarcity, forcing us to recycle more. At the same time, electrification will demand a huge amount of metals to distribute the power to each of the freshly electrified applications.

Researchers predict that more metals will be extracted in the next 30 years than during the whole history of humanity. This represents a complicated business environment that attempts to reduce our dependence on fossil fuels and minerals, while at the same time, produce

more low-carbon power, heat, and synthetic fuels such as hydrogen and ammonia.

A French study on copper reserves shows that despite metallic mining depletion, one can reach a sustainable copper world supply over the next 100 years, provided we reach 70 per cent of reuse in our supply chains.

Although the timing is unclear, the trend is already there: semi- scarcity will slowly become the rule in the next decade. This does not signal the end of mining, but to reach business sustainability, we will need to dig deeper and deeper, to extract the same amount of metals, requiring more and more energy.

At the same time, we also need a huge amount of energy to melt again used metals and to purify them after systematic recycling.

So along with the environmental challenge, going circular is also about becoming less dependent on fossil fuels to generate our energy and plastics and less dependent on new metals for our products.

From circularity to profitability 

The Take-Make-Waste era is over. The principles of circular profitability are to monetise all products that still have a function, even if slightly altered or downgraded. While few of today’s products have been designed to achieve true circularity, keep in mind the five success factors that can drive circular profitability:

  1. Create efficient reverse flows and repair centres. To succeed, it is very important to reach critical mass quickly, to provide recurrent business to repair centres, as well as a wide range of high-quality second-life offerings for our customers.
  2. Build circular eco-designs that make dismantling and repairing quick, with scrapping and recycling becoming the very last option.
  3. Deploy digitisation and IoT technologies as enablers for a circular economy. Each product should onboard its circular “digital passport” to assist customers in their preventive maintenance from go-live to end-of-life and provide full traceability of the location of each serial number, the accessories changed, as well as assistance in the process of disposal during the end-of-use. IoT will enable aging calculations based on environmental conditions which are essential to help filter the “goods to be repaired” from the “goods to be recycled.” Eventually, web marketplaces will allow all facility managers to monetise their installed equipment base instead of simply scrapping these items.
  4. Create an ecosystem of circular partners. In this playing field, cooperation is much more powerful than the competition. It is utopian to think companies will manage everything by themselves. Some partners will specialise in collection, some in repairing or reselling, or others can perform recycling as a service. This ecosystem can even be achieved with your competitors to help share the costs.
  5. Timing must be properly managed from juggling new regulations to effective mineral tensions.

 


This article was originally published on The Guide - Season 3 | 2021

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