The way we extract and process materials to transform into products that we transport around the world and sell is responsible for nearly three-quarters of global emissions. For the climate catastrophe, consumption is a clear culprit—and while shoppers have a substantial role to play in shaping the market for sustainable items, research shows that the overwhelming majority of consumers want help from brands in doing so. It's clear that companies can drive climate action—and that consumers are keen to see it happen. The way to do it? Shifting to a circular economy, which our Circularity Gap Report 2021 found could close the Emissions Gap and limit warming to well-below two-degrees if enacted globally. Leaving the deeply-ingrained linear processes that have fuelled the production and consumption of the last century behind isn't easy—and may even seem impossible for large-scale retailers whose reach spans nations. Businesses looking to go circular will inevitably stumble through a process of trial and error. But at Circle Economy, we started big, and our work with international budget retailer Action gave way to some pearls of wisdom that can help other companies in retail jump start their circular journeys.
Our analysis with Action confirmed: the vast majority of a retailer's emissions and material use occur at the product level—and that the most impactful change can be driven by buying teams tweaking their product assortment. But with an often-varied product assortment and hundreds of suppliers, this can seem like a daunting task. We've boiled it down to five steps:
We now know there's no reason to disregard sustainability in business: the so-called 'eco-wakening' is spreading among consumers across the globe, in high-income nations and emerging economies alike. The numbers show just how much sustainability is valued: in the US, revenue from sustainable products spiked 29% between 2013 and 2018, and these goods grew 5.6 times faster than their regular counterparts.
Businesses around the world are already cottoning on to this trend, realising that sustainable sells. Lidl Belgium, for example, has launched a programme to track supply chain emissions, finding that 80% stem from just 60 suppliers. The retailer is now sending climate consultants to its primary suppliers to help them cut carbon emissions, especially targeting meat and dairy. Global brand IKEA is aiming to go fully circular within the next decade—in every aspect of its business, from its business model to its product range—while online fashion retailer Zalando has joined forces with the Ellen MacArthur Foundation to imbue circular principles in its offerings from more than 3,000 brands. Food retailers are also making moves to combat food waste through artificial intelligence, supported by new technology: US-based startup Wasteless, for example, uses an algorithm to calculate weather, a product's stock availability and its sales trends to price items—both optimising revenue and cutting waste. Through proactive knowledge sharing, the use of cutting-edge new technology, and the application of tried-and-tested circular strategies, the opportunities for businesses are endless.
Going circular is a lengthy journey: it will require education, radical collaboration and drive to translate data into actionable targets and vague ambitions into achievements. But retailers stand a lot to gain—from boosting customer satisfaction and increasing brand value to meeting sustainability goals. Circle Economy's work with Action has already gleaned promising results: by following our five step process, the retailer is taking the first steps to make practical changes to some of its best-selling products. And contrary to popular opinion—they're showing that this doesn't have to mean giving up on their goal of selling affordable products.
The future is circular: a means to an end, strategies that design out waste, optimise materials' value and keep them in use, and regenerate nature, will help us reach a safe operating space for humanity—while delivering the financial wins businesses want to see. And while the ultimate goal is a shift to circular business models—such as rental or resale—championing a circular assortment of products is a good place to start. Are you ready to get on board and kickstart your circular journey? Our work with businesses can help embed circularity in your company—and guide you through the analysing, strategising and collaborating of our five-step process. Get in touch with our team to explore your circular potential and transform the way you do business.