The importance of the circular economy in business

Over the last few years, the economy has grown exponentially, taking center stage in all sectors of society. In the last two years in particular, and largely due to the Covid-19 pandemic, the circular economy has followed this growth trend in a wide variety of locations around the world.

As we have seen, with the lockdown policies implemented by governments, there has been a reduction in people's mobility, with journeys by plane and car decreasing on a large scale. Not since 1940 has the planet seen such a significant drop in CO2 emissions into the atmosphere - approximately 7%. On the other hand, the reduction in travel has also led to a drop in demand and in the price of oil (something we've forgotten today).

We can therefore say that the pandemic has been an ally in raising awareness and expanding the circular economy.

But what is the circular economy and how important is it for business?

The circular economy is nothing more than a strategic concept of production and consumption that ensures sustainable growth over the years. With increasingly scarce resources and an environmental need to make better use of them, the circular economy is essential both for maintaining levels of economic growth and for environmental preservation and resource conservation.

The aim of the circular economy is to make better use of the material resources at our disposal by applying three basic principles: reduce, reuse and recycle. In this way, the life cycle of products is extended, waste is utilized and a more efficient and sustainable production model is established over time.

Up until now we have lived in linear production models, i.e. we extract, produce, consume and discard. The society in which we live in this type of model is proving to be unsustainable for people and organizations. The circular economy, on the other hand, establishes a more sustainable model of production and consumption, in which raw materials are kept longer in production cycles and can be used repeatedly, thus generating less waste.

The truth is that nowadays many organizations are beginning to have a clear idea that sustainability has a major influence on their operations, particularly in terms of reducing the carbon footprint they produce in their activities.

Sustainability and corporate responsibility can no longer be ignored, which is why we've identified 2 reasons why the circular economy is fundamental for business:

Brand protection

Over the last few years, the organizational ecosystem has become increasingly digital, immediate, but essentially global. This idea of a "global village" means that companies that don't adhere to current sustainability standards are criticized by the public. As new generations "push" older generations to change, organizations feel obliged to include the circular economy and sustainable policies in their business.

Consumers increasingly willing to pay for sustainable solutions

One of the many arguments used by organizations against using green solutions is their high price. However, today's consumers want to support companies whose philosophies align with their ideals, and green initiatives are at the forefront. By adopting a more environmental business model, you can broaden your consumer base and create greater customer loyalty. Several studies have shown that consumers are increasingly opting to buy more expensive recyclable and sustainable products rather than those with high carbon production levels.

In short, we can see that there is great urgency in the business ecosystem for organizations to become "greener" and more sustainable, reducing their high carbon levels. The first step towards achieving this goal is to implement physical asset management technologies capable of bringing together Environmental Management System and Energy Management System modules, which simplifies environmental compliance and sustainability reporting. This type of technology guarantees the management of the carbon footprint calculation, based on all the physical asset management information: energy quality metrics, water, gas, fossil fuels and tracking of hazardous waste produced.It also allows organizations to see consumption in real time, simply and at low cost.

We believe that people and organizations are now aware of the need to internalize circular economy processes, but there is still a long way to go in defining and implementing production models that are effective.

Source: TekSapo