According to Waste to Wealth, 2015’s seminal guide to circular economy, most business practices will “contribute to a global gap of 8 billion tons between the supply and demand of natural resources by 2030. This translates to $4.5 trillion in lost economic growth by 2030 and potentially $25 trillion by 2050”.
A circular economy could unlock this potential growth, challenging us to reimagine and redesign our global economy from linearity — take, make, waste — to circularity, based on designing our waste and pollution; keeping products and materials in use; and regenerating natural systems.
Many countries have made strides in product repairability to reduce waste, but Australia still lags. According to Dr Miles Park from the University of New South Wales Built Environment school, the European Uunion is introducing new regulations which require companies to provide spare parts and servicing information for up to 10 years for some products.
“We have product stewardship regulations in Australia, but only for recycling certain product types, televisions, and computers,” Dr Park said.
Some companies are already embracing a circular economy business model. John Hoke, NIKE’s chief design officer said: “brands like Nike have an obligation to consider the complete design solution, inclusive of how we source, make, use, return, and, ultimately, how we reimagine our products”, he said.
“Nike’s ‘Move to Zero’ journey, is about zero carbon and zero waste, to help protect the future of sport and the planet.”
According to the Ellen Macarthur Foundation, the impact of transitioning to a circular economy will be felt broadly.
“The circular economy is gaining traction globally with business and government leaders: to gradually decouple economic growth from virgin resource inputs; encourage innovation; increase new growth areas and create new jobs.”
It’s easy for most leaders to think this is too challenging, however, it could be as simple as applying common sense, this principal was something I encountered during a workshop I ran back in 2005.
While facilitating a day-long ‘CEO think tank’ for leaders in the manufacturing industry at the Australian Business Council (in Sydney, NSW) in 2005, there was a much-heated debate about the value of introducing ‘sustainable’ practices into manufacturing; it was a tiresome push up-hill battle. As these CEOs were adamant about holding their position, i.e., the concept of ‘sustainability was for the ‘barefoot tree huggers,’ detached from the reality of what it means to run a successful business.
The question that changed everything was, “why do you choose to waste valuable money and resources in your manufacturing processes? isn’t that like throwing money into the bin!”
Suddenly, one CEO asked, “do you mean sustainability is simply being more efficient?” this was our ‘eureka’ breakthrough moment. They recently completed an audit of their manufacturing processes and discovered ‘disposal of waste’ cost the company $300K per month, money literally in the bin.
His company went on to rethink and redesign their entire manufacturing practices, introducing cost-saving efficiencies across the whole supply chain, reducing their waste to one green wheelie bin, and potentially saving approx. $3.6 million annually.
The tides are slowly shifting from the old paradigm of wealth creation and leadership styles motivated by power, profit, and prestige, to a more progressive, socially, and environmentally conscious way of leading and perceiving the world.
As more and more companies, leaders, and entrepreneurs are inspired by the idea of value and wealth creation that have a positive, lasting impact on society, the Murdoch Business School is redefining impactful business. Whether it is the undergraduate combined Bachelor of Business and Bachelor of Entrepreneurship and Innovation, or the 12-month MBA, curriculum content is designed to consider the impacts of business in society, and for society. This thinking supports the development of a future generation of leaders that will inherit a thriving world.
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