For our very first episode we had the chance to discuss the circular economy transition with Valentina Carbone, Professor of Sustainability and Supply Chain Management at ESCP business school. In this episode we address several questions to understand whether the circular economy is a promising model for businesses.
What is the circular economy? What is the main difference with the linear economy?
Today our economies are mostly based on linear economies. This means that companies extract resources, and transform them into products or services that we consume, and then throw away the waste. The issue is that resources are used as if they did not generate any negative impact, but it is not the case. In fact, many times they produce waste and carbon emissions that cannot be offset. Therefore, this volume-driven model contributes to the environmental degradation of our planet.
The circular economy model aims to preserve resources and reduce the negative externalities caused by the production of goods and services. It designs out waste and pollution, keeping products and materials in use and regenerating natural systems.
What is the incentive for businesses to use the circular economy model?
First, there is the moral side of it. We cannot continue using resources like we have been doing in the last years. Second, it can bring sustainable value to companies. The challenge, however, is to find how to implement this new model. For big corporations, for example, it can be challenging to change their models. Their reliance on linear models can make it hard to shift to circular models, which is why we need to accept a slower change.
Do you have any examples of companies who are using the circular model successfully?
Phenix is a great example; they make the best out of food waste. They connect retailers to charities in order to tackle food waste and reduce hunger.
Philips healthcare is another example in the B2B sector. They implemented a project to refurbish machines and rent them to hospitals. In repairing high tech, instead of remanufacturing it, the environmental impact is huge.