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Disrupt or Die: Brand Leaders Talk Logistics of a Circular Economy
March 20, 2014
No one can deny that the emergence of circular economy thinking is throwing up some fascinating dynamics right now. This urgent need for systems-level redesign requires an experimental cocktail of innovation and imagination, not to mention open platform dialogue and collaboration. Increasingly, brands are realising that is it no longer sufficient to be wedded to sustainable ideals; they need to be prepared to disrupt their business models from within.
Just take this recent sound bite from Kingfisher Group CEO Ian Cheshire: “I'd rather disrupt my own business than have a competitor do it for me.” Cheshire was talking at Resource, the world’s first major circular economy event held earlier this month in London, where he called for tougher legislation to help incentivize the creation of more closed-loop inventions, such as Kingfisher’s power drill, that will drive material flow optimization.
But bringing a circular economy to life also requires a formidable amount of business risk. P&G’s corporate waste strategy leader Forbes McDougall highlighted the need for big corporates to mix things up by connecting with smaller, more nimble entrepreneurs. “It can be economically driven and that would really accelerate the uptake of this concept across business,” he observed.
One of the big challenges, especially if brands are looking to buy in more disruptive thinking and skills, is creating that safe platform for dialogue. There are a number of sensitive barriers to negotiate here — not least those of competition laws, disclosure agreements and intellectual property rights. This is an area that the Ellen MacArthur Foundation’s Circular Economy 100 initative could potentially get a grip on, as could the more design-led Great Recovery project and the forthcoming Disruption Innovation Festival.
The concept of circularity relies heavily on promoting new models of consumption that move away from ownership towards leasing, sharing and access. This will likely see consumer-facing brands prosper, especially if they get the messaging right. Take the example of eBay’s Common Threads partnership with Patagonia — a genius move by both brands to tackle the downstream impacts of apparel goods during the use and disposal phase. At Resource, eBay’s head of social innovation for Europe Lorin May revealed that her company was actively exploring how it could use its global reach to help brands progress further on this agenda.
These types of partnerships can only work if there is mutual gain to be had on both sides. Working towards circularity is likely to become increasingly competitive and there is a danger that companies may look instead to take single ownership of a particular product chain. Lifecycle ‘ownership’ of such goods down the supply chain could lead to cross-subsidization of markets and a monopoly-type scenario. As a result, higher costs and production inefficiencies might occur.
What is healthier perhaps is the creation of more ‘open-loop’ systems as proposed by Interface’s sustainability director Ramon Arratia, whereby circular stakeholders, particularly manufacturers, look to scavenge waste materials from outside of their supply chains. Defining the size and scope of these loops, whether closed or open, and how they might best intersect and interact is certainly one area that requires closer inspection.
In addition, the creation of each new circular business model will come with its own associated carbon impact and this is a dilemma that companies will have to wrestle with. There is no point trying to re-engineer a ‘better’ system if the material, energy and labor inputs don’t justify the final savings that can be gleaned from the output. Already certain organizations such as The Restart Project are questioning whether important considerations such as product durability, repair and reuse are being overlooked in this equation.
A circular, restorative economy promises a radical break with the past, but it is wise to remember that brands are still at the brainstorming stage and many are relying on outside funding to undertake such experimentation. Even if some of these trials prove successful, figuring out how to scale up such pilot work will require more investment, and more risk. The stark reality is that no matter how pressing the environmental case, if there is no economic payback in sight then the concept is destined to become a disposable fad in itself.
If this should happen, what then? What lies beyond a circular economy? It’s a question no one is asking yet — perhaps they should.