‘Thrivable’ Circular Business Models: For many years in the industrial era, the global economy mainly used a “take-make-waste” system, where resources were extracted, goods were produced, used and finally disposed of. The consequences of this system have been great waste, critical shortages of necessary goods and pollution. Worldwide, 100 billion tons of materials were used in 2023, but just 7.2% was put back into the economy. Besides the environmental impact, this inefficiency acts as a problem in the economy which can create a chance for real transformation.
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What are Circular Business Models?
Circular Business Models (CBMs) aim to address this by designing practices that recover and retain materials for the longest period. Circularity cuts costs and helps the environment by using a loop to move waste between industries and back into production. Social, environmental and financial indicators are now part of core business performance thanks to thrivable Circular Business Models which highlights thrivability as a priority for strategic actions.
This partnership aims to trigger a worldwide movement for radical change by identifying new technologies and business solutions that break our dependency on natural resource extraction while marrying targets for protecting the environment with ones for boosting economies.
— Dominic Waughray, Head of the Centre for Global Public Goods, World Economic Forum
Circular Economy Business Models
CBMs offer great economic opportunities. In 2015, Accenture estimated that these types of models could lead to an extra $4.5 trillion in economic growth by 2030 which is starting to look very likely. There are important savings on energy, as recycling aluminum needs 95% less energy than making it from scratch. And components that are remanufactured can reduce the overall production cost by about 40–60%.
Many companies achieve success in the market such as Back Market, worth $5.7 billion and Vestiaire Collective, whose sales reached €157 million. Some notable examples also are Adidas’ recyclable “LOOP” shoe, Philips’ refurbished medical equipment, H&M’s textile reuse collection, Globechain’s online trading platform for used goods and Mr. Green Africa’s efforts to reuse plastics.
It focuses on the history, main ideas and economic promise of thrivable circular business models, how they have been applied in different fields and what must be done to maximize their benefits to society, the environment and the economy.
What the Linear Economy Is, What Problems It Causes and What Are Its Boundaries?
Since the beginning of the industrial revolution, the dominant model is based on getting resources, creating products, consuming them and disposing of them. Even though this strategy caused a massive increase in economic growth, it also put a very heavy burden on the environment and people. It is now more obvious that the linear model does not fit everything.
Many of the Earth’s raw resources are being taken away faster than it can replace them and some important resources are projected to be scarce in a short time.
Most products are sent to landfills or are burned which leads to more pollution and greenhouse gas emissions.
Linear models do not maximize the value of materials which costs the economy a lot and creates missed opportunities in both innovation and work creation.
New statistics reveal that world economies require a lot more materials each year than they can reuse; only 7.2% of what was taken from nature last year was turned into new material. Because these systems are not efficient, they fail in markets and become key causes of problems such as climate change, a loss of different species and pollution.
Business Models in the circular Economy Concepts Examples and Theory
what is Circular Business Model?
Both materials and products are used for a longer time, made the most of while in use and then recycled or repaired at the end of these Circular Business Models. Circular Business Models are different from the linear model because they look at ways to reuse, repair, remanufacture and recycle goods.
Circular Business Models are not just about waste management or recycling; they involve deeply changing the way businesses produce and handle value. If products are made to survive for years, people can fix them and recycled, companies can cut costs, improve their brand and generate extra income.
Elements that Support Circular Business Models
Promotes Sustainability: Items are structured for longer usage, are easy to take apart and simple to fix.
A company uses fewer resources which helps cut waste and saves money.
Materials and products are kept circulating by reuse, remanufacturing and recycling within a Closed-Loop System.
You don’t buy the product, but use it and pay for it by the month which pushes businesses to upkeep it and make upgrades.
People involved in the value chain join forces to increase resource efficiency and gain the advantages of circularity.
Changing from Circular to Thrivable: Bringing in Social and Environmental Value
Thrivability takes circularity further by including social, environmental and financial performance into the way businesses are judged. Thrivable Circular Business Models focus on saving resources as well as on the well-being of both people and the planet.
The mission central to a Thrivable Business
The foundation of a thrivable business model is having a clear purpose that deals with environment and society. It directs what the business does and helps to ensure value is created for everyone influenced, not only for those who own shares.
The main concern in a Value Proposition and Delivery exercise is to understand and embody the customer-centric mindset.
They support redefining value creation by thinking about what is important to customers, partners, society and the environment. Value delivery tries to establish solid ties with customers, investigate customer groups and employ multiple ways to get better results.
The Management of Generating and Retaining Value
Local organizations are involved by testing ideas and solutions and thereby supporting the development of thrivable Circular Business Models. Working together makes it possible to examine, adjust and increase different business models in actual situations.
The Economic Potential of Circular Business Models: a $4.5 Trillion Chance
Circular Business Models (CBMs) make good economic sense. Accenture’s report from 2015 believed that by the year 2030, adopting circular strategies could bring an additional $4.5 trillion to the global economy. The prediction is based on real results from top organizations and industries that have gone circular.
Most of the bills are lower as a result.
If aluminum is recycled, only 5% of the original energy is needed to make it, compared to making it from scratch.
It Costs Less: Making new parts from old parts cuts production costs by 40–60% and turning waste into usable products helps companies use fewer resources and makes them more profitable.
Implementing circular economy seeks to generate millions of new jobs, mainly focused on recycling, repairing and remaking products.
The investment case for circularity
Investors are paying more attention to how the circular economy can help society. Venture capital investors granted about $8.7 billion to circular economy startups in 2023. Not a big part of VC investments, this surge shows that more people are interested in sustainable innovation that grows. BlackRock is among the institutional players that have launched an ETF focused on the circular economy, to profit from transition.
It is startup innovation that is fueling the growth. Loop Industries which is headquartered in the U.S., is working on advanced technology to recycle PET plastic at a high level and has secured €20 million ($20.8 million) for strategic investment in December 2024, as well as licensing its technology in Europe. Ecovative Design which was founded in 2007 and deals in biomaterials, has also brought in $155 million change in funding. Mycelium-based substitutes for leather and packaging developed by Ecovative are showing how circular bio-based materials perform successfully in the food and fashion industries.
All this is driven to a higher level thanks to global politics. As a result of the pandemic, war in Ukraine and increased trade disagreements, how secure global supply chains are has become apparent. Businesses now accept that handling resource resilience is a key issue. Local remanufacturing, collecting materials and reverse logistics are circular models that support the region and help it depend less on instable imports.
Therefore, significant companies are addressing the challenges. Apple promises to make its batteries with 100 percent recycled cobalt by 2025. IKEA is bringing back furniture into the economy by allowing it to be resold and focused on circular design. The company now offers fleet clients tire-as-a-service, letting them use less, enjoy tires longer and grow their business relationships. Using remanufactured components at Caterpillar boosts customer retention, enhances margins and decreases waste. These points, while not rare, are signs of where the market might be going in the future.
Distinctiveness in the Market and the Strength of the Brand
By adopting CBMs, businesses are able to differentiate their goods, interest environmentally aware people and demand higher prices. A good example is that farmers who practice circular agriculture methods often earn an additional $3,100 per hectare each year, due to saving on costs and creating new streams of income.
Including Investment and Innovation
Using CBMs leads to new developments in the design of products, in materials and in business models. Governments, financial institutions and development agencies are increasing their support for circular technologies and infrastructure with funding and incentives.
Circular Business Model Case Studies in Industry
Back Market: Bringing Innovation to the Refurbishing of Electronics
Back Market is now leading the way in refurbished devices, making sure customers buy affordable electronics with warranties and guarantees. When Back Market sells renewed goods, it decreases the amount of electronic waste, makes appliances and electronic devices affordable and gives business to refurbishers. The achievement of the company shows that circular business practices bring both growth and profit in the tech field.
Vestiaire Collective: Changing the Fashion Industry by Promoting Resale
Vestiaire Collective set up a popular market for second-hand luxury and designer clothes, focusing on green issues and the desire for original, inexpensive items. The rise in circle consumption among the younger crowd combined with easy resale opportunities is making the platform more popular and building brand loyalty.
Adidas: Designing in a way that allows for remanufacturing
With Futurecraft.Loop, Adidas demonstrates new ways to design products for minimal waste. The shoe is manufactured with just one kind of recyclable material, enabling it to be recycled into shoes after it is no longer used. As a result, waste is reduced and this method becomes a guideline for the future of sustainable apparel.
Refurbished Equipment from Philips Healthcare
Hospitals can purchase Refurbished Systems from Philips Healthcare which includes pre-owned equipment that is inspected and brought up to date. It supports providers by reducing expenses, preserving costly tools for longer and promoting the international effort known as circularity in healthcare.
H&M, Globechain and Mr. Green Africa are contributing to circularity in several sectors.
The Textile Collection Program by H&M: Picks up clothing waste and puts it to good use, helping cut down on textile damage and boosting sustainable fashion.
B2B Reuse Marketplace from Globechain: This platform matches firms to share unused products, reducing waste and assisting them in meeting their environmental targets.
Mr. Green Africa’s initiative: Recycles plastic waste to produce valuable goods, employs many workers and decreases pollution.
How to Create Circular Business Models: Problems and Ways to Approach Them
Challenges in CBMs
To move from a linear to a circular mindset, companies should alter their company culture, governance system and how they work with different stakeholders.
There are barriers when it comes to using CBMs because of mixed rules and not enough encouragement.
Circular Activities: It is often necessary to join forces across large, complicated supply chains for circular practices. Scaling circular solutions means businesses must have enough capital and be able to secure financing at the beginning.
Advantage of Circular Business Models
Clear leadership and a clear vision play a key role in the shift to thrivable CBMs.
| Working Together: Bringing customers, suppliers and officials from the government and civil society groups into finding answers. | Experimenting with different business methods by piloting and field testing them to see what actually succeeds in real-world situations. |
| Advocating for policies that will enable circularity, offering incentives, setting standards and making regulations. | Circular Design: Adopting circular ideas during product development, assembly and how things are delivered. |
| Systemic Transition: Making the Most Out of Thrivable Circular Business Models Taking advantage of the $4.5 trillion opportunity calls for a shift in business, government and social approaches. This includes: | Developing Circular Infrastructure: Creating and supporting the use of recycling, remanufacturing and reuse plants. |
| Tracking Results: Creating ways to measure and report on improvements in social, environmental and financial results | Cooperation: Offering interactive spaces and agreements that make it possible to exchange information, resources and leading practices. |
Final Thoughts on Circular Business Models
Thrivable Circular Business Models mean that creating and maintaining value is now changing in the global economy. Moving to regenerative profit means businesses can achieve more economic, social and environmental results than recycling alone can provide. Besides earning $4.5 trillion, this offers a way to support resilience, equality and sustainability. The proof is in companies and industries like Back Market, Vestiaire Collective, Adidas and Philips Healthcare which have found that going circular is essential for lasting prosperity and profitability
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