Products of Change

DRIVING SUSTAINABLE
CHANGE TOGETHER

Wed 08 Dec 2021 | by Arthur Parry

Have yourself a Circular Christmas | Arthur Parry explores new ways of approaching the festive season

If you are reading this, then there is a fair chance that you're already thinking about how to limit your environmental impact for your business or in your private life. Christmas celebrations have long been associated with conspicuous consumption, whether that be with the stack of presents beneath the tree, the food and drink we share with friends and family or with the eye-catching decorations and displays we see appearing from just after Halloween. What options do we have to continue to enjoy this period of festivities while also respecting our climate and environment?  Well, one area we can consider is the Circular Economy. When we think about the Circular Economy, recycling and sustainable material choices may come to mind. These certainly are important steps, but if done in isolation there is generally only limited positive impact that can be achieved.  For example, if in your business you were to increase the recycled content in your existing packaging materials, but the rest of the lifecycle remains untouched, then there is a pretty high likelihood, in many situations, that the more sustainable packaging material will still end up in a landfill, if not an incinerator... or worse. This may sound rather bleak; why bother doing anything if this is true? With what follows here, I hope to indicate how looking more systematically at the design of a Circular business model can not only have a much more significant positive impact for the environment but also open exciting new business opportunities and more meaningful and valuable relationships with your customers, suppliers and other partners. The rule of three The three principles of the Circular Economy, as expressed by The Ellen MacArthur Foundation, are to Eliminate Waste and Pollution, Circulate Products and Materials and to Regenerate Nature - all driven by systematic design. Along with these principles, it is essential to maintain value for your full "ecosystem"; to design with everyone involved and to understand what "value" means for each.  Any time that value is lost or eroded implies an input of energy and resources to recover that value.  These moments are not only cost-inefficient but are also very likely the point at which waste and emissions are created. It is this understanding which leads to the hierarchy known as the 9 Rs, in which interventions such as reduction and reuse rank higher than recycling, due to the fact that they imply action to prevent the dilution of value. How about a couple of Christmassy examples of this? In some quarters there is much debate over the choice between reusable artificial trees, cut trees and rooted trees - the various arguments being between a reusable artificial tree that could conceivable last for many years, cut trees which can be chipped for reuse or the needles composted, and rooted trees that can be replanted to continue their growth (and therefore also, in principle, contribute to carbon sequestration). A systematic, circular approach to this might challenge the presumption of ownership in order both to keep materials in use and to regenerate natural systems. What if, for example, we were to rent a rooted tree each year (together with appropriate care instructions) and for the provider of this service to source the trees from a well-managed, suitably biodiverse forest? This service could also include delivery and collection through low emission transport solutions, thereby providing an additional benefit for the end-user while reducing the number, and impact, of individual journeys involved. Think of the children Another example familiar to many of those reading this is the topic of children's gifts - even if this involvement is more related to your private life than to the products or services provided by your business. The idea that these gifts often have transient appeal will be very familiar. In making choices regarding these gifts it remains important to look at the materials and manufacturing processes for these products (ethical sourcing, recycled content, recyclable products, elimination of single use plastics, net zero glidepath etc.). However, a systematic design approach would also imply looking at the retail process (and associated journeys), the usage patterns and behaviours as well as post-usage provisions and subsequent return of the materials to use, once again always seeking to avoid loss of value. The way to achieve this could be by simply looking at existing behaviours. It is well known that toys are handed down to younger siblings or family members, and we see in some places now the emergence of toy libraries, toy repair services and even donation of toys to charity, all of which extend the life of these products. These existing behaviours imply that there is perceived value beyond the original transaction which is not yet recognised within the business model. A Circular approach could be to look at how these behaviours could be incorporated into the business model, in such a way that the maintenance of value is not left to chance and can be accounted for in the balance sheet. A business in this situation could take more direct control over the existing resale market for their products, thereby also being able to create an opportunity for a new interaction with their customers. I can appreciate that even with this couple of festive examples you may be left with questions related to the cost and complexity of these interventions, as well as concerns as to whether these could ever be as financially attractive as the existing models. I believe that there some aspects of a transition to a Circular Economy which are not yet fully appreciated. Introducing a Circular model Firstly, given that there can be understandable concern about taking on the design of these new approaches, and with the development of the associated physical and digital infrastructure, it is perfectly possible to implement such a model in incremental steps. This could mean running smaller scale pilots with specific retail or service partners, or for a limited geography in the first instance to learn. This will have the added advantage of directly involving partners in the design of the Circular Model, thereby gaining understanding of what the idea of maintenance of value means to them. Secondly, there are tangible business benefits which result from a Circular transformation, many of which are simply not available in a Linear equivalent. Taking the examples above, both the Christmas tree rental service and the ideas discussed with regards to extending the life of gifts for children imply new interactions with your customers (i.e., post-usage). These new interactions are an opportunity to increase loyalty, to provide value-added services (which are not predicated on consumption growth) and to obtain and share real time, in-market data. This data and information can be used to optimise your own offering and business model, but importantly also that of all other organisations involved in the lifecycle. It could be possible to aggregate demographic data, usage data, purchase data, failure modes, habits and practices and to offer this as a new source of value to your network. Since the new design will seek to maintain value, even beyond the first usage, it will become increasingly possible to include this retained value in the business model. For example it may be possible to reduce the initial outlay for your customer at the first transaction, perhaps broadening your reach by doing so, once you demonstrate that a proportion of your costs can be recovered in a subsequent transaction (for instance if as part of your systematic design you have taken more direct control of a resale market), or from the provision of value-adding services, disconnected from consumption growth. The full cost of the Christmas tree in the example does not need to be recovered from the initial transaction, partly because the model includes many further transactions thereafter, but also because there will be opportunities for revenue from the associated activities, including the management of the biodiverse forest from which they are sourced. With some foresight it is also evident that the knowledge you gain in doing this, and the systems and infrastructure you create, will be of significant interest to others, and not just within your own industry. There will therefore be an opportunity to gain value from these, again without complete reliance on consumption growth. If you were to put in place digital infrastructure to track and manage the return in the example of the children's toys, for them to be repaired, resold or recycled then these same digital tools, and the learning you have generated from using them, will be of value to others looking to put in place similar systems, perhaps even in totally unrelated sectors. So, what might a Circular Christmas look like? A Circular Christmas will be characterised by the provision of products and services which have been explicitly designed with the goal of maintaining value, and from systematic prevention of materials entering the waste stream. There will be a greater interaction between manufacturers, suppliers, retailers, customers and communities due to a recognition of the inter-dependencies and mutual benefits. Recycling and the sourcing of more sustainable materials is great, but so much more potential exists within the Circular Economy!