The former CEO of Unilever, Paul Polman, wrote recently how companies are willing to invest in various IT solutions, HR etc. but when they should invest in humanity, the purse strings go tight.

We, indeed, are living in interesting times: we’ve reached the point in history where every CEO has to be able to say something about climate goals. This is great! And it is also much needed; besides the clock is ticking from the planetary perspective, the customer requirements shut out those who don’t have (ambitious) climate goals (as a short sidetrack: last year we had just finished a sustainability plan to one of our customers operating in the b2b field, when they got a request from one of their biggest clients asking them to describe their climate goals and actions).

We’re also entering an era, where every company has to have a circular economy (CE) approach embedded in their strategy. In addition to providing necessary tools for decreasing scope 3 emissions, CE approach should be the foundation of your strategy, mindset and R&D process.

So let us talk about the next step that you, as a CEO, need take to keep your leader position and, to inspire your company and get customers choosing your products. That step is to start planning your circular strategies, i.e., what is your company’s position in a circular economy and what is your offering.

Why? Because decoupling your company’s growth from the increasing use of virgin materials, natural resources and CO2 emissions is a precondition for you to be future-fit.

This is exactly what the EU wants companies to do through their most recent (March 2022) circular economy package. The new legislation wants to make sustainable and circular products the norm and by so doing, they’re pushing companies to design better. Another immensely important goal is to reduce Europe’s resource dependence and build more resilience into business operations and vulnerable supply chains.

The difference between linear and circular design

Before diving into the package, let’s see what the difference between linear and circular design is. In a nutshell: linear design focuses on the product solely, whereas circular design approaches the product as part of the system and starts with a question: how can the product circulate safely in the system for multiple lifecycles and retain its value? When asking this fundamental question, it becomes clear that besides material & chemical choices, the circular ecosystem around it should enable slowing and closing the loops in a low-carbon way. When looking at your products from this systemic perspective you start finding opportunities for decoupling.

While reading through the following highlights of the package, it’s worth reflecting what needs to change in your R&D and design process.

  • The existing Ecodesign Directive will cover almost all products setting requirements for durability, reliability, reusability, upgradability, repairability, ease of maintenance/refurbishment/recycling in addition being energy and resource efficient.
  • All regulated products will have to have a digital product passport to support traceability and reuse opportunities.
  • There is a specific strategy for textiles to make them more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.
  • Another specific strategy is for construction products with the aim to boost internal markets while meeting climate and sustainability goals in built environment.
  • And last, but not least, consumers will be empowered: all of us will need to be provided validated info on sustainability credentials – so goodbye greenwashing!

So, here’s a quick check-list for you to get started:

  • Have you identified relevant circular economy opportunities & new ways of value creation throughout your operations and value chain?
  • Have you identified circular strategies to decrease your scope 3 emissions?
  • Have any/some of the above CE package aspects been taken into account in your current R&D process?
  • Have you thought about piloting new CE product/service systems, but not sure how to do it?

If it feels like you might need some support in ticking in any of the boxes in the above check-list, let’s have a chat and see what we can do together.

 

Anne Raudaskoski, Head of Consulting

Ville Grönlund, Circular Business Development Consultant