The Circular Economy: How Businesses Are Redefining Waste

Alex Schulze , CEO/Co-Founder

The Circular Economy: How Businesses Are Redefining Waste

The traditional linear economy, often called the take-make-waste model, is built on the idea of extracting finite resources to create products that eventually end up as waste. In this outdated framework, businesses prioritize boosting sales and cutting costs, often ignoring the environmental consequences of their production processes and the fate of their products after sale.

This lack of responsibility has led to resource depletion, environmental degradation, and an escalating waste crisis.

Recognizing the shortcomings of this approach, the shift towards a circular economy has gained momentum. Circular economy principles seek to close the loop by using resources efficiently, minimizing waste, and continuously reusing or recycling materials. Unlike the linear model, this approach emphasizes sustainability by designing products for durability, promoting recycling and reuse, and reducing waste at every stage of the product life cycle. The result is a regenerative system that benefits both the environment and the economy.

Several forward-thinking companies are already leading the way by integrating circular economy principles into their operations.

Closed Loop Design: Sparking Innovation

IKEA is integrating both reuse and recycling into the design of new products as part of its goal to become a 100% circular business by 2030. The company has also introduced programs to refurbish and remanufacture items to prevent them from being wasted.

Supporting customers in reusing products is central to this strategy. IKEA now provides spare parts and fittings to extend product life and sells pre-owned furniture in its stores. In 2022, the largest IKEA franchise distributed 21.9 million spare parts, extending the lifespan of furniture for nearly 2 million customers. That same year, the company generated nearly $44.5 billion in global revenue, with 32 million products resold through its circular hubs.

Currently, 60% of IKEA's product range is made from renewable materials, with over 10% incorporating recycled content.

Embracing "Reduce, Reuse, Recycle"

Sustainability is becoming a top priority for consumers, with a 2020 McKinsey & Co. survery showing that 66% of respondents, including 75% of millenials, consider sustainability when making purchases. With this growing demand, businesses are stepping up to reduce their carbon footprints - and some are making notable progress.

In 2020, Adidas produced 15 million pairs of shoes made from plastic waste collected from beaches. More than half of the polyester used in Adidas products now comes from recycled plastic waste. This initiative not only improves environmental conditions but also significantly reduces waste from resource extraction and processing.

Another effective strategy is the adoption of buyback programs and selling secondhand goods. Patagonia's Worn Wear program allows consumers to trade in used clothing for credit toward new products. The program also offers repairs and encourages reusing items instead of purchasing new ones. By 2020, Patagonia had sold aroung 120,000 repurposed items, contributing to the company's annual sales of over $1 billion.

Eliminating Plastic Waste

Many businesses are embracing circular design to combat plastic waste, transforming their products ana packaging to be more sustainable. British cosmetics retailer, Lush, for example, has reimagined its liquid personal care products by offering solid formulations that eliminate the need for plastic bottles. Their 'naked' range, which now includes items like shampoo, conditioner, body wash, toner, and deodorant, makes up about 65% of their product line. Since 2005, Lush has sold nearly 50 million naked shampoo bars worldwide, thereby eliminating over 150 million plastic shampoo bottles.

Similarly, Everdrop, a German company, offers concentrated cleaning tablets that customers mix with tap water in their own reusable containers to create cleaning sprays for kitchens, bathrooms, ang glass surfaces. This approach not only cuts down on plastic waste but also reduces CO2 emissions by avoiding the transportation of bulky liquid-filled containers. Everdrop estimates that its business model has eliminated more than 16.5 million single-use plastic bottles.

Coca-Cola has also made significant strides with its Universal Bottle, a reusable PET plastic bottle that can be refilled and reused across multiple soda brands in Latin America. After use, consumers return the bottle to the point of sale, where it is collected, cleaned, and refilled. On average, these bottles can be reused up to 25 times, leading to a 90% reduction in plastic use. Since its introduction in 2018, the Universal Bottle has become Coca-Cola's fastest-growing packaging format and is now expanding to other continents.

Circular Economy: Here to Stay

The circular economy encourages innovation in material design and recycling technologies and is slowly replacing a more traditional linear economy approach. Home goods brands such as IKEA, fashion brands such as Adidas and Patagonia, home and personal care brands like Lush and Everdrop, and even F&B giants such as Coca-Cola are all making strides in embracing reuse, rethinking packaging, and eliminating plastic waste – and it’s only a matter of time before more brands and industries follow.

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