As companies increasingly push to become more sustainable, with some expressing their intention to go beyond carbon neutral and become carbon negative, the benefits of circular economy practices have come to light first plan.
Circular economy principles, breaking the linear cycle of resource extraction, use and disposal, have the potential to create new patterns of use, reuse, refurbishment and recycling presenting new economic opportunities as well as sustainability benefits.
However, moving from a linear model to a circular model requires major changes, cooperation and the commitment of multiple stakeholders. Bringing together multiple data sources, complex supply chains, and coordinating partner efforts, while financially planning for such significant changes, is not a trivial task that will require new thinking and new tools. Digital technologies will be essential to enable the visibility, orchestration and management of circular economies and operations. Leaders in digital management technologies can share their expertise in accessing data flows and operational silos to enable the evolution and deeper integration of circular practices into a full lifecycle. With many digital leaders already at the forefront of sustainable business and economic efforts, their expertise combined with their existing capabilities can enable the transition to circular economies and the sustainability benefits they bring.
reflection and action
As the sustainability efforts of large organizations intensify, many see the benefits of circular economies as the new operating model of the future to enable them to achieve their sustainability goals, while remaining responsibly profitable. Circular operating models have many benefits, not the least of which is waste reduction and the ever-increasing need for raw materials.
Recognizing the wider benefits of circular economies, the Circular Economy Action Plan is at the heart of the EU’s European Green Deal as an international example of best practice. The recovery from the COVID-19 pandemic is seen as an opportunity to begin these efforts to move towards more sustainable and circular ways of doing business. However, many measures need to be put in place before a circular economy can develop.
A report by the Ellen MacArthur Foundation said that limited data availability, unpriced externalities and outdated accounting rules do not fully reflect the value creation of circular business models or linear risks. He further points out that governments, financial regulators and central banks have a lot of work to do in setting direction and providing economic incentives.
The report recommends investing in circular activities, infrastructure and innovation. There is also a need to improve transparency through standardization and reporting requirements, with reference to the EU Taxonomy, China’s Green Bond Verifier Oversight System and the EU Directive on non-financial reports. Finally, the report recommends embedding circularity in financial regulation, risk assessments and modelling, and exploring unconventional methods, such as embedding circularity in green quantitative easing.
Design for the circle
From a product perspective, circularity starts with design.
According to the European Science Hub, approximately 80% of all product-related environmental impacts are determined during the design phase of a product. Improved design provides greater serviceability during operation, with the support of readily available spare parts, to extend operating hours and use. Additionally, the modular design, with repurposing, refurbishing, and dismantling in mind from the outset, combined with a focus on lifetime efficiency, can significantly reduce waste, while promoting longer use and maximum recycling of resources. Single-use materials are falling into disuse, as indicated by global demand for recycled materials, which grew by 17% between 2012 and 2016 for plastics alone.
Digital technologies are seen as a key enabler of circular economies, connecting, aggregating and enabling data analytics to support the complex and sophisticated coordination of the disparate resources needed. A key recommendation of the 2020 Circularity Gap Report is to foster global collaboration to collect and share data. “This will help identify the key data needed to measure and track circular performance, as well as provide the infrastructure and alliances needed to collect, retrieve and share the data,” the report says.
As digital leaders begin their own journey to circularity, shared resources and experiences enable organizations of all sizes to learn, understand and implement the principles.
Cooperation and sharing
Digital leaders have made significant progress in achieving sustainability goals. They have also made important sustainability commitments, such as the Climate Neutral Data Center Pact.
With knowledge gained from developing and supporting software tools, such as data center infrastructure management (DCIM) systems, digital leaders can extend and combine these capabilities to enable organizations to better understand their own operations and how they can begin to introduce circular economy practices, aligning them with existing sustainability efforts. By working together, digital leaders can share the progress they have collectively made in reducing energy consumption, improving operational efficiency and increasing infrastructure utilization, providing a reference for all.
Sustainability efforts cannot be effective when undertaken alone, they must be coordinated across the entire ecosystem, requiring not only consent but deep commitment from supply chain partners, including scope 3 emissions. Moving towards circularity will require even greater commitment from supply chain partners.
These efforts not only accelerate efforts to achieve sustainability goals, but also build the resilience of supply chains, according to Gartner. The analyst recommended a number of steps to transform supply chains to enable them to shift to circular models, such as deeper customer engagement and clear criteria for targets and measurement.
Cycle of life
The level of cooperation and integration required to enable circular economies is higher than ever before. Only digital technologies, from IoT and edge computing to AI and real-time analytics, can bring together disparate data sources and combined resources into a cohesive, orchestrated strategy.
This range of efforts in circular economies can be developed into a life cycle, enabled by digital tools and technologies, to ensure that infrastructure, equipment, software and resources can be managed in a life cycle. complete life to virtually eliminate waste, reduce raw material requirements and improve economy. results. Schneider Electric has been recognized as a global leader in sustainability and has a proven track record of working with partners to develop and achieve sustainability goals, also recognized in 2019 by the World Economic Forum for its circularity efforts.
Backed by a strong sustainability program, Schneider Electric has made great strides in reducing its own carbon footprint. Through its membership in the European Data Center Association, the company is also committed to the Climate Neutral Data Center Pact, a self-regulatory initiative.
Other examples recognized by the WEF are in the areas of food waste, dyes and dyes, recovery and reuse of plastics, waste tires and waste water treatment. The organizations featured range from start-ups to one of the world’s largest brewers. Each example shows the complexity of supply chains that centralize materials for reuse or recycling, and the sophisticated processes applied. None of this would be possible without complex digital tools and platforms, enabling a cycle of measuring, analyzing and determining results.
A circular solution
The circular economy is widely seen as a way to solve many of the problems facing the world, while enabling sustainable development efforts. Digital management technologies are recognized as fundamental enablers of the practices needed to move towards more circular ways of operating. Digital leaders, such as Schneider Electric, have the expertise and experience to lead in this area, providing a set of tools and, just as importantly, insights that enable lifecycle management to monitor, analyze and continuously improve. Schneider Electric has been recognized for its achievements in these areas and continues to lead the way through its own efforts while sharing the journey and resources with its partners, customers and community.
— The author is Senior Vice President, Secure Power Division, International Operations, Schneider Electric.