Shaping the circle

Resource efficiency has been presented as the idea of decoupling economic growth from resource use and environmental impact. Circular resource efficiency solutions, therefore, are value propositions that reduce resource use and environmental impact by implementing strategies that close the material loop for technical materials, such as maintain and repair, reuse and redistribute, refurbishment and remanufacturing, and recycling or to improve the biological cycle by implementing strategies such as cascading, extraction of biochemical feedstock and composting.

Circular strategies

Different stakeholders have provided examples of what circular resource efficient solutions could look like. Accenture (2014) provided a list of what they refer to as circular business models, ways companies could create value by implementing closed loop strategies. They identified five:

  • Circulated supplies
  • Resource recovery
  • Product-life extension
  • Sharing platforms
  • Product Service Systems -PSS

Business models

However, if we look into definitions of business model, none of these completely fit them. A business model is then either a tool that describes how an actual company is delivering value to its customers or a blueprint that demonstrates how a new venture will address a market opportunity to deliver future value or a representation of how an industry works. The above-mentioned elements could be parts of a business model but cannot be considered as stand-alone business models.

Business models have different elements and Osterwalder et al (2005) provide the most popular list of them:

  • Product: Value proposition
  • Customer interface: Target customer, distribution channel, relationship
  • Infrastructure management: Value configuration (resources and activities), core competency, partner network
  • Financial aspects: revenue model, cost structure

According to this definition and to this set of elements, the strategies suggested by Accenture (2014) could help configure a circular business model.  For example, circulated supplies refer to the type of resources (part of the value configuration) used to create the value proposition; resource recovery deals with a type of activity to develop it; product life-extension is the result of strategies that will reduce the need for acquiring new products; sharing platforms are channels to deliver the value proposition, and PSS are arrangement of resources and activities that allow companies to propose value to their customers.

Circular resource efficient solutions

There is no clear definition of what makes a solution circular and resource efficient. If we dissect the term, a solution can be equated to a business model, therefore what we are looking for are business models that deliver create value by closing material loops reducing resource use and environmental impacts.

In this sense, a circular resource efficient solution is any business model that has a value proposition to customers that uses circulated resources, implements circular activities (maintain and repair, reuse and redistribute, refurbishment and remanufacturing, and recycling for the technical cycle and cascading, extraction of biochemical feedstock and composting for the biological cycle).

According to the Ellen Macarthur Foundation (2013) the tighter the cycle the better regarding resource use and environmental impacts, therefore, strategies such as cascading and maintain and reuse should be prioritised over composting and recycling. However, there is a point in time that materials will need to be either recycled or composted.

Examples

Find examples of circular business models collected by the Ellen Macarthur Foundation, here.