At the ACE Hub, we believe in the circular economy and its potential to make our lives better. We know the opportunities are there to begin the transition, but what kind of benefits can we expect from going circular?
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The circular economy represents a significant financial opportunity for businesses. In Australia alone, the circular economy is predicted to add $210 billion in present value to our economy by 2048.
Substantial benefits are also predicted at the industry level. A recent report found that a circular textiles economy could be worth $5 trillion. But the value of circular approaches for businesses extends far beyond their macro-economic benefits.
We have spent the past year talking to people who are building circular businesses from the ground up and advocating for change across industry and society. During these conversations, the multifaceted benefits of circular business quickly became clear. From generating revenue and reducing waste to bringing new customers on board and improving brand image, circular models deliver a number of wins for businesses.
The holistic nature of a circular approach means companies implementing circular principles don’t just see improvements in one area of their business, but right across the board. To see evidence of this, one only has to look to our business case studies.
Michael Elias, founder and CEO of clothing retailer and recycling service Upparel, says that in addition to helping the company divert one million items of clothing from landfill, circularity has delivered financial and community benefits for the business.
“From doing the right thing and introducing circularity we've seen a 220 per cent increase in revenue. We have had our community share us [on social media] over 20,000 times within a four-month period,” Michael explains.
Andrew Egan, founder of commercial removal and storage service Egans, also reports multiple improvements: “We've never had so much interest in our company. We've never been so engaged with our customers. We've never generated results like we're generating now”.
Our research reinforces the importance of circularity to the future of business. We surveyed business decision makers working in C-suite, senior management and board positions to determine how Australian businesses are tracking in their understanding and implementation of the circular economy. An overwhelming 88% of respondents believed the circular economy would be important to the future of their business at some level. The top benefits identified by those surveyed were reducing costs and increasing efficiencies, aligning with expectations of corporate sustainability, aligning with public opinion around sustainability and identifying innovation and product opportunities.
Interestingly, these results show financial gain is just one part of the circular economy picture. For business decision-makers in Australia, becoming a more sustainable business and providing the best possible products are also significant motivators to go circular. This research indicates that good business is not all about the bottom line, nor should it be. In many ways, the circular economy offers a model that allows us to quantify the multiple impacts businesses have — environmental, social and economic — and introduce improvements across the network.
The social, environmental and economic benefits of circularity are closely linked and often mutually reinforcing. For example, switching to a product as a service model generates:
Environmental benefits by extending the lifespan of items, reducing strain on primary resources and minimising waste
Social benefits by reducing costs for consumers, improving customer experience and creating local jobs in order to provide services
And business benefits by generating long-term revenue streams, creating feedback loops that allow for product customisation and optimisation, building a positive brand image, providing a point of difference, building lasting relationships with clients and helping a business meet its corporate sustainability targets
Circular businesses are also future-proof. On a planet with finite resources, closed-loop business models that are regenerative by design and work within the limits of the planet’s natural systems are the only business models that could keep operating ad infinitum. Circularity offers a way forward for business and helps businesses build the future that we all want to live in — one where our companies, societies and environments can thrive.
As another of our case study interviewees put it: “This is a trend which will not stop so all investments and activities you do towards a circular economy, you will benefit for the rest of your life as a company”.