📊 Embracing the Circular Economy: Transformative Strategies for Business with Carina Sundqvist
Join Michael Londesborough and Carina Sundqvist as they delve into the transformative power of the circular economy in corporate settings. Discover how companies like IKEA and H&M are successfully navigating this shift, the role of AI in optimizing sustainable practices, and the groundbreaking potential of circular symbiosis in business models. Uncover the innovative approaches and collaborative efforts needed for businesses to thrive in a circular economy.
ML (Michael Londesborough): Are companies typically ill aware of the potential a switch to circular economy holds? Or do they understand but need help with transitioning?
CS (Carina Sundqvist): Most companies see the opportunities, but face difficulties when it comes to realization. I often organize workshops where we brainstorm ways to implement these ideas within a given company’s business model. A company can’t change everything at once, they have to do it one step at a time. Help is available. For example, the Ellen MacArthur Foundation started the Circular Economy 100 Network, which consists of numerous global companies such as IKEA or H&M, who are working together with the Foundation on making the change.
ML: Is it necessary for companies to maintain material ownership in order for this system to work?
CS: I don’t think it’s necessary to maintain ownership, but rather to take responsibility for their products. In Sweden, we have very good recycling infrastructure. We take as much as 70% of all household garbage, sort it, make biofuel from the food waste and run our buses on that. That shows us that everything can be used. But you need the infrastructure to make it happen. I think that companies can work together with government to make that happen and thus maintain responsibility for what they put on the market.
ML: We frequently hear that there needs to be serious investment into infrastructure to facilitate these new opportunities. Sound like you would agree…
CS: Yes I do. I believe that states and municipalities should finance this. In Sweden, recycling companies are owned by municipalities. We have an “industrial symbiosis” program which helps companies begin collaborating on circular initiatives. The program is inspired by symbiosis in nature, where living organisms share their resources. Companies, industries and municipalities can work together in a similar manner.
ML: If connection and collaboration are the foundation, it means we’re looking at taking advantage of networks. That suggests the need to apply AI and other data systems more effectively. Have you seen anything about that?
CS: Absolutely. I recently read a report from the Ellen MacArthur Foundation and McKinsey about how AI and circular economy can work together. AI is excellent at pattern recognition and optimization, both of which could help us to make this transition much quicker. For example, when the European Aerospace Agency wanted to 3D print an alloy to use in an aerospace craft, but didn’t know what kind of aluminum would be best, they used AI l to find the solution. They started off with 10,000 options. With help AI they were able to narrow it down to just a hundred. That’s a perfect example of using AI to find patterns and identify the right tools for the job.
ML: Can you give me an example of a company that has already made the transition? What have they gained and what have they lost?
CS: The Swedish company Houdini, an outdoor brand, has all the makings of a good circular economy company. At the beginning they sell an outdoor garment to a customer. Once the customer is finished using it, they can sell it back to the Houdini who will sell it to another customer in second hand. They also rent clothes. For example, I don’t need to own my skiing gear- I can just rent it for one week a year. They give advice about how to treat garments so that they stay in good condition and they help with damage repair as well. At the very end of the lifecycle, I can bring the garment back and Houdini will tear it apart to use the material in creating a new product. They have every step of the circular economy covered and their business is successful.
ML: What about in terms of brutal economics and the bottom line? Have they seen any disadvantages?
CS: Well they may have- it’s still a transition. I don’t have that information so I can’t say. But they have many stores around Sweden. I think it’s good for companies to have this approach that they are never be done. That this is something to constantly evaluate and improve upon. Another example is H&M, who is now also getting involved in the circular economy trend. They are fast fashion and as such want to sell a large amount of clothing all the time. Recently they bought a company called re:newcell focused on textile recycling. For example, they will take used jeans, shred them and extract their cellulose fibers. They then sell those fibers to companies who make new clothes out of them. It’s a step in the right direction. We recycle quite a lot of material nowadays, but we’re not so good at recycling textile and electronics. We should focus more on these areas.
With electronics, it’s important to keep products as they are for as long as possible. We should repair them, reuse them or refurbish them- keep them in use. Only at the very end should we take them apart and put them back into the system. Circular design thinking is also very important. We need to think about how materials will flow through the system and plan for it in the design process. So that everything is already set. That’s another area in which AI can help us- to backtrack how the design component should happen.
ML: Does the impetus typically come from an enlightened CEO who is determined to apply the circular economy or is there pressure from consumers?
CS: I imagine it’s a combination of both of these factors. Any CEO that really looks into this can see all the advantages, both for their brand and for society. A lot of innovation can be done within circular economy.
ML: There will likely be winners and losers from an adoption of the circular economy. Who will be the winners and who will be the losers?
CS: What you’re saying makes me think of the company Spotify, who provides digital music. Before Spotify, most of us got music on CDs, which were made of plastic and took up a lot of space. Today we simply send data and can listen to music from all over the world. Spotify is a very destructive company. I believe that we will be seeing more and more of such changes. Companies need to stay alert and adapt to what’s happening around them.
There may be some losers, but I think we could all be winners. This is a win-win-win situation. For customers, for companies and for the environment. This approach offers real solutions.